Revista
de la
Universidad
del Zulia
Fundada en 1947
por el Dr. Jesús Enrique Lossada
DEPÓSITO LEGAL ZU2020000153
ISSN 0041-8811
E-ISSN 2665-0428
Ciencias del
Agro
Ingeniería
y Tecnología
Año 12 N° 32
Enero - Abril 2021
Tercera Época
Maracaibo-Venezuela
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The organization technology of Ukrainian logistic operators’ work
on an e-commerce basis
Hanna O. Prymachenko*
Anton O. Kovalov**
Hanna I. Shelekhan***
Julia V. Shuldiner****
Yelyzaveta I. Hryhorova*****
ABSTRACT
The purpose of the article is to develop a comparative description of order fulfillment models
by logistics operators, analysis of the estimated average transit time in the Asia - Europe
direction. The main approach for studying this problem is a systematic approach that allows
to identify technology elements of Ukrainian logistics operators based on electronic
commerce and the use of rail transport in the Ukraine - Asia direction, and consider each
element as a subsystem and identify bottlenecks. The article presents the technology to
organize the work of Ukrainian logistics operators in the needs of the current market, which
includes components of automation, artificial intelligence, warehousing and shipping
directly to customers by 3PL operators. The materials in the article are of practical value for
the professional and productive training of logistics operators, employees of transport
companies, for research and teaching staff, in order to improve their professional skills.
KEY WORDS: container transportation, logistics operator, railway transport, system
approach.
*PhD in Technical Sciences, Associate Professor at the Department of Transport Systems and
Logistics of Ukrainian State University of Railway Transport. E-mail: prymachenko5514-2-
16@uoel.uk, ORCID ID: https//orcid.org/0000-0001-7326-8997
** PhD in Technical Sciences, Associate Professor at the Department of Freight and Commercial
Management of Ukrainian State University of Railway Transport, ORCID ID: https//orcid.org/0000-
0001-8546-3183
*** PhD in Technical Sciences, Associate Professor at the Department of Railway Stations and Units
of Ukrainian State University of Railway Transport, ORCID ID: https//orcid.org/0000-0002-6640-
6084
**** PhD in Technical Sciences, Associate Professor at the Department of Transport Systems and
Logistics of Ukrainian State University of Railway Transport, ORCID ID: https//orcid.org/0000-
0001-6418-998X
***** Postgraduate Student at the Department of Transport Systems and Logistics of Ukrainian
State University of Railway Transport, ORCID ID: https//orcid.org/0000-0003-4351-3263
Recibido: 25/06/2020 Aceptado: 01/09/2020
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La tecnología de organización del trabajo de los operadores
logísticos ucranianos sobre la base del comercio electrónico
RESUMEN
El propósito del artículo es desarrollar una descripción comparativa de modelos de
cumplimiento de pedidos por operadores logísticos, análisis del tiempo de tránsito promedio
estimado en la dirección Asia – Europa. El enfoque principal para el estudio de este problema
es un enfoque sistemático que permite identificar elementos de tecnología de los operadores
logísticos ucranianos basados en el comercio electrónico y el uso del transporte ferroviario en
la dirección Ucrania – Asia, y considerar cada elemento como un subsistema e identificar
cuellos de botella. El artículo presenta la tecnología para organizar el trabajo de los
operadores logísticos ucranianos en las necesidades del mercado actual, que incluye
componentes de automatización, inteligencia artificial, almacenamiento y envío
directamente a los clientes por parte de operadores 3PL. Los materiales del artículo son de
valor práctico para la formación profesional y productiva de operadores logísticos, empleados
de empresas de transporte, para personal investigador y docente, con el fin de mejorar sus
competencias profesionales.
PALABRAS CLAVE: transporte de contenedores, operador logístico, transporte ferroviario,
enfoque de sistemas.
