Pavel Shashurin started his first business 20 years ago in his hometown. It was a logistics company specializing in transporting fuel and lubricants. Later, he expanded his business, captured a significant portion of the market in the region, and started working in other niches.
In an interview, Pavel talked about how fuel transit is carried out, what he did to stand out among competitors, and what nuances need to be considered when organizing transportation in extremely low temperatures.
Your first business was the transportation of fuel, which is a difficult and responsible direction. How did you start your own business, and why did you choose this niche?
I always wanted independence: to manage my own business and my finances. In the early 2000s, I opened my first business in selling and delivering petroleum products to logging companies. Before that, I worked as an employee in this field, so I saw a demand for such services and understood how to organize them. There was no plan, to be honest, but everything worked out.
Loggers work in certain areas of the taiga where specific types of forests grow, and these places are often far from civilization. Therefore, many companies needed deliveries of petroleum products deep into the forest. Logistic companies did not take on this work, apparently not wanting to complicate their lives. On the other hand, I acquired equipment that could move off-road and organized such transportation, so several companies started working with me. As a result, my company serviced several dozen enterprises. In the first year of work, I managed to earn about $500-600 thousand; over time, this figure only grew.
How did you establish the business so that all processes ran smoothly?
There was no more capital, everything started from scratch. I brought my first full-drive fuel truck from Japan for $4,000, and the investment came from personal funds. Over time, I bought three more trucks, which were twice the size of the first one and also off-road vehicles. Initially, I purchased fuel at oil refining bases located directly in my area, and then began to deliver it directly to customers from oil refineries, of which there were two in the Khabarovsk Territory.
In the first year, the volume of orders began to increase, so I started transporting fuel by truck and organizing transportation in tank cars by rail. At the start, I had one assistant; of course, the staff grew as time passed. By 2018, I had 16 people in my team. It took a long time to gather people because I realized from experience that the human factor is the most important.
Have you had any competitors?
A large company could not be displaced, as it occupied half of the market. The others were small enterprises like mine. Customers are generally reluctant to switch from one supplier to another. Of course, it was challenging to compete with a monopolist. However, all decisions in a large company are made slowly and need to be coordinated in the capital – this takes a lot of time. Due to the fact that my enterprise was smaller, these processes went much faster for us, and we were more mobile. This is another reason why some customers started working with us.
Over time, you began to develop your business in other directions. How did you come to this?
Once, I was unexpectedly offered to refuel a sea vessel. It was challenging: every month I calculated how much fuel needed to be purchased to provide all the customers, but here it was necessary to get an additional 100 tons of fuel at once. I had to make an agreement to “borrow” this fuel and then return it. But we eventually completed the order. I had a reputation as a person who always kept his promises, so people were happy to work with me. After that incident, I started refueling ships, and word of mouth worked. Such orders came to us regularly once or twice a month.
In general, we always tried to stand on the customer’s side, sometimes even working at zero profit to keep the client. In addition, we looked for solutions to optimize the transportation process for our customers. For example, we began to use the GLONASS satellite system, which allowed us to track the movement of our drivers and control that they followed the predetermined optimal route.
Later, I also decided to deliver timber: I wanted to try something new. I bought a timber truck, then three more. Enterprises needed additional equipment to transport timber from remote areas.
Did your portfolio also include orders from the government, which is a difficult sphere?
I didn’t look for new clients, they came to me by themselves. Once, the municipal services approached me with an offer to participate in a tender. It is challenging to work with the government, but we managed. To win a tender for a government contract, you need to offer the most advantageous price. But the lower the price, the less you earn. Therefore, there was not much profit from cooperation with the government, but we did it to raise our reputation in the market.
To supply government-owned enterprises, it was necessary to have a stationary gas station. My team and I built a gas station when we had free funds. This became another branch of our business. We purchased equipment on order, but we built the station ourselves. As a result, we started supplying fuel to municipal organizations – police, hospitals, and utilities.
Khabarovsk Krai in Russia, where you are from, has a very harsh climate. How did you manage to establish logistics in such difficult conditions?
Weather is crucial to take into account, especially in the taiga. Winters in Khabarovsk Krai are very frosty, with strong blizzards. The temperature usually stays around minus 20 degrees, sometimes dropping as low as 40 degrees below zero. But despite everything, the vehicle must leave and return on time. To avoid any disruptions, I always allowed extra time for the road. We cannot allow the transport that is expected in one place to be snowed in somewhere else. Delivering fuel on time in the offseason when warmth is replaced by cold is important. There is winter and summer diesel fuel. The latter freezes at minus 10 degrees, so I always had reserves before the frost. I remember when I bought forestry equipment, there was a storm right away, it suffered, and the forestry truck overturned. This was not due to the fault of my driver. We had to deal with insurance companies for a long time, and participate in legal battles, it took work. This led to a simple moment when the transport does not work, it does not earn but instead consumes resources. It was a difficult moment, but we coped with it.
In America, you also started doing what you love and know – transportation. What differences do you see in the industry compared to Russia?
In America, all conditions are created for carriers; probably, there are no such services anywhere in the world. Generally, the transportation system works like this: the owner of the cargo contacts a broker, who calculates the cost of transportation and offers it on a special service. There, carriers see what cargo they will have to carry, in which direction, and how much the customer is willing to pay for the service. Then they decide whether to take this order for delivery or not, and after that, exchange the necessary documentation with the broker.
Now I am trying myself in different niches in transportation. Starting a new business is not difficult for me, because when you do what interests you, you do not notice any problems. I currently have only one truck, but I rent different trailers for different types of cargo. In five years, I hope that a strong team will work in my company, and hundreds of trucks will be in the fleet.