BLG Logistics has strengthened its links to the Ukrainian and wider Eastern European automotive markets with the signing of a new joint venture contract with ViDi Group.
Called BLG ViDi Logistics, the company is investing a total of €28.6m in a logistics terminal in Kalinovka near Kiev, with initial capacity set for 15,000 vehicles. Construction of the centre is due for completion in 2013 and it is the first European logistics provider to make such an investment in Ukraine. Establishment of the new business is being supported by Kyiv Regional State Administration.
The terminal and its transport provision will draw on the assets acquired through BLG’s 94% ownership of E.H.Harms and the establishment of E.H. Harms Automobile Logistics Ukraine (E.H.Harms ALU), which was established with ViDi Group in August 2007. Last year the company moved 10,000 vehicles dealing with 80% of ViDi Group customers, including Toyota, Ford, Porsche, Subaru and Fiat.
The new activity is aimed at solving capacity problems at ViDi Group’s 8-hectare terminal at Vyshneve, which is now completely full, but Kalinovka will be expanded according to customer demand as the market recovers from recession.
Talking to Automotive Logistics, E.H.Harms ALU’s managing director Pawel Byglewski said: “We don’t know how the market is developing right now, but next year we expect sales to be 15% bigger, and by 2011 we expect it to be really growing again. We will grow the business at Kalinovka according to customer requirements.”
Kalinovka is strategically located as far as automotive trade is concerned. Situated on the highway to Odessa, and very near Kiev, which is the main market for cars coming into Ukraine and makes up 35% of sales, it is directly accessible by vehicle traffic coming via the Port of Illiychevsk on the Black Sea.
“We don’t need to go into the centre or around Kiev, but for the main volume flows we are located at its doorway,” said Byglewski. “We also have a rail connection and, of course, customs clearance, which allows us to clear the customs for our customers within 24 hours, which is a unique selling point in this market.”
Ukraine’s economy is currently in a fragile state having been badly affected by the economic downturn and there are fears the International Monetary Fund may not release the next tranche of its pledged $16.4 billion loan because of concerns over the government's control of the budget deficit and inflation. Given this situation the projected deduction that the new logistics centre will achieve through customs revenue is welcome news.
“We believe that within the next couple of years more OEMs are going to enter the market and we see that our position, like BLG’s, which already has a network working for the OEMs directly, means we can enlarge the market share on the Ukrainian side together with the ViDi Group by getting these customers directly,” said Byglewski.
Pictured (l to r): Vitaliy Dzhurinskiy, general director, ViDi Group: Viktor M. Vakarash, governor, Kiev Region; Frank Sturm, general manager, BLG Automobile Logistics