Introduction
Today’s all logistics providers are too aware of the fact that e-commerce business is
booming: online sales are estimated to take up 24% of total sales by 2027. Companies have
been forced to redesign their warehouses and distribution centers in order to meet
consumers’ demands for fulfilled orders as quickly as possible (Wang, 2010). These days, if a
supplier can’t keep up with the quick shipping needs of consumers, it’s all too easy for those
consumers to simply switch to a competitor who can meet their needs (Technologies
disrupting logistics…, 2019). Consequently, automation software has become a requirement
for any business trying to keep up. Many automation systems typically focus on logistics
integration, operational control and/or business control. Automation provides logistics
companies with the control of automated machinery, for example, allowing them to sort
packages without human employees (Heidegger, 2019). But in order to upgrade to channel
production at optimum speed, businesses must optimize their existing operations while
implementing new technologies that go far beyond simple automation solutions (Tsareva
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and Omelyanenko, 2020). The most forward-looking companies are improving the logistics
order fulfillment by using combinations of innovative robots, artificial intelligence solutions
and more to create a highly optimized supply chain that can meet the changing needs of
today’s consumers (Blanckenberg, 2019; Kulykov, 2020).
Talking about artificial intelligence means using robotics. They are used to track,
locate and move inventory within the warehouses. Apart from robots, artificial intelligence
is also about big data. When the insights of big data are used along with artificial intelligence,
it helps to improve different areas of supply chain like supply chain transparency and route
optimization. Robots are quickly becoming one of the most adopted tools in warehouses,
thanks to their efficiency and easy implementation for tedious warehouse processes such as
unloading, shipment retrieval or pallet stacking (Pndey, 2019).
Beyond robots, logistics providers are also seeing a rise in using unmanned vehicles
operated with artificial intelligence and machine vision technologies. A Material Handling
Institute survey showed that members expect the adoption of driverless vehicles in
warehouses to rise from 34% to 73% over the next five years, with more than half of the
respondents saying that driverless vehicles have the potential to create competitive
advantages. Also, a high level of data protection is important for modern logistics companies.
In this business the volume of information transfer is very large, and a better tool than block
chain technology for the protection of large amounts of data has not been invented yet
(Chornopyska & Bolibrukh, 2020; Hryhorak et al., 2020). Block chain technology is a special
structure for recording a group of transactions (actions), the main advantage of it – the
implementation of any operations only when this action is considered confirmed. For
example, the transaction will be considered true (confirmed) only after checking its format
and signatures (Dobrovnyk et al., 2018). A new era demands new technologies and in today’s
era of globalization, it’s essential for retailers 3PLs and logistics service providers to use these
technologies within their operations. In order to stay competitive and thrive in this
increasingly mobile, e-commerce driven world.
1. Methodology
The simple rule in traditional supply chains was to store maximum possible quantity
of every product, everywhere, every time. Supply chains have evolved and are much different
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from what they used to be say 2-3 decades back. Modern supply chains equipped with better
information and intelligence are able to predict product demand well in advance, plan
accordingly and deliver the items close to when they are needed. The new supply chain rule
is to have “the required quantity, of the right product, in the right place, at the right time”
(Krasnoff, 2020). The traditional warehouses are not completely fit to cater to this new
supply chain rule and this led to the evolution of static warehouses into distribution centers
(Dyczkowska & Reshetnikova, 2020).
The systematic approach was used to identify elements of technology of Ukrainian
logistics operators based on e-commerce and the use of rail transport in the direction of
Ukraine – Asia. To achieve the aim of the study, two order fulfillment models were
investigated (Figure 1).
Figure 1. The visual of the two order fulfillment models (Gilbert, 2020)
Figure 1 show two most common order fulfillment models – one that uses third-party
service providers and the other where you basically handle all the major tasks. There could
simply be too many chores that you may not have time to efficiently manage (Sahaidak et al.,
2017). The fact is marketing and selling are only half of the equation in business, the other
half is getting your products to customers fast. Fulfillment centers enable ecommerce
merchants to outsource warehousing and shipping (Gilbert, 2020). This relieves business of
the necessary physical space to store all products, which is beneficial for merchants without
the capacity to directly manage inventory. Sellers send merchandise to the fulfillment center,
and the outsourced provider ships it to customers for them. Fulfillment centers make
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inventory management much easier and allow store owners more time to focus on other areas
of their business (Zorini, 2020).
