Tekhnovita, a construction equipment distributor based in the Russian city of Samara on the banks of the Volga River, is fighting for its survival. Ms. Varzhitskaya’s next stop was Kyrgyzstan.
The 32-year-old said, “No one is putting their hands down or giving up. Maybe the quality of the products we bring in is bad and the prices are high, which will affect inflation and prices, but jobs still are.”
Russian businesses are scrambling to find new suppliers and changing products and processes to adapt to sanctions imposed by the West following Russia’s invasion of Ukraine in late February. Shippers are rewriting routes, and importers are grappling with delays.
“Yes, war is bad and people are dying, but how do we affect it?” Ms. Varzhitskaya said. “We have to work, we have to feed our families, and everyone is trying to find ways to solve this that will satisfy everyone.”
The sanctions are expected to push the Russian economy into a deep recession, further straining the country’s businesses. According to the International Monetary Fund, the country’s GDP is projected to decline by 8.5% this year, the biggest decline since the early 1990s. According to the Moscow-based Association of European Business, data released last week showed new car sales, a key indicator of consumer sentiment, declined more than 78 percent year-on-year in April.
Inflation has risen in Russia and many foreign-owned businesses have closed. But the stock remains largely on store shelves and the job losses have been minor. The situation is likely to worsen as restrictions are in place and businesses burn through inventory.
IMZ-Ural, the reputed manufacturer of sidecar motorcycles used by the Red Army in World War II, ceased shortly after the war began. “We were hit from both sides. We couldn’t get anything in and didn’t take anything out,” said Ural chief executive Ilya Khait.
Ural exports 95% of its production and imports 80% of its components, including shock absorbers from Italy, fuel injectors from Japan and brake parts from Spain.
The company is scaling up production with some 150 of its employees to a new assembly line from Irbit in Russia about 360 miles southeast of Kazakhstan. “It is ambitious, but we look forward to restarting production by August,” Mr Khait said. “As it looks now, it’s unlikely we’ll go back to Russia, but we won’t have to go any other way around it.”
For companies that can buy supplies, actually getting them is another challenge. “The old routes that were drawn in pencil on the map are becoming practical,” said Mihail Markin, head of business development at Major Cargo Service, a Moscow-based logistics company.
The company, which works with more than 2,000 customers in Russia, has seen imports drop by 50% to 70%, depending on their origin. Approved goods are not being received, but deliveries of other products such as clothing and equipment are gradually increasing as the ruble has stabilized and logistics companies are looking for workarounds, he said. Russian companies that rely on approved parts are also starting to place new orders after switching to suppliers in Russia-friendly countries, Mr Markin said.
He said supply routes are often more complex, longer, more expensive and have less capacity than previously thought. Customers want more details about their products journey. “They want to look at the map and for you to tell them how much each phase will cost,” Mr Markin said.
Instead of using trucks that cannot cross the Russian border, cargo is now loaded onto ships in Italy or other South European ports, transported to Turkey, reloaded on Turkish ships which make it through the Bosporus. Delivered from the port of Novorossiysk, Russia, and picked up there by truck, Mr. Markin said.
He said another solution is to load cargo onto trucks in Europe, transfer it to trains, which can cross the border, transport it to major cities and return it to trucks to reach its final destination. can be placed.
The cost of imports from Europe has nearly doubled, he said, and shippers no longer offer long-term prices. “Here’s the price by the end of the week,” he said.
Asian routes are slowing down, the port of Vladivostok in Russia’s Far East is becoming more active, and the Trans-Siberian Railway is loading, he said. Russian trucking companies are moving to China and other Asian countries, Mr Markin said. Overall, the cost of transportation from China has declined since February, he said, but the delivery time is less predictable.
Demand for Alta Roma coffee in Russia has soared as other suppliers such as Lavazza have pulled out. But getting coffee into the country is slow and expensive, said Francesco Capobianco, co-owner of Russian-Swiss coffee roaster Almafood, the brand’s parent company.
Alta Roma imported between two and three containers in March and April, less than the usual 10 per month, Mr Capobianco said. A container was stuck in Istanbul for 20 days in March. Truck shipments from Europe, meanwhile, cost the company about 12,000 euros per container in April, up from 4,000 euros before the war in Ukraine, he said.
The stock of the company will expire in June at the current rates. If the coffee supply doesn’t improve, Russians will “drink tea, or chicory, or barley, or vodka,” Mr Capobianco said.
When the ruble fell after the invasion, healthy foods maker Fit O’Clock saw a sharp increase in prices. The company’s co-founder Elena Tihonova said that the price of zucchini increased almost nine times and the thermal labels used for the packages increased by about seven times.
The company replaced some of the cardboard packaging with stickers, which cost 40% less. It cut out middlemen from some transactions, dealing directly with Indian and Turkish suppliers of chickpeas and lentils, which it uses for its meatless cutlets.
It faces a major challenge with its production machines, most of which come from Germany, Italy or Japan. They require maintenance and Ms. Tihonova doesn’t know what happens if one of them goes bad. He said that the sugar substitutes are of substandard quality.
“It’s like shifting from a comfortable BMW to Cherry,” the Chinese car brand, she said.