Russia’s leading steelmaker Severstal, amid challenges such as weaker domestic demand, a stronger ruble and logistics and trade restrictions this year has seen significant rise in logistic costs when exporting its products. Severstal’s Deputy General Director for Sales & Operations Mr Evgeny Chernyakov in an interview with Interfax said “Amid all the perturbations and absence of insurance, all international logistics companies left Russian ports, and tariffs and transshipment have risen sharply. This has hit us hard as prices have fallen in the international markets. Now things have improved, freight tariffs are more or less fine, and there are now flows. Of course, we have been forced to look for new markets, and this lengthens the distances. We didn’t have such problems in the past since we shipped our metal to Europe via St Petersburg. Then, to be honest, we did not depend so much on Russian Railways.” He said “Now we are redirecting shipments to the south and the Far East, we have completed a shipment to the most remote region for us - to Sakhalin. Of course, it is interesting and important for us to increase the volume of deliveries to these destinations, but the increase in railway tariffs hurts the cost of our metal and, as a result, the ultimate price of products. The question arises - how do we change this situation? And the most obvious answer is to shift the costs to the end customer. But you need to understand that the domestic market is highly competitive. And, if we raise prices due to increased logistics costs, then this will hit our competitiveness. He added “Of course, we will continue to develop alternative delivery methods: water and road transport, interaction with ports, customers, and so on. And, of course, we continue to hold dialogue on tariffs with Russian Railways.” Mr Chernyakov while answering a question about sale of Neva-Metal stevedoring company due to changes in the company's logistics flows added “Over 30% of our sales were exports, and 90% of them were handled by Neva-Metal. Today, the share of exports has fallen by a third, even more. So it was logical to divest this business as the Baltic region is of no interest to Severstal in today’s realities. For us it is most relevant to have access to other destinations, for example we expect to increase shipments to CIS countries.”
Russia’s leading steelmaker Severstal, amid challenges such as weaker domestic demand, a stronger ruble and logistics and trade restrictions this year has seen significant rise in logistic costs when exporting its products. Severstal’s Deputy General Director for Sales & Operations Mr Evgeny Chernyakov in an interview with Interfax said “Amid all the perturbations and absence of insurance, all international logistics companies left Russian ports, and tariffs and transshipment have risen sharply. This has hit us hard as prices have fallen in the international markets. Now things have improved, freight tariffs are more or less fine, and there are now flows. Of course, we have been forced to look for new markets, and this lengthens the distances. We didn’t have such problems in the past since we shipped our metal to Europe via St Petersburg. Then, to be honest, we did not depend so much on Russian Railways.” He said “Now we are redirecting shipments to the south and the Far East, we have completed a shipment to the most remote region for us - to Sakhalin. Of course, it is interesting and important for us to increase the volume of deliveries to these destinations, but the increase in railway tariffs hurts the cost of our metal and, as a result, the ultimate price of products. The question arises - how do we change this situation? And the most obvious answer is to shift the costs to the end customer. But you need to understand that the domestic market is highly competitive. And, if we raise prices due to increased logistics costs, then this will hit our competitiveness. He added “Of course, we will continue to develop alternative delivery methods: water and road transport, interaction with ports, customers, and so on. And, of course, we continue to hold dialogue on tariffs with Russian Railways.” Mr Chernyakov while answering a question about sale of Neva-Metal stevedoring company due to changes in the company's logistics flows added “Over 30% of our sales were exports, and 90% of them were handled by Neva-Metal. Today, the share of exports has fallen by a third, even more. So it was logical to divest this business as the Baltic region is of no interest to Severstal in today’s realities. For us it is most relevant to have access to other destinations, for example we expect to increase shipments to CIS countries.”