To represent how fulfillment works the authors compared the best logistic companies
in China (Table 1) and Ukraine (Table 2).
Table 1. Comparison dashboard of the top Mainland China and Hong Kong-based
fulfillment centers
Fulfillment
center
Geography
Cooperation
ZhenHub
Has fulfillment centers in
11 different countries and
regions, including
Mainland China, Hong
Kong, USA, UK, Germany,
Italy, France, Australia,
Taiwan, the Philippines
and Korea.
Work with shipping
companies that include
DHL, China Post, FedEx
and SF Express. Also
offer full e-commerce
integrations for all major
e-commerce platforms
like Shopify, Woo
commerce and Amazon.
DHL Hong Kong
Fulfillment center in Hong
Kong, warehouse in Hong
Kong, also several other
offices and warehouses in
Mainland China.
Shipwire
Global fulfillment
company and a brand of
Ingram Micro, that owns
more than 154 fulfillment
centers in 45 countries
around the globe.
They work with multiple
well-known shipping
companies that include
DHL, Hong Kong Post,
FedEx and SF Express.
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EXchain
Fulfillment center based in
Hong Kong, warehousing
network in Hong Kong,
Europe (Germany), the
United States and China.
Their online system
automatically imports
orders using an API
service from all major e-
commerce platforms like
Wish, Alibaba, Amazon
and eBay.
Send from China
Fulfillment centers and
warehouses located in
Shenzhen, Shanghai and
Dongguan.
They also offer easy
online store integration
with Web Service APIs
that allows sellers to
track orders, manage
inventory, and keep an
eye on product
information and order
processing.
Easyship
Has offices and
warehouses in Singapore,
Netherlands, Australia and
the United States.
Full e-commerce
integration for all major
e-commerce platforms
like Alibaba, Amazon and
Shopify also connects
sellers with shipping
companies like DHL,
FedEx and others.
Source: F. Gronkvist (2019).
2. Results and Discussion
On June 8, 2020, the first direct container train arrived from China to the Liski
department of Ukrzaliznytsia in Kyiv. The peculiarity of this train is that goods were
delivered from the northern regions of China, which is difficult to organize by the sea due to
the distance from China's seaports (Boldyreiva & Gryshko, 2020). It is planned to organize
the running of these trains on an ongoing basis. The train covered the distance of 9000 km in
15 days. The train included 31 platforms with 41 forty-foot containers. They brought to
Ukraine drilling equipment, bicycle parts, furniture, household goods, personal protective
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equipment, etc. The Ukrzaliznytsia informed that the train also transported gas trimmers
and medical equipment. Also, in plans to ensure the entry of container trains to the branches
of UZ Liski in Kharkiv and Dnipro (Kostiuchenko, 2020). A container train provides faster
speed than shipping by sea. This is both cost savings and the ability to build new production
chains based on the quick delivery of components to enterprises. Carriage in such a train is
approximately two times more expensive than by sea. But by sea it takes 45 days. And the
train is interesting for those who are interested in speed of delivery (Figure 2).
The market of container transportation in Ukraine shows a positive dynamic of
growth by an average of 13-15% annually (Figure 3). According to this, the growth of
container traffic is on the railway. Thus, for the first 4 months of 2020, 90 thousand TEU
(TEU or twenty-foot equivalent) was transported by rail as part of container trains, which
is more than in 2 times more than the volume of traffic for the same period in 2019 (Kulak,
2020).
Figure 2. Average estimated transit times Asia – Europe (Rail freight from China…, 2019).
