In Russia, the cost of transporting food has risen sharply

Industry unions of food suppliers announced an increase in prices for domestic and foreign transportation, as well as a lack of free transport, Kommersant reports. The situation worried the Ministry of Agriculture. Maxim Titov, DIRECTOR of the Department for Regulation of Markets in the Agroindustrial Complex of the Agricultural Department, sent a request to the unions for information on the situation with the transportation of food.   

The letter was sent to the National Union of MILK Producers (“Soyuzmoloko”), the National MEAT Association (NMA), the Association of Confectionery Industry Enterprises “Askond”, the Fish Union, the Potato Union and so on. In the letter, the Ministry of Agriculture asks to analyze the change in the cost of transporting agricultural products per ton for the period from 2019 to 2021. The ministry is also interested in the position of the unions regarding the reasons for the change in the cost of transportation and on the issue of the sufficiency of the transport fleet. The unions had to send the information to the Ministry of Agriculture by August 18.

The executive director of the Potato Union, Alexei Krasilnikov, told Kommersant that in a number of areas there is an increase in the cost of transportation by at least 20-30% compared to last year, and in some cases - twice. According to him, this is due, among other things, to the lack of refrigerated transport and the lack of drivers from the CIS countries against the background of the pandemic.

The Association of Confectionery Industry Enterprises Askond fixes an increase in the cost of transportation on domestic routes by 10-15%, and on international routes - from 24% to 160%, the publication found out. The interlocutor of the publication in one of the large food companies says that on average, logistics has risen in price by 15%, and due to the lack of free trucks, carriers have the opportunity to dictate prices. In some cases, they refuse the contract unilaterally. The HEAD of the National Meat Association, Sergei Yushin, told Kommersant that on average, transportation prices have risen by 10-11% year-on-year, but the dynamics strongly depend on the specific direction and are seasonal. According to him, there are certain problems with free transport, which have arisen, among other things, due to the departure of people from this business.

The Ministry of Agriculture is working on possible solutions to the problem with the Ministry of Industry and Trade and the Ministry of Transport. According to the interlocutor of Kommersant among manufacturers, subsidizing the transportation of food, easing the burden on road carriers and taking measures to reduce fuel prices can be a way out.

The director of the Fruit and Vegetable Union, Mikhail Glushkov, said that the rise in the cost of transporting goods has hit vegetable producers hard, their margins are declining. “Of course, we understand that the reason for the increase in the cost of transportation is the increase in prices for fuel and lubricants and spare parts, and the increase in government fees. The metal around the world has risen in price by 2.5 times, which led to an increase in prices. There are no questions for logistics companies,” he said.

A PepsiCo spokesman said that the company, like other market players, is seeing an increase in freight costs. “In RUSSIA, the increase in prices for motor transport services, on average, amounted to 11.5%. In the case of attracting additional carriers due to a decrease in the volume of supply from transport companies, the cost of trucking is observed to be 50-80% higher than the base price, PepsiCo said. “This may be the result of a decrease in the availability and a significant increase in the cost of vehicles in 2020-2021, an increase in the cost of auto parts, an increase in the cost of fuel, and administrative pressure in some regions of Russia (for example, the introduction of strict restrictions on movement along the Moscow Ring Road).”

In addition, according to the representative of the company, there is a growing shortage of supply of rolling stock, in particular, insulated cars, in rail transportation. “This may also necessitate the use of trucking services. Our company, along with industry associations and other industry representatives, takes part in meetings and preparing materials for relevant departments, ”concluded a PepsiCo representative.

More expensive than Moscow: what is happening with prices in Russia 

In early August, the President of the National Association of Freight Road Transport "Gruzavtotrans" Vladimir Matyagin said that the prices for transportation have not been raised for more than 10 years, and now there are objective reasons for their growth. According to him, the current increase in prices is small and they will continue to grow, because the price must take into account all the requirements that apply to transport companies: an environmental fee, transit through Moscow, rising prices for cars, fuel, spare parts and wheels, taxes, and so on.