OREANDA-NEWS. September 25, 2009. In St. Petersburg, Ms. Anastasia Lukyanova, Deputy Director of ROSNO’s Transport Risks Insurance Department, delivered a speech at the roundtable discussion "Situation in Road Transportation Market: What Lies Ahead?" This event has become the first in the cycle of dedicated meetings of businessmen, scientists and mass media; it was organized by the trade magazine "Container Business" and the Chair of Logistics and Transport Organization of the State University of Engineering Economics (INZHECON), reported the press-centre of ROSNO. 

15 companies participated in this event: transport operators, forwarders, representatives of the scientific community, insurance and media partners, and mass media. Among them were the leading market players, including: Transek , Novatech, GSK UMIAT, TranCo, AT-Region, Eurologistika, ISC Service, Matralen, Port Trans, Milarin S-Logik, etc. The resultant discussion between the participants touched upon the problems related to the current state of the cargo haulage market and focused on identifying the most effective market development and cost cutting methods.

The majority of representatives of transport companies acknowledged a significant decline and a danger of overall future market stagnation. This state of affairs results not only from the financial crisis, but also from termination of transport licenses. According to experts, about 80% of the cargo haulage market pertains to the so-called "shadow economy" organizations conducting operations not only without proper documents, but also using obsolete vehicles and employing unqualified drivers. As a result, there are frequent cases of seriously damaged cargo and large-scale environmental pollution. By decreasing their costs as aforesaid, illegal carriers also cut rates, leading to the present-day significant market deformation. In the opinion of representatives of transport companies, today, tariffs are below actual market level by 15%.

Among the instruments which could be used to mend the industry’s current problems, the roundtable participants named the following: legal regulation (introduction of the licensing system), use of innovative technologies (new logistical schemes, information support, etc.) and insurance coverage of cargo owners and carriers.

According to the estimates by ROSNO experts, prior to mid-2008, the annual volume of cargo insurance market in the North-Western Federal Okrug varied in the range of 400 to 500 mln roubles. The pre-crisis growth rates approximated 15% per annum. The market dynamics will fully recover only if the cargo traffic increases, at least, to the level achieved in 2007. However, in contrast to other markets, the transport insurance market will not go in the red, since deliveries and consumption of imported goods of various categories still remains an important vector for the Russian economy.

Speaking of the peculiarities of the insurers’ work in this segment, Ms. Anastasia Lukyanova, Deputy Director of ROSNO’s Transport Risks Insurance Department, noted: "One of the factors obstructing the development of the cargo insurance market is the state of risk management in the Russian companies. Unfortunately, their risk management is in its infancy. 90% of companies do not possess a resource base which would maximize profitability of an organization in this field. Today, there are four major methods of protection against potential unforeseen financial losses in case of damage to, or a complete loss of, the cargo: establishing own reserve funds; legally contracting responsibility area or fully relieving of certain obligations; cooperating only with major market players which, as a rule, conduct timely technical examination of cars, medical examination of drivers and competent personnel training, decreasing the risk of a possible breakdown on the road or a fraud; and insurance. Undoubtedly, the use of any individual instrument would not enable avoiding unforeseen expenses in case of any unfavorable developments. However, insurance allows minimizing such expenses, since all payments are made by insurer. A policy costing five thousand roubles can cover million-rouble expenses, and taking such amounts on balance sheet is not an option for many companies. The insurance contract is primarily needed by carriers: indeed, in about half of all cases, operator is the entity responsible for the damage to, or loss of, cargo — and therefore cargo owners often neglect concluding a cargo insurance contract, relying on the 100% reimbursement of losses by their transport companies. Besides, it must be remembered that even if a cargo owner has concluded an insurance contract, the paying company has a statutory right to collect the amount of payment from the person or entity responsible for the damage to, or loss of, the cargo. Therefore, all the more so in a financial crisis, it is extremely important that cost-cutting instruments are taken account of. Speaking of ROSNO, the Transport Risks Insurance Department met expectations of its partners by developing a number of products enabling transport companies to save up to 70% of insurance premium and survive recession without bearing more costs than it had been planned".