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Figure 3. Main trade partners of Ukraine in % from total volume (Import from other
countries to Ukraine) in January-March 2019 (Ukraine’s foreign trade…, 2019)
Container rail transportation is a really reliable, cheap and convenient way of
transportation, which will be able to compete to the sea and air mode of transport in the
combination of China-Ukraine, because if you compare rail transportation with air, it is
cheaper, and if you compare with the sea mode of transport then by rail faster. Ukrzaliznytsia
and Ukrposhta intend to discuss cooperation in the delivery of goods and correspondence
from China by rail after the first direct container train arrived from China. The management
of Ukrposhta announced their interest in the container transportation service by this train.
There are some reasons why do they need to cooperate. The number of orders of Ukrainians
on AliExpress for 10 months of 2019 increased by 70% – this brought Ukraine to the 2-nd
place in terms of growth rates on the mappelplex. This was reported by the press service of
Ukropshta. In the total cost of goods sold on AliExpress in 2019, Ukraine entered the top 10
countries in the world. Ukrposhta for the three quarters of 2019 has already delivered more
than 20 million items from China, and most of them are goods from online stores (Figure 4).
They are ordered by Ukrainians aged 24-35 years, more than half of them shop on AliExpress
via a smartphone (Ukrainians ranked second…, 2019).
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The highest demand for products with AliExpress is among residents of the Kyiv,
Dnipro and Kharkov regions. The company delivered 56% of the parcels ordered by the
Ukrainians from China to these regions. Also, Ukrposhta interested in having a
representative of Aliexpress office in Ukraine (Ukrainians ranked second…, 2019). The Nova
Poshta Global company has opened another way of delivering parcels from the Chinese
trading platform AliExpress to Ukraine by train also. According to the company, it is in 2
times faster than similar shipments on the market. Nova Poshta delivered the first test batch
of parcels by train, convinced of the reliability of this method, and now plans to use it on a
regular basis. “The key advantage of the railway is a clear route: trains move on schedule,
which allows customers to meet delivery deadlines. In addition, railway containers allow to
combine e-commerce shipments with the cargo of business customers, which allows to meet
the needs of various segments” – said Olga Volodina, Deputy Director of Nova Poshta Global
(Karpus, 2020).
Figure 4. Distribution of departures of Ukrposhta from China in September 2019
(Ukrainians ranked second…, 2019).
Ukraine took the second-place ordering from Aliexpress after Russia. Russia has
advantage because there located warehouse of Aliexpress. There is the main and only, as of
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2019, its own AliExpress sorting and processing center. Chinese sellers rent 21000 square
meters of heated and ventilated storage facilities. In order to accelerate delivery in the
Russian Federation, Chinese sellers have already delivered to the warehouse the most
popular goods in some quantities. For this, sellers paid – those stores where you buy them on
Aliexpress (Kononenko, 2020). Business in Ukraine can also ensure the simultaneous
delivery, storage and dispatch of their goods. Most Ukrainian sellers bring their goods to
Ukraine from China. That is why 3PL operators can help businesses. In Ukraine, the
fulfillment market is under development. It’s very young industry. The direction of fulfillment
is handled by Nova Poshta Logistic, the only company on the Ukrainian market working
according to the formula “fulfillment + delivery”. The customers of this service today are
Rosetka, Allo, WOG, Nestle, Philip Morris, Garna mama and other companies. The
fulfillment services in Ukraine are also provided by Denka Logistics, Zammler, Raben, UVK
and other companies. All represented companies can integrate cargo delivery, storage and
dispatch directly to customers (Yarovaya, 2017). Let's compare the capabilities of the top
companies based in Ukraine.
Some customers import cargo to Ukraine using other self-dependent delivery
companies from abroad, for example, Nova Poshta picks up for storage directly from customs.
The Table 2 shows that fulfillment powers are located in the capital and the region mostly.
