Market Know-How: Lost in Relocation

The moving services market in Russia is growing rapidly, albeit unevenly. A great number of companies operating in the sector are ready to meet the requirements of any client. Along with international moving companies offering top quality services, but at sky-high prices, there are a multitude of ordinary carriers who attract clients with affordable prices while the quality of services is hardly the main criterion.

Key Players

The first step a company takes after deciding to relocate is to find a moving company. That is quite easy because extensive information on firms and individuals offering relocation services is available on the Web and in the media. What is most important is to figure out what goals the company pursues by moving to a new office or another district. In some cases, a group of guys driving GAZel trucks will do. Local papers and websites are full of ads offering the transportation of goods from offices, homes, etc., within the city limits and beyond. Many companies offer relocation abroad.

The first companies to enter that market were foreign firms, or, to be more exact, the branches of leading Western networks of movers. They appeared here in the 1990s and immediately secured leading positions on the market, which is quite understandable since they hardly faced any competition in those days. Today the competition is growing stronger as their Russian rivals have proved to be quick learners.

For the time being, international moving companies still retain the lead. They are Voerman, Allied Pickfords, Ace International Moving, Crown Relocations and others. There are a number of reasons for that: experience gained over decades of work, developed know-how in packaging and transportation, high quality service, and the conservatism of consumers. Unofficial statistics are available to show that up to 70% of clients satisfied with the quality of a service use the same company again. Leading domestic movers began their operations in the late 1990s but the real influx of Russian firms began in 2000.

Tatiana Gromak, head of marketing at Delikatny Pereyezd (Delicate Relocation) believes that all the players active on the professional relocation market fall into several categories. They are branches of Western moving firms, Russian companies and companies catering for individuals and small businesses.

Numerous individual carriers make up the foundation of the moving market pyramid. They are mostly individuals in possession of 1-3 vehicles. Such people do not need and can scarcely afford a larger car fleet. Monitoring and classifying such carriers is quite complicated. Top place is firmly occupied by the major movers – international as well as domestic firms. While foreigners focus chiefly on international transportation and relocation of Western offices, Russian firms are involved largely in transporting goods across the country.

Specialized companies offer relocation of offices and homes. Western firms charge more (due to the packaging materials supplied from abroad) and do not take on small orders; freight carriers often lack the necessary packaging materials and offer only human resources and vehicles; Russian movers agree to all size of orders, use Russian-made packaging materials and offer a full set of services.

Who Is What?

Vlad Portnov, head of office real estate at Praedium, defines moving as a professional administration of corporate relocation services across Moscow, Russia and other countries. The essence of that service is easy and amounts to moving things (furniture, equipment, etc.) from one location to another. Leading postal services companies, such as TNT or DHL, have begun to offer moving services as well, Portnov says.

Marat Abdulin, head of marketing at Courier.Ru, is convinced that the word “moving” (in Russian: “mOOving”) grates on the Russian ear. At the same time he notes that if a company simply tells its potential client that its line of business is relocation the latter may fail to understand that what he is being offered is a wide range of services, because moving companies do not merely move offices or homes to new locations; they take care of all the issues that arise during relocation, provided of course, the client does not fail to mention that in the agreement.

The client’s participation in the process is reduced to a minimum. The important features of services provided by moving operators include insurance for the goods being transported and tracking of the shipment, Vlad Portnov says. A new trend on the market is the offer of office relocation service whereby office workers are assisted in moving from one country to another. In addition to the organization of relocation proper, the moving company assists arrivals in finding a home or a school for their children.

Who Is Moving?

According to VinLund’s representatives, their client base includes all sorts of companies, such as representation offices of international companies, Russian firms and government bodies, companies employing only 5 workers and companies with over 1,500 employees. Most orders deal with moving offices to a new location, or within the same office building.

Courier.Ru reports that 80% of clients seeking office relocation services are commercial firms, while the rest are non-profit organizations or government-funded companies. Private individuals order home relocation services. Large enterprises and groups of companies order moving services more frequently. Vlad Portnov adds that Western firms in 90% of cases opt for international movers.

A source in VinLund has reported that a well-known firm once scheduled its relocation to a new office for the May holidays. The company planned to vacate its offices on Bolshaya Ordynka (in downtown Moscow) but the traffic police directorate upset its plans by closing the city center to traffic. The bored employees of the company were forced to spend half a day in the building idly watching the crowds gathering for a holiday procession. Having learnt their lesson well, the employees at that company now always check the traffic police website before planning any new relocation.

Yelena Aralova, PR director at Soho Realty, says that their clients order moving services mostly when renting new apartments. Those who buy apartments rarely take large household items from their previous homes, because they want a different interior design for their new homes. “In such cases, our clients rarely order moving services,” she says.

The situation is different in the prime residential sector where tenants cannot always afford the luxury of purchasing new furniture each time they move to a new flat. “After accumulating personal belongings, tenants always move them to a new apartment (unless, of course, they rent a furnished apartment),” Aralova says. “In such cases tenants order moving services. Foreigners are their most active clients today.”

The moving services market in the prime housing sector is growing, Aralova says, although not so rapidly as in the office sector. Realty agencies extol the advantages of the service, which includes considerable time-saving and management of the risks that may arise during relocation. “A respectable mover assumes all the risks and covers the damage in case of loss or damage to expensive goods,” Aralova says. “Additional services offered by a moving operator include cleaning, arranging furniture within the apartment, etc.”

