The secrets behind FM Logistic’s sparkling success in Russia

Last year, FM Logistic celebrated its 15th year anniversary on the Russian market, a fact that is now reflected on the company’s new logo. If briefly put, how would you characterize these past 15 years?

It has been a passionate experience. FM Logistic Group had the chance to be a pioneer in the development of modern logistics on the Russian market. Fifteen years ago our Group decided to believe in the Russian market and commit serious investments, with the construction of the country’s first ‘Class A’ international standard warehouse in the Moscow Region in 1998. That was the year, when Russia was hit by crisis, but even then FM Logistic continued to believe in the need for developing modern business solutions for the fast growing Russian market and modern distribution facilities.

Today, we have reached maturity in Russia, with eight logistic platforms in the country, offering developed transport, customs and co-packing solutions to our clients. These are the results of our strong will to be a leader with a good reputation on this market.

Undoubtedly, FM Logistic has achieved many sparkling results over these years in Russia, including being a pacesetter in several segments of the industry. What factors, in your opinion, have helped the company achieve such successes that have made it what it is today on the Russian market?

We have always split our approach into two parts: our experience and specific market conditions. Indeed, FM Logistic has over the years acquired lots of experience in various sectors of its activities. Most of the warehousing processes applied in our Russian platforms were initially launched on the base of our experience in other countries with the same products. Our very good knowledge of FMCG products, cosmetics, food, hygiene, retail, etc. makes it rather simple for us to adapt it to meet new demands. The second aspect is to transfer this knowledge from theory and adapt it specifically to Russian conditions. And, here, of course, our experience and knowledge of the local market are the key elements for developing this service successfully.

Adaptation has to be made, for instance, for customs, 'russification' of goods or specific local transport and distribution requirements. You need, for instance, to integrate very specific documentation flows in accordance with the legal requirements and use so-called expeditors. As a result, the service provided in Russia is tailor-made. Today, FM Logistic employees come from all over the world to Russia to study our work model and see how they can use it for developing new business services and solutions in their respective countries. We are proud to show them our successes and support them.

As a way of comparative analysis of business profitability, how would rate the Russian market vis-a-vis other key foreign markets, where FM Logistic has operations, both in Europe and globally?

In general, it is rather clear that most European markets are much more developed with lots of active players. It is much easier to operate on these markets, but cutthroat competition has made it very difficult to maintain a high level profitability, especially if one is not inventive or creative enough. Here, the risk/profitability ratio is much lower than in countries with fast growing markets. Even if this is a logical general trend, the Russian market is much more unpredictable, because only few companies currently provide logistics services in the country. 

Fifteen years ago, almost all the international companies saw Russia as a huge potential market, but the question today is have these companies invested in it? The answer is no. Indeed, none of the three major international players has done so, and consequently, most of the market development was done by local Russian investors. Today, it is clear that the decision made by FM Logistic to invest in new and fast growing markets, such as Poland or Russia 15 years ago, was the right choice to ensure fast growth of our business.

Despite the successes of the past 15 years, it would be wrong to assume that a company as highly ambitious as FM Logistic would now rest on its laurels, leaving things to forces of inertia. In this context, what are the plans and strategies to maintain the company’s niche on this market?

Today, we still have the same spirit as we had 15 years ago, and that is to keep growing, developing and continue to be a key and exemplary company on the market. With the arrival of competitors, everyday has become more challenging, and this strengthens our willingness to become even stronger.

The key word is to develop new ideas and concepts that are fully adapted to Russian market’s needs. Here, we have to be inventive, and we can do this by using the experience we have developed over the years in other countries and adapting it to the specificities of the local market. These ideas include transport services, copacking and, in general, the ability to find new ways to offer built-to-suit solutions adapted to all clients’ specific needs, as well as the optimization and combination of different data flows. 