In the coming years, NP Logistics plans to develop a branch network in cities with a
population of millions, a branch has already been opened in Kharkiv (Yarovaya, 2017). Why
it has to be used and important for business: building logistics on your own is very expensive,
often Ukrainian online stores outsource a part of the logistics process, but today in Ukraine
you can outsource the entire logistics process from storage to packaging to the final
customer. It’s difficult and expensive to build logistics on your own. Firstly, investments in
the warehouse: arrangement of workplaces, warehouse equipment, loading equipment, rent.
Renting a good warehouse costs hundreds of thousands of hryvnias per year. Secondly,
implementation of Information Technologies. It is impossible to conduct logistics on a large
scale without a good automation of the warehouse system. Installing of good software can
costs hundreds of thousands of dollars. The total costs of premises, technology, equipment
and people are measured in millions. This business is very high tech. The fulfillment market
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in Ukraine is still so young that it is worth investing in infrastructure development,
debugging technical processes, structuring the market, and then robotizing.
Table 2. List of top Ukrainian companies which provide 3PL logistics
Company
Stocking space,
square meters
Services
Nova Poshta
Logistic
30000 in Kyiv
region
Acceptance of goods at the warehouse (rejection,
stickering).
Storage of goods.
Picking orders.
Registration of accompanying documentation
(check, warranty card, ЕН).
Order packaging.
Returns Processing.
Denka Logistics
20000 in Kyiv
region
Storage and shipment.
Accepting orders online.
Cross-docking, selection of goods from stock.
Accounting for serial numbers.
Packing and delivery.
Sticking of goods.
Taking goods from the supplier.
Zammler
25000 in Kyiv
region
12500 in Kyiv
region
5000 in Odessa
region
Acceptance of goods from the supplier.
Storage.
Order processing (call center).
Complete set, packing of the order.
Automatic calculation of the cost of delivery of the
order.
Delivery to the door.
Return processing.
Payment service (receiving payment from the
recipient).
Photo studio services.
According to the new possibility of delivering containers by rail from China, it is
important to consider the possibility of cooperation between Ukrainian logistics companies,
companies providing 3PL logistics and Ukrzaliznytsia. This can solve delivery and stocking
problems for Ukrainian business and Chinese business in Ukraine. Major solutions include:
optimal delivery time and cost;
clear route – trains run on schedule without deviations and delays that can
guarantee customers timeliness of delivery;
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railway containers allow to combine administration of e-commerce with loads
of business customers that can satisfy the needs of various segments;
it will provide an opportunity to consider the storage of various popular goods
from china for buyers of AliExpress, Alibaba and other giants of Chinese production and
distribution, which will accelerate and increase the demand for using this type of service, as
well as attract economic investment in the development of this infrastructure;
it will increase the frequency of trains from China to Ukraine – every week and
with a subsequent increase in frequency.
Conclusions
The conclusion is that all parties have the benefit of participation in the delivery of
goods in such a way. For logistic companies: expanding the services for online businesses,
increasing the speed of delivery processing, the ability to lease warehouses for goods of
popular foreign online stores. For local business and e-commerce: automation of logistics and
inventory processes, reducing storage costs. It reduces the percentage of errors in the
selection of orders, allows you to track warehouse performance indicators and offer the best
method of delivery and payment for customers. And most importantly, by transferring
logistics processes to the hands of professional providers, online business can focus on its
main functions – promoting and increasing turnover. For Ukrainian railway company: new
contracts with leading suppliers of logistics and container rental, demand for increasing the
frequency of import of goods by rail and expanding the geography of delivery.
Yesterday, choosing a fulfillment operator, price and quality were decisive, but today
only the additional range of services that operators can provide becoming increasingly
important. Another current trend for e-commerce may be the use of sharing logistic as one of
the sharing economies segments that covers the issues of sharing storage, transport and
personnel services (loading, unloading, accounting, and many other operations). Logistics
and fulfillment are promising areas because the online market is started to grow.
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