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Who will suffer from the prohibition of transit through Ukraine

Author : Natalia Telegina Oleksandra Galaktionova

11:01, 17 February 2016
Who will suffer from the prohibition of transit through Ukraine

Author : Natalia Telegina Oleksandra Galaktionova

Ukraine has banned traveling of Russian trucks on its territory in response to the decision of Russia's Ministry of Transport to prohibit the movement of Ukrainian lorries. Now Russian carriers can reach Europe only by sea

11:01, 17 February 2016

Rad the original text on RBC.

gazprom.ru

Since February 15, Ukraine has suspended the transit of Russian trucks on its territory. If the van belongs to a foreign logistics company, but goes to Russia, it is not stopped at the border.

Why has Ukraine banned the entry of Russian trucks?

Such a decision the government has taken in response to a similar ban of Russian Ministry of Transport, which explained that its decision was also a measure of the return on shares of Ukrainian activists, who last week began to block the movement of Russian trucks for political reasons.

In Kyiv, the decision the Ministry of Transport was seen as a violation of international agreements - the procedures of the World Trade Organization and bilateral intergovernmental agreement on road transport. Russia unilaterally stopped the movement of trucks on Ukrainian territory, said the press service of the Cabinet of Ministers. Trucks will be blocked until obtaining explanations from the Russian side.

Prime Minister Dmitry Medvedev at a meeting with Vice Prime Minister called the Ukrainian activists blocking Russian truck, "crazy" and "bandits", and Kyiv’s ban on truck traffic – as the legalization of their actions. According to Deputy Prime Minister Arkady Dvorkovich, now about 100 Russian trucks remain on the territory of Ukraine, more than 500 lorries cannot leave the European Union, to return to Russia through the territory of Ukraine and Belarus. In Russia, at 14:30 on Monday, 161 Ukrainian trucks were detained, said Russian Transport Ministry.

Related: Ukraine and Russia agreed to return their trucks home

How would Russian trucks go?

Russian lorries cannot go thought the territory of Ukraine but also through Poland, the overland route to Russia is closed. On 1 February 2016 the authorities of Russia and Poland could not agree on the number of entry permits to the trucks in 2016, the country is still negotiating now. According to the representative of the international transport group TELLS (fleet includes 170 vehicles) Andriy Pavlyuchenko, flow of transit through Ukraine has increased due to the overlap of Poland. "Previously, Ukraine served as a transit country for South Stream, goods to Italy, Slovenia