Rustam Yuldashev, STS Logistics
Release Date: 2010-09-27
Rustam Yuldashev, President of STS Logistics, has been interviewed by Russiaenergy.com for a Russia Special report for Oil and Gas Financial Journal to discuss the challenges of working in Russia, cooperation of STS Logistics with the oil and gas sector, as well as the current and the prospective projects in Russia.Mr. Yuldashev, you are the founder of STS Logistics. Russia is a very challenging country logistically: there is the geography, the different cultures, the different climates. What made you decide to start a logistics company in Russia and how has it developed since that time?
In the 1990ies, after I left a Japanese logistics company, my friend and I had the idea to build a Russian logistics company that would be the leader of the Russian logistics market.
We started in Moscow with a staff of 3 people, and within as few as two years we opened approximately 10 offices from the Far East of Russia to St-Petersburg, and in the CIS. Our main target was to find clients for logistic services on the basis of a few good contracts that we signed to form a platform to build the company. Our first clients were oil and gas companies.
Why did you choose to do business in the oil and gas sector?
According to our marketing idea, oil and gas is the biggest part of the Russian economy, and besides, oil and gas companies have increased their business a lot. Before, oil and gas companies were choosing Western companies for logistic services, especially Panalpina, so our idea was to find solutions for the Russian oil and gas companies, with services of a new value and new prices.
How difficult is it to make this price competitive on the Russian market?
Our company has the advantage of knowing the Russian logistics market, the infrastructure and the mechanics of transport in Russia. Besides, it is not so difficult to find a Western agent to organize transport from Europe and the U.S.
Our primary focuses are export, import and distribution within the CIS. To help that on an international scale, we opened a few international offices in 2001-2002 with the main idea of selling our possibilities and expertise within the CIS.
As we said, Russia is a logistically challenging market. After growing the company to this stage, what would you say to your readers about your strongest points in Russia?
One of our main advantages are well-organized international freight forwarding network and customs brokerage in Russia, Azerbaijan, Turkmenistan, Uzbekistan, USA, Ukraine, China, Japan, Kazakhstan and Netherlands and our experience in transporting overseas cargo in Russia. Thanks to our network of offices in Russia, Ukraine and the CIS, we have experience of working within all territories in Russia.
Today, our main business lines in Russia are energy – including oil and gas and electricity, the industrial sector, the automotive sector, especially spare parts, and Fast Moving Consumer Goods (FMCG).
Your recent merger with RLS made you one of the largest logistics companies in Russia. M&A can be a difficult process during the first two years for any company… How did STS Logistics approach these challenges over the last two years?
According to our general idea, our first step was to build a logistic company starting with the oil and gas sector and then looking to other economic sectors as the next step. As RLS has a lot of experience in FMCG, we chose this company for the merger with the aim of creating one of the largest logistic operators in Russia and the CIS. You’re right to say that this process was not easy because to merge during the crisis makes the matters much more difficult. As a result, we have optimized our company, and now we need to find the right size for it. I hope that this year will be finished with more stabilization because FMCG has helped to grow our business in the last two years.
Is your experience in solving infrastructure problems in Russia a good way to increase the business?
STS Logistics knows how to find solutions and right people to streamline the logistic obstacles in Russia but some of our Western competitors – for instance, companies like Agility and Panalpina - have a better history with the Western clients that look at the Western logistics companies. The Russian market is somewhat different, so one of our main strategic objectives is to build confidence with the Western clients in Russia. Currently, the Western companies account for 50-60% of our client portfolio.
The main reason to choose STS Logistics in Russia is our track record of over 20 years on the market in Russia.
What projects you are most proud of?
One of our partners is CentrKaspneftegaz – a joint venture between Gazprom and Lukoil involved in offshore vertical drilling in the Caspian Sea for the development of “Zentralnaya” geological structure. As the Caspian Sea does not have a clear legal status, STS Logistics has found a good customs solution organizing cargo transport from Europe, Dubai to the offshore without customs clearance and saving our clients millions of USD.
However, a lot of projects were suspended during the crisis. We hope to restart some of them next year in the Caspian Sea and the Shtokman field.
For our current projects in the major Russian oil producing regions such as East Siberia, the general idea in this region is to find solutions to transport large volumes of cargo to certain destinations. For instance, we have successfully transported 400 t gas turbines building a 2 km railway, a cargo terminal and special fittings.
After the merger, STS Logistics has become a big player. What is your strategy to keep growing?
Delivering our clients a very high level of quality is our main priority for the next 2-3 years. To achieve this, we have set up a quality target and we ask our clients for their feedback every three months. Before the merger with RLS, STS Logistics was ranking first in terms of quality due to the fact that we had an expert overview of the market. As we have lost some of our quality focus during the crisis time, now we are targeting quality again.
In your view, is STS Logistics an international company focused on Russia or a Russian company?
STS Logistics is a company with International mentality focused on services in Russia. In the Soviet times, we lost the service quality, and our mission is to bring our people back to quality and service.
What would you like STS Logistics look like in 5 years’ time as a company?
STS Logistics is one of the top companies in terms of turnover and, as I have said, our main target is quality.
What would be your final message to the international audience of Oil and Gas Financial Journal?
STS Logistics, as a quality-oriented company, cares about every client and pursues the mission of bringing value. Moreover, now is a good moment for that because the Russian market is showing more opportunities to increase the business. Besides, this is complemented with political stabilization.
| Company: | STS Logistics |
| Position: | President |
| Country: | Russian Federation |