Working in a logistics world, which is an exceptionally internalized process, we have to be extremely inventive in order to convince customers that an external logistics services provider, such as FM Logistic, can bring more savings and added values to their companies via its advanced solutions. With regard to company’s development, I believe that any growth has to occur smoothly so that it can be adapted to the evolution of the market and clients’ needs. Today, we have been able to achieve this by developing true partnerships with our existing clients and potential customers, and this enables us to foresee clients’ needs and new market trends much in advance, and thus, avoid having empty warehouses. We will continue to use this approach.

When speaking about the global crisis and its negative impacts on businesses, what key lessons would you say you learnt during the recession and, how, going forward, will they enable you to best position the company for tackling similar challenges in the future?

I must say that FM Logistic did not suffer seriously during the crisis, at least compared to our competitors in the industry or with companies in the other sectors of the economy. The main reason for this stems from our long-term vision in our business strategy and the excellent relationships with our customers and partners.

During the crisis, we initiated an open dialog with each of our customers in order to hear from him/her how we could help him/her better go through the crisis with most minimal losses and reduce the difficulties it could create for both of us. Thus, we were able to find anti-crisis solutions, specially adapted to individual clients, which enabled us to pass through this difficult period as smoothly as possible. At the same time, all our customers knew they could always rely on us to adapt our services to their specific needs at any time they would need such support. 

This fair, long-term relationship is very important, as both partners are always open and ready to discuss common problems and support each other in times of difficulties. It provides the required stability for all the parties involved in such partnerships.

The level of competition in your industry is very high, a trend that is likely to increase further as we finally exit the current crisis. In this context, what would you say are your company’s main competitive advantages over other key players on this market?

Our approach is based on clients’ satisfaction and excellence. This requires a constant search for ways for further improvement of our business processes, the results of which is the establishment of true long-term relationships with all our clients. This approach helps explain why most of them have become our loyal customers, as they fully know that FM Logistic is a reliable and attentive partner that can offer tailor-made solutions to each client’s needs. Our wealth of local and international experience, accumulated over the years, is our key element for developing and executing new business projects. It gives us the real know-how in specific business sectors, where we have strong experience in Russia, as well as newer directions, where FM Group’s unique knowledge in business processes offers a solid foundation for new developments.

Our next question is about your company's famous corporate name, ‘FM Logistic.’ I must note that it is not etymologically transparent to people outside your industry. So, the question is what do the letters, F and M, in the name stand for, and how has this name come to represent one of the most globally recognized brands in your industry?

It all started in the 1960s, when two families, Faure and Machet, decided to set up a company in the eastern part of France. The company was named ‘Faure & Machet,’ a brand name that it used in its earlier years of rapid growth in France. But when the company started its internationalization, the ‘Faure and Machet’ brand name was, for simplicity sake, changed to ‘FM.’ Today, though FM Logistic is now an international group, represented in 12 countries, from Spain to China, it is still an independent entity owned only by these two families. This was an important aspect in the adoption of the company’s long-term strategy in early 1990s to invest in Russia.

Then FM Logistic shareholders had a dream and the courage to go eastwards to Russia, and from here to China through the Trans-Siberian Highway. While today other large corporations are still contemplating on whether or not to exploit this new business opportunity, FM shareholders have simply realized their dream, putting in all the efforts necessary to success- fully accomplish this challenging mission. 

This has been our approach for many years, and today we have no reason not to continue to use this successful method to achieve our other ambitious objectives in new countries and new markets. For instance, a new project in the health sector was launched by our Group this last summer on the international markets. We plan to launch the Russian version shortly.

It is often said that successful businesspeople sacrifice a lot – hobbies, time for family members and friends, etc. – to attain their set corporate goals. Do you agree with this assertion, and if not, how do you manage to efficiently balance the delicate equation between corporate needs and other life necessities?

I have always had enough energy to keep me very active in both personal and corporate lives. Being constantly and actively involved simultaneously in different projects helps me avoid being bored. Indeed, this is what I like best in running a company in Russia, because it is a country that is in a constant motion, moving at a very high speed. This requires one to be mentally and physically alert and maintain a ‘fighting spirit’ around the clock. This is how I organize my life, and I like it this way: that is constant challenges, both for me and my team. We are all united by the same spirit; we all want to succeed and it works.