For a selected developing nation, critically analyse transport and logistics development: balanced, equitable economic growth or fast track consumer enclaves - Coca-Cola, McDonalds, etc. ?
1 LOGISTICS
The first centrally planned economy was created as a result of Bolshevik coup in Russia (October 1917). The command economy was a monopolistic system with Soviet industrial enterprises operating with a single-supplier policy and centrally distributed basic producer goods. The Soviet structures were taken apart in 1990-1992 as Soviet Union collapsed.

However, the problems of the Soviet times have affected recent economical developments and therefore those problems should be looked at. The big problem of Soviet industry was poor delivery performance record. For example, in 1990 almost 25% of Soviet industrial enterprises broke at least once their promises for delivery to customers. At the same time there were many plant stoppages and even shutdowns (Rodnikov).

The Soviet heritage within the logistics industry also consists of lack of understanding of supply chain�s objective. There was no customer focus in USSR and even few years ago, supply chain as a whole was not thought of as means of supplying products to meet needs of customers.

However, already logistics is becoming a more recognised socio-economic force in Russia. By challenging price increases and encouraging competition between sellers, logistics has direct impact on costs and prices, together with anti-monopolisation process within Russian economy.

The following example of food distribution follows Soviet-type supply-chain and warehousing example shows inherited problems of Soviet/Russian logistics.

EXAMPLE: FOOD DISTRIBUTION
After the collapse of the Communism, food supply has become an important consideration, both politically and economically. At the beginning of the emergence of free market, food supply situation has worsen significantly. The problem was shortage of food with three factors creating it: break up of Soviet Union, decline in agricultural output and logistical inefficiency in food supply chains. Up until few years ago many products were unavailable outside their region of production.

There were 3 characteristics of Soviet food supply chains: large scale, centralised control and lack of competition (Taylor). Within the command economy, most of the food for main cities was supplied through small number of big organisations. For example, bread supply chain in Moscow consisted of 5 mills (supply of flour), 24 large bread factories and 38 small bakeries (bread production). Another example would be St Petersburg, where only 3 meat processing factories served the whole city�s needs. In these examples, transport of product through the chains was undertaken by small number of state owned transport companies.

As planning and control of supply chain was given directions by state planning authorities in Moscow, so the whole structure of chains was vertically hierarchical to Moscow. Again, communication on the vertical level between enterprises was poorly developed and the whole system by means of its design was non-competitive.
Even after the break up of the Soviet state, main bulk of food was supplied through these large scale supply chains. However, there were two changes within supply system: (i) the old political and vertical feature of the system became non-operational (ii) individual enterprises within supply chain were encouraged to act as commercial firms in free market.

As the central state planning agency no longer determined production volumes and movements, the control of supply chain got transferred to managers of enterprises who lacked experience.
However, with the recent western interest in Russia came the new technology, new ideas, training and capital which developed the supply chains significantly if only within the urban regions in Russia.

WAREHOUSING
The most developed and urbanised place in Russia is Moscow, therefore it is understood that if there are persisting problems within warehousing business in Moscow, then those are the same problems that continue everywhere.
The whole logistics sector in Russia is still in its emergent stage, mostly because of traditional order of investment markets development, so that logistics is only looked at after office and retail sectors have developed.

Russia�s warehousing is characterised by large stock of out of date buildings. In Moscow there are 2.1m m² of warehouse stock - out of which 1.5m m² is unimproved Soviet-time space with insufficient loading capacity, and only 400,000 m² of the whole stock is up to international standards.

