LOGISTICS TO RUSSIATurning challenges into competitive advantage

St. Petersburg

Dnepropetrovsk

Kharkiv

Cheliabinsk

Tashkent

BishkekAlmaty

Minsk

Lvov

Odessa

Donetsk

Urumqi

Aktau

MoscowRigaKleipeda

Kiev Novorossisk

Russia Kazakhstan Ukraine Belarus Kirgizia Uzbekistan Baltics

Office since 1993 1998 2000 Repr: 1999Off: 2009

2000 Repr: 1996Off: 2010

1995

Number of offices 4 2 6 1 1 1 2

Customs license since 1997 1999 2003 NA 2001 NA 1995

Headcount general 312 42 105 5 6 5 23

Headcount customs 24 3 6 NA 2 NA 2

Ahlers presence in CISAhlers in a nutshell

Ahlers in Russia Today

– Opened first Russian office in 1993

– Own 200.000m2 landplot with 44.000m2 warehouses in St Petersburg

– Licensed customs broker and specialized import structure through Ahlers’ RusImport

– All-round logistic service provider

Russia 300

people

Ahlers in a nutshell

Top 3 challenges In 15 minutes

• Transportation

• Customs formalities

• Documentation

1

2

3

9

11a11b

10

18

Russian import declaration

4 5

67 8

12 13 14 15

16 17

19

General 1 Supplier 2 Importer3 Transporter4 Amount of different positions5 Amount of packages6 Delivery terms7 Contract currency and amount8 Exchange rate used9 Location customs area10 List of docs provided to customs

Position Specific11a Product description11b Location and package description12 HS customs code13 Country of origin14 Gross weight15 Net weight16 Quantity and unit of measurement17 Customs value18 Customs tax for whole shipment Duties/VAT for specific position19 Total tax/duties/VAT for complete declaration

CUSTOMS

1) Transport

1) Transport• Groupage shipments

• Dependency• Transit times

• Full trailer loads • Weight limitations• Truck possibilities• Transit times

• Containers via Baltics/St Petersburg/Novorossisk• Weight limitations and opportunities• Transit times and congestion

• Railway• Place of customs clearance• COC vs SOC containers

• Airfreight• Express, small and big shipments• Transport vs customs speed

Transportation

Transportation

The real challenge on transport to Russia

Is only rarely the actual transportation!

2) Customs / DDP deliveries

- Customs authorities require detailed information when products are to be customs cleared

- The importer carries legal / financial responsibility for the correctness in the import declaration, certification and product specifications

- Importer can file for customs herself, or work through a customs broker that represents the importer towards customs

- Customs has the right to ask for additional documentation during, and after, customs clearance

2) Customs / DDP deliveries

Supplier

BORDER

Sales contract

Client (importer)

Customs

- Licensed organisation that represents importer towards customs authorities

- Bank guaranty of RUR 50mln (>EUR 1mln)

- Competence requirements

- 3 violations = lost license

- Joint responsibility for correct declaration

Supplier

BORDER

Sales contract

Customs contract

Broker

Client (importer)

Customs2) Customs / DDP deliveries

- A broker company can practically not act as fiscal representative of supplier

-

- VAT issue plus book keeping challenge Client- Responsibility towards customs carried by Client

anyway

- So there needs to be an importer when you ship your products to Russia

Supplier

BORDER

Sales contract

Client (importer)

Customs contract

Broker

Customs2) Customs / DDP deliveries

In case customers ask for DDP deliveries, this usually implies they expect to receive already import cleared products in a local Ruble contract.- Commercial deliveries- Free of charge guarantee deliveries- Free of charge sample deliveries

Supplier

BORDER

Client

Independant import partner

Sales contractSales contract

Own officeCosts, knowhow, priority,

currency risks, legal

Distributor, agentPricing, marketing, dedication, trust

Customs2) Customs / DDP deliveries

3) Product descriptions / customs codes

• Technical information required is similar to what you use for most other countries in the world:- Name/model/details of the product- Gross, net weight, value per item- Producer details and country of origin- Technical description / content (in Russian)- (Russian) HS customs codes

Solution

Detailed technical description is required to define Russian HS code (including material, exact use etc)

Challenge

Russian HS customs codes are partly picked on other criteria than HS codes in Europe (parts are defined separately from machinery)Substantial costs (import duties, certification) based on other HS codes

3) Product description

Your customer might ask many questions – have patience

Documentation

3) Product descriptionGeneral information Reference number:

Producer name:Producer addres:Producer phone number:Model:Name:Country of origin:European HS customs code:

Physical characteristics Gross in KG:Net in KG:Dimensions, mm

Material (in %):Only indicate for single material small spare parts

Picture/technical drawing:

Link to digital version of related documentation

Description of the product:

Function & Purpose of product:

Documentation

Technical description /

brochure

Customs codes

Translation to Russian

Define Russian HS code

Objective info on:

- Involved import duties

- Certification requirements

- Other product specific aspects

Documentation

(Was allowed to touch 3 subject only)

Certification

Most international quality standards are not recognized by Russian authorities

Implying that often local certification is required, both for import and actual use

If import certification is mandatory than no certificates = no customs release

Certification can be obtained through testing of samples or through provision of technical documentation or contents to authorities, depending on certification

Standard certification usually obtained in 1 – 2 days, other certification up to 3 – 6 months.

CertificationDocumentation

Any questions?

Please feel free to contact:

Wijnand Herinckx

Wijnand.Herinckx@ahlers.com

+7 915 000 5234

Living in Moscow, regularly in Benelux.

Finished :)

CUSTOMS

In all cases, there must be an importer that is willing to custom clear the goods (and carry responsibility for its specifications)

Formalities are different depending on value of your shipment

Customs value

- up to EUR 200- up to EUR 1000

- up to EUR 50.000- exceeding EUR 50.000

Customs value = FCA value + insurance + transport costs till border of the products placed into 1 customs declaration

Customs requirements are partly based on value