VII International forum
“Marine Industry of Russia”
Hotel complex
Department of affairs of the President of the Russian Federation

Moscow, 24, B.Yakimanka Str
24-25 May 2017
Forum bulletin

More on trading companies in the marine industry

Epoch when boats, dragons and galleys were constructed and rigged on site has passed. Canvas for making sails, hemp for ropes, timber for ship hulls and oars – all of these could be produced on the spot without need to go somewhere. In the course of the evolution, the ship design has sophisticated incredibly, some materials used in ship construction were replaced by others, and the equipment totally renewed. In the Middle Ages, shipbuilders had to purchase lots of materials both in the inner regions of their homeland and in other countries. And it is notable that they were looking toward purchase of materials and primary products, while performing construction in the homeland. Naturally, they could not roam looking for the needful – commerce is the business of merchants. Later, enterprises emerged which engaged only in trade of ship construction and repair materials.

This trend was gathering pace and now we have a great number of commercial enterprises specializing in delivery of ships, ship and port facilities, special-purpose machines. It is not surprising at all. The necessary equipment is often produced at the far end of the country or by several enterprises. Sometimes, necessary production can be purchased only abroad or even overseas.

There are trading companies delivering products of various manufacturers and offering variety of goods. Some of them selected to be highly specialized and became single-brand companies or they specialize in a certain class of equipment, for example in ship power plants or port facilities. Taken as a whole, the number of trading companies in the Russian marine industry amounts to thousands.

Russian Market

Major manufacturers of ship and port facilities often open own trade representations or grant the right to sell their production to authorized dealers and distributors. The general distributor have the powers to arrange dealer net independently. When buying at the trade representative, customers gain such an advantage as the guarantee of product quality and aftersales service. Another advantage is a flexible settlement system for purchased machinery, bonuses and discounts.

From the 90’s of the XX century, there has been a trend of purchasing onboard and port equipment for the Russian civil fleet abroad. Foreign industrial manufacturers did not lose such opportunity and have opened scores of representative offices in our country. As for Russian enterprises, they were under severe shortage of funds for a long time, and only at the moment, return to the acceptable level of turnover. The return was favored by the world depression favored.

Although many Russian manufacturers perform direct delivery of their products (without any mediators), they increasingly engage trading companies for marketing such products and create own subsidiary marketing units.

Altogether the sales volume in the shipbuilding industry were growing till 2005 with a downturn after that. And currently, the situation improved.

The structure of the sale of ship facilities, equipment, parts and so on is not uniform. Traditionally, 2/3 of the whole sales volume falls at provision of government orders, war shipbuilding and ship repair, auxiliary and commercial fleet. And only small share of the specialized production is used for satisfaction of the national civil shipbuilding demand. The highest figures for a long interval are 10%.

In 2007, the Ministry of Industry and Energy of the Russian Federation issued order #354 adopting the Strategy of Development of the Shipbuilding Industry for the Period until 2020 and further. The document states that “annual potential losses in sales volume will amount USD 600-1000 mln.” which can be explained by many objective causes. It is noted that the annual volume of external sales in the war segment of the shipbuilding industry amounted to USD 1 bln. (Russian quota on the world market is 20%) but it can grow 1.5-2 times. It is also stated that by 2010, the overall production (that is the sales volume) was to grew 1.5 times, too.

Naturally that under conditions of extremely fierce competition on the export market, the sales volumes cannot grow in the absence of inland sales. The growth outlined at the moment is in no small part conditioned by government purchase orders for ships and their equipment (mainly of the ice class) including facilities for development of the continental shelf.


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By: “Ideological buiseness-projects”

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