Crisis Puts Business to Test
Everything that can be touched can be moved. Finances, in spite of the growing popularity of electronic money, are not an exception. Being an equivalent of goods, money, and especially its quantity, has a direct influence on the quality and very possibility of delivery of all sweets of life, and even life itself, therefore the notorious financial crisis will affect the transport and logistic sphere also.
It is pointless to discuss whether this infection will affect Russia – trading at the exchanges is not to be stopped at the drop of a hat. It is not clear where are the airbags owned by the country that are to protect it from "tough events in the world economy", but nobody wants to work without a profit, otherwise it is not a business any more.
The last issue of Russian “Newsweek” answered to these events with a remarkable cover. The crossed images of and automobile, a chaise lounge, a construction crane and household equipment of different level of necessity and cost were printed on the first title of the magazine. The idea of the authors of the cover is to show that it is high time to pull in the belt and give up everything an average Russian got used to while living in one of the most dynamically developing economies in the world.
An example of how bad the situation in the retail industry is is the decision of the Lenta shareholders to postpone the sale of the controlling stake of the company. And the management of the company explains this decision by the collapse of the fund market. The decision to postpone a number of its long-term expensive projects was declared by X5 Retail Group.
Due to the financial crisis the company reclassified $82 mln, reserved in the form of letters of credit for the expansion, to basic funds, and $14 mln. of operational funds were turned into investment funds.
According to the plans of the company management, the Lenta network, which operates in the hypermarket format, was to consist of 50 by the end of 2008. X5 Reatil Group, which owns Pyatorochka, Perekrestok and Karusel brands planned to enlarged its trade areas from 600 th. to 760 thousand sq. m. in 2008.
It is no secret that the expansion of retail companies to the regions is accompanied by the appropriate support of logistic operators and developers. The latter frequently work with losses even in the capital area. Actually, who could think that the construction of a logistic object on the Moscow outskirts can prove to be absolutely disadvantageous?
One of the most important foreign companies in the Russia logistic market is French FM Logistic. FM Logistic declares that the company is investing into the construction of warehouseing facilities for its own use only. However, the “gallic solidarity” of FM Logistic with Auchan and Leroy Merlin is not a secret.
According to Alla Lahoz, Head of public relations, Eastern Europe, the investments in the construction of logistic complexes are partially financed by European banks credits. “But, since the difficulties with the liquidity arose at the present moment in many western banks, we also encounter difficulties in obtaining the credits for financing the objects that are under construction, explains A.Lahoz. – The construction is not stopping, but we have to look for possibilities of its financing from the internal fund”.
As pointed out by Vladimir Dorokhov, financial director of STS Logistics, the influence of the crisis on commercial relations is quite relative. According to him, the transportation of the production of the first degree of importance, number of which includes food products, will hardly be influenced by the situation at the exchanges. On the contrary, it is possible to forecast an increase in their volume. But problems can actually arise with delivery of construction materials, however these problems will be encountered by developers, and not by the oil and gas sector.
According to Maxim Shakirov, regional director of the warehousing and industrial real estate department of Colliers International (Russia), the instability on the financial markets, as well as the increase in the cost of construction materials have led to the fact that the construction of several logistics objects in Saint-Petersburg is either postponed or frozen.
On the other hand, according to Thomson Reuters, in 2008 companies from BRIC countries refused to hold an IPO as announced before. Now it is time to take a time-out.
On 22 September 2008 the president of RZD Vladimir Yakunin announced that it is high time for an IPO of TransContainer and Refservice. But recently he said that there are no problems with liquidity, however the investment program could be reduced by 15% in future.