“Prospect of banana exports by India to Russia could be huge”

India Business & Trade recently caught up with Andrey Grechkin, CEO of Dalreftrans, a subsidiary of FESCO Transportation Group. The discussion revolves around Dalreftrans’ role in facilitating trade between India and Russia, particularly focusing on perishable cargo.

Grechkin sheds light on Dalreftrans’ expertise in refrigerated container transport and their position as the leading reefer operator in Russia. He also highlights their commitment to end-to-end logistics and their plans for expansion in the Indian market. The interview delves into the future of India-Russia trade, exploring opportunities for balancing exports and potential products that can be explored for bilateral trade.

India Business & Trade: What are the key business of Dalreftrans and what are the company’s areas of core competence? 

Andrey Grechkin: Dalreftrans is currently a part of FESCO Transportation Group. Fesco itself is the largest Russian container company, which provides a full set of integrated logistics services – inland, maritime, railways, tracking, container handling, operations in ports and so on. Coming back to Dalreftrans, we are a reefer operator responsible for transportation of perishable cargo in reefer containers.

As a shipping line, FESCO celebrated its 144^th anniversary, and Dalreftrans is only 26 years old. But it’s understandable because reefer business itself has only been in existence for around 50-60 years globally.

Currently, we are the biggest Russian operator of reefer containers, with around 5,000 physical containers in our fleet currently, a significant figure in terms of global volumes. We have about 45-50% of owned containers in Russia.

Our activities in general fully cover all activities of the FESCO Transportation Group. We have intermodal services, maritime services, domestic transportation, etc. Our philosophy, is to provide end-to-end services and not just port-to-port transportation, in order to fulfill all expectations of our customers.

India Business & Trade: How do you view the market growth trends in your business, i.e. perishable trade, from a global perspective?

Andrey Grechkin: Interestingly while we do make projections, it is quite difficult to accurately assess the demand situation in a highly dynamic global market. All our budgets and plans are based on statistics in accordance with those expectation. But in the currently globalized, world, we find ourselves regularly opening new routes and increasing our geographical presence every year.

We can try to predict our future development, but we are always answering the market and this is the most important thing for us. You should be able to support new requests even if you can’t predict them. So our strategy currently is expansion of services to countries like China, Japan and new countries.

Our core business is transportation of goods between Russia and other countries, in-bound, out-bound, but all of our services are connected to Russia. So, we face huge changes in the market, from the COVID pandemic to geopolitical restrictions. While these developments are constraining us in some way, they are increasing our flexibility and reaction to new market options.

So we develop our network. About two years ago, we opened Vietnam Direct Service to the Far East, firstly, then to Middle East to some extent, and then to the rest of the East. Then we’re moving further to develop a connection using Vietnam as a hub with other countries. We had some new customers, new volumes to us, new types of commodities.

India Business & Trade: What is your current presence in the Indian market, and how do you project it growing in the coming years?

Andrey Grechkin: India was the most logical country for us to diversify into and we entered the market last year. Our trade with India is much more significant than would seem on the surface. Consider some interesting facts in this context. Five roads could be built from Moscow to Delhi with tiles that we import from India. Three Taj Mahals could be built with the paper imported from Russia. With the tea imported from India, we could make 3 million barrels of tea. And conversely, over 100,000 tons of Dal Makhani could be prepared with lentils exported from Russia.

Currently our share in the Indian market is about 16%, and we would like to increase it to around 30%. It seems like an optimistic and ambitious plan, but I am confident that we can reach these targets. Firstly, FESCO provides one of the very few, and I suppose the fastest direct services from India to Russia. We have two legs of the service – Novorossiysk, and another one to St. Petersburg.

And now we are working towards the development of a direct service from Indian ports to the rest of Russia via Vladivostok, to cover all possible final destination points inside Russia. This is important, since our country is big and a majority of customers are not situated in locations close to the ports that I mentioned. A majority of them are inside the country at inland points. So we can provide integrated railway and sea logistics from and to India.