The forecast for warehousing market states that in 5 years time there will be 800,000 m² of unimproved stock (with rest of it having gone out of service), therefore additional demand will have to be met by new projects

2 TRANSPORT
During the last few years, the transport economic development program was fulfilled only by 15-57% (The Economic Development and Trade Ministry of Russia), resulting in possible future problems with transport. The latest problems within transport system, as stated by the same Ministry in its 2003 report, are:
The funds for all types of transport get renewed only by up to 70% at the most, meaning that the current financial mechanisms in use are not satisfactory.
Insufficient level of industrial and regional coordination in development of transport infrastructure, resulting in non-rational waste of resources and decrease in transport effectiveness.
Transport technologies are not up to the international modern market standards.
Level of IT use within transport processes is low, resulting in obstruction for integration within communication system.
The opportunities of geographical position of Russia are not used (for example, transit cargoes between Asia and Europe).
Not enough academic interest for development of transport system.

All in all, the control over transport system lacks collective and cooperative approach as during reform time transport was not looked at as unified object of state control. The first programs of transport planning after the collapse, had regional approach and at the same time had lost its centralised control feature. However, some of the organisational structures and economy mechanisms of planned economy have survived. State participation within transport industry is still in excess. All this leads to Soviet-time problems becoming more severe as more and more problems arise due to the lack of funding.

ROAD TRANSPORT
Development of roads in Russia does not correspond to the level of auto mobilisation of the country and to the socio-economic needs of government and population. Lack of sophisticated roads is a traditional problem for Russia, but with the new market reforms this problem became even more severe. Underdeveloped road network has had negative effect on economic growth, preventing expansion of regions rich in natural resources. At the same time, rapid growth of auto mobilisation added extra problems by creating congestion. Over 1/3 of federal roads work at the overcrowded level, adding up to the goods and services pricing and reducing competitiveness of Russian products (Ministry of Transport of Russia). Russian roads also have low density, meaning that there are 1.7 million km of road in the CIS (the ex-Soviet 15 republics), which is just over length in France and also 3.5 times less than length in USA (Taylor).

However, not all the news are bad - truck transportation within Russia grows 3-4% annually and auto transport has become very useful in some of economic sectors - servicing agricultural business and taking cargo short distances (Interfax News Agency Business Report, December 10, 2002). Transportation of cargo by road has increased to 27% of overall transportation in Russia (moving of foreign goods grew by 12 times in the last decade). But the problem with increased cargo-hauling is that the cargo-moving increases 10-20% annually, whereas roadway capability grows only by 5%.

From the western countries experience growth of auto transport�s share in national transportation nearly equals growth of GDP, therefore economical development in Russia will coincide with growth in auto transport use. This will bring even more congestion, destruction of road cover and high level of pollution near industrial centres, increase in transport costs and therefore increase in product prices (Ministry of Transport of Russia).

RAIL TRANSPORT
The road mode in Russia is the most important one (see Appendix), however, the average haul for it is only 21 km as over longer distances rail transport is used. Especially so in case of food (see the food distribution example) as 62% of farm production and all imported grains use rail, with average haul of 1,240 km (Taylor).
Rail is always likely to be important in Russia because of the long distances which separate areas of production and consumption.

Russian railways are very highly used and with the general state of those railways being poor, it creates capacity restraints. In addition there are more capacity restraints during harvest time, therefore resulting in lost of products harvested due to spoilage (while awaiting transport).

The length of railways in use was 86,000 km in 2002 (Transport Ministry of Russia) - which does not correspond to demand and as a result, rail transport looses business to auto transport. However, rail transport still have no competition in directions of Siberia and east as it is the only mode of transport available.

SEA TRANSPORT
Sea transport is mostly used for international trade, with 60% of international trade goods moved by sea transport (Transport Ministry of Russia) and for transport to far North Russian regions (evidence of under use in Appendix). Over 90% of Russian international trade is shipped by foreign vessels, as most of the Russian ships are privatised and are being used outside Russia (no statistics available because of this). However, Russian fleet is getting old and therefore faces the same problems that world fleet does.

Rate of development of Russian transport infrastructure is insufficient. In 3 last years, $24 m has been invested into developments of few Russian ports; that figure can be compared to $40 m investment in Iranian port Amirabad. Because of the poor state of most of the Russian ports, 25% of Russian exports have to go through foreign ports.