Any Whim Satisfied

So how do professional movers work? Preparation for the relocation of offices on a turnkey basis begins with a preliminary assessment of the operations to be carried out. A manager of the moving company visits the client’s offices to evaluate the cost of relocation and provide the necessary instructions. The client is not charged anything for the visit. After that the mover sends out a commercial offer to the client, specifying the dates, cost, terms and conditions of relocation; the parties negotiate the price, sign a deal and develop a plan for the arrangement of work desks at the new location.

This is the first stage of the comprehensive services, Courier.Ru representatives say. The next stage is relocation proper, which begins with the packaging materials – boxes for the employees’ belongings, special film for office equipment, etc – being delivered to the client’s office. The client is provided with a detailed information booklet concerning relocation. Office employees usually pack their things themselves although if necessary the employees of the moving company can be dispatched to the office to assist them.

Once all the goods are gathered and packed, the shipment begins. As a rule, trucks with furniture and equipment are sealed in the presence of an authorized official of the client company who signs a deed to the effect. The client may be advised to appoint an attendant who will travel alongside the driver in the truck to the new location. Upon arrival the seal is removed in the attendant’s presence. The delivered goods should be unpacked and their state checked in the presence of representatives of both parties, the moving operators advise.

Then the parties sign an acceptance report and within the next couple of days the mover issues the invoice. Movers advise their clients to have their goods insured, especially if the items to be shipped are expensive. If disputes arise, the parties either settle them through negotiations or register an insured accident. Experts at Praedium believe that when a large quantity of expensive goods are moved, enlisting the services of moving operators is better because they offer comprehensive services. All the expensive items will be duly insured.

Professionals at Work

Companies operating in Russia move from one location to another once every four years on average; individuals change homes once a decade, Courier.Ru reports. The employees of companies that change offices name quite a large number of movers. Marat Abdulin says there are “some 50 professional moving companies” operating in Moscow.

Moving experts at VinLund say that the exact number of moving companies operating in Moscow is hard to determine, but approximate data are as follows: there are over 50 firms capable of moving an office of up to 100 cubic meters, or 30 to 40 work desks, and approximately 20 operators that can handle relocation of 100 to 300 cubic meters. The choice of companies offering relocation of larger offices is much smaller, because no more than eight moving firms will agree to move offices of 300 to 500 cubic meters, and only five companies will move offices of 500 to 1,000 cubic meters. Only three companies offer relocation of offices measuring 1,000 cubic meters and larger. One work desk measures 2.5 cubic meters on average and a standard truck capacity is 80 cubic meters.

Some companies traditionally turn to international movers such as Allied Packford and Crown Relocations. But there are also a number of reputable Russian companies who have been on the market for years. They are Delikatny Pereyezd, VinLund, Courier.Ru, Master-Pereyezd, TransAutoGroup and other companies with impressive track records.

Delikatny Pereyezd has organized office relocations for Siemens, Renaissance Insurance Group, and MIAN. Courier.Ru moved Radio Maximum, Megafon, Delovoi Ekspress publishing house, and Daryal TV. Master-Pereyezd moved the offices of Kultura TV network, Corbina Telecom, and Pervoye OVK Bank. VinLund moved the ConocoPhillips and BBDO offices.

All Inclusive

The total cost of relocation includes the cost of packaging materials, shipment and work, VinLund reports. The price depends on the weight of goods, terms of shipment and the availability of elevators. Marat Abdulin says clients should be ready to pay $20 to $80 per cubic meter ($20 to $30 on average). As a rule, moving operators proceed from the weight of goods and terms of shipment, Courier.Ru reports, as well as the availability of convenient driveways, parking facilities, elevators, and the number of stories in a building if none are available.

Moving companies assess the cost of relocation free of charge, Abdulin notes. All the would-be client has to do is to call in a assessor. As a representative of a company frequently taking part in tenders, Marat Abdulin says that valuations made by professionals differ by only 1.5-2%. Russian operators claim they charge nearly 50% less than their foreign rivals. But, carriers admit, the price does not play the decisive role in choosing a moving firm. In order to build a reputation of a respectable and reliable carrier, a company needs to have extensive experience, know-how for the packaging and shipment of valuable goods, and, most importantly, to deliver goods at a new address without causing any damage or loss.

A Bit of Red Tape

Before the relocation a client has to sign a series of documents, including a standard model agreement, which, however, will contain a specific provision saying that the client shall see to it that no third persons i.e. outsiders, people not employed at the client company, enter the premises, while the moving company cannot be held liable for the actions of those third persons.

VinLund recommends taking out additional insurance on goods worth over $50,000. An employee at VinLund, who asked for his name to be withheld, said that once there is a conflict, the mover undertakes an internal investigation. The company’s security service and a representative of the client company examine records made by surveillance cameras if there are any on the premises.

If the check reveals evidence of the mover’s guilt he compensates for the damage, either by reducing the charge or repairing the damaged goods. Agreements with moving companies also contain a provision that says that the moving operator bears full responsibility for the safety and integrity of the goods.

Marat Abdulin says, on his part, that his company does not necessarily include the provision obliging the client to ensure the absence of third parties from the premises in model agreements. Most companies use standard procedures for compensating damages to the client, he adds. The agreement the mover offers to the client contains a provision that says that the price of goods to be shipped is determined proceeding from the price stated in documents of purchase or, if no such documents are available, from the price charged for similar goods, or at face value. That means it is quite possible to receive compensation if there is a conflict. Abdulin notes that insuring the goods makes sense if its value exceeds the cost of the moving services.