You will observe the same situation in India. So for the near future, we have agreed with the agent to develop ICL points, and to use the Indian network of railways to cover all interior locations within the country. It helps us provide some additional value to customers and get closer to their warehouses to provide door-to-door services. So we expect and hope that these points, as I mentioned, will help us increase our share of the market.

India Business & Trade: How do you view the outlook for India-Russia trade and what factors will drive its growth in the coming years?

Andrey Grechkin: It is a very, very interesting question for us as well. We only try to predict it. Certainly, we can agree that all things on the surface are already taken care of. Oil and natural resources trade has increased. And currently, we are in a situation where we should find additional commodities to balance the trade. It is not a secret that Russian exports of natural resources to India are much bigger than vice versa. And we should balance that movement of money on one side and commodities on the other.

For example, in my sphere of foodstuff transportation, we have a completely opposite situation because outbound volumes from India are much bigger. Actually, we have one way trade from India to Russia. Nothing comes in reefers backward.

To balance and provide the market better rates, we should decrease empty positions. There are few possible ways of doing that. We can use these reefer containers in non-operating mode for transportation of packaged cargo, which is not normally needed to be transported in temperature mode.

We should think together using some association, expert association in both countries, what we can export from Russia, and what barriers we should bring to balance volumes. One possibility is the development of exports of Russian meat and fish. Russia is one of the biggest exporters of fish globally.

So we can find solutions for taking these products of frozen fish to India for inner consumption or for processing. Nowadays China is the main factory, let’s say, to process wild Alaskan Pollock and calamari. All these commodities could be also retargeted to India if we get a positive response from Indian processing companies and traders. And volumes are significant of up to 2 million tons annually for this type of commodity.

Also, now step by step, the pork export from Russia is developing inside India. And this is a good field. There are no restrictions or barriers, tariff barriers to do it. Now if we’re talking about outbound volumes from India, we face very good volumes of grapes, which are transported from India to Russia.

We provide two major advantages. The first is our transit time, which is the shortest at the moment in the market. We are providing 15-17 days from the main Indian ports to Novorossiysk and about 23 days to St. Petersburg. And another thing, we provide only brand new containers. Our reefers are upto three years old in the Indian market and this is a very important thing. We need to look to ensure that such sensitive products like grapes will be transported safely.

We see other fields of development – seafood transportation, frozen squids and other seafood production transportation some other fresh and frozen fruits. But we should try together to find new commodities to increase our volumes and more importantly balance. It will give us the ability to provide better rates.

India Business & Trade: What is your view on the potential of banana exports from India to Russia, which is being considered an attractive proposition?

Andrey Grechkin: The prospect for development of banana trade from India to Russia is indeed huge. First of all, India is the biggest producer and consumer of bananas in the world. That is why Indian farmers are not oriented towards exports. They are not preparing containers properly for the launch. This is important considering the short shelf life.

When we visited Mumbai a few weeks ago, we had some meetings with Indian traders and provided them the full list of requirements from Russian buyers to understand if they can follow these requirements. In that case, we can multiply the volumes because Russia is also a very big consumer. There could be a maximum volume of 2,000 physical containers weekly to Russia. So even a small share of these volumes could affect the existing trade very much.

India Business & Trade: Fruits and vegetables typically face the challenge of long transit times via sea, especially towards distant destinations like Latin America, for example (in the case of India). What key recommendations would you like to provide for such shipments?

Andrey Grechkin: The main advice I will give is to use direct services without transshipments, especially in unpredictable countries. In fact, our main advantage is that we provide direct services. Certainly, there are some commodities, which are unsafe to transport using sea transportation. For something very sensitive and with a short shelf life, there is no sense to risk the cargo. If you should use air transportation you have to do it, but in general we are quite sure that if we commit 15-17 days of transit, we will follow it.

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Andrey Grechkin is CEO, Dalreftrans LLC, a leading reefer operator and part of Fesco Transportation Group. Dalreftrans is currently the largest operator of refrigerated container transportations in the Russian Federation (total volume >33 000 TEU per year). Andrey completed his education from the Russian University of Transport, Moscow in 2004. He has experience of over 20 years in logistics of perishable goods. He joined the Fesco team in 2018.