3 CONCLUSION
It can be said that Russia is similar in some aspects to China - in a way that both countries have developed since the transition. As in the case with China, Russia has two speed economy. The fast track corresponds to the urban and western side of Russia, where the first wave of western and eastern imports has passed and Coca-Cola became an ordinary, everyday object. The slow track relates to the rural and/or eastern side, where it is still hard to believe that Soviet days have long passed and imports that are seen are of a poor quality.
The McDonalds restaurants came to Russia in 1990 and since then had grown to 104 restaurants in 30 cities, with most of the cities being in western part of Russia (McDonalds Russian website).

The modern-western Russia is very much on the balanced and equitable economic growth path, with Moscow in the lead. However, the differences between the rural sites of Russia and those of Moscow are so noticeable and evident that the standard joke is �embassy of Russian Federation has been opened in Moscow�.
It has become something of a circle with urban areas being already much more developed than rural and therefore more investments, labour and imports coming again to the urban part.

Many rural regions have problems with maintaining a year round transport network, as the state of the roads does not allow any sort of communication in winter and early spring times. At the moment, about 40,000 settlements, with over 10 m people living in them have not got annual access to road network (Ministry of Transport of Russia)

Even after the initial crisis and despite country�s strong economic since 1999, one of the continuous problems is that economy growth has been uneven. Some poor geographical regions and population (mostly from these regions) keep falling further behind the more superior regions (The World Bank) .
The other problem is the ageing of logistics resources throughout the country, resulting in various obstruction to the much needed trade and economy growth.
The transport systems are mostly out of date, however there are improvements on all modes of transport. Progress is slow to come but it is a cumulative aspect - meaning that it is becoming easier to keep up good road conditions, vehicles state, etc., once the main changes to the old types have been completed.
As an index of current improvements in food supply and transportation McDonalds restaurants in Russia can be used. Today, McDonalds gets 75% of it supplies from Russian firms and farms and as the company states, the fresh vegetables have to be consumed within 7 days of production, meaning that Russian farms are not only up to the world standards but also that the better use of transport system makes deliveries like that possible (McDonalds website).







APPENDIX


Volume of cargo transported (million tonnes) Year 2000 Year 2001 Year 2002 Year 2003 forecast Year 2004 forecast Year 2005 forecast Year 2010 forecast

RAIL TRANSPORT 1042.6 1091.2 1145.8 1208.8 1269.2 1326.3 1533.3

AUTO TRANSPORT 5379 5400 5600 5900 6100 6300 7000

SEA TRANPORT 102 105.1 108.2 111.3 114.5 117.6 147

INTERNAL WATER TRANSPORT 117.5 122.7 127.8 133 139 145 230



Source: The Economic Development and Trade Ministry of Russia (2003)



REFERENCES
- Estates Gazette (February 1, 2003) �Soviet values still haunt industrial market�
- Interfax News Agency Business Report (December 10, 2002) �Number of cars in Russia increases 8% a year�
- Korukin K. (September 8, 1998) �Warehouses Struggle to Cope With Inflation� The Moscow Times
- Lagnado A. (August 2, 1999) �Russia signals a new food crisis� The Times
- Rodnikov A.N. (1994) �Logistics in Command and Mixed Economies: The Russian Experience� International Journal of Physical Distribution and Logistics Management vol.24, number 2, pp.4-14
- Taylor D.H. (1994) �Food Supply Logistics in the Russian Republic� International Journal of Physical Distribution and Logistics Management vol.24, number 2, pp.15-22
- www.economy.gov.ru - The Economic Development and Trade Ministry of Russia (accessed on 1st of November 2003)
- www.mcdonalds.ru (accessed on 1st of November 2003)
- www.mintrans.ru - The Ministry of Transport of Russia (accessed on 30th of October)
- www.worldbank.org (accessed on 3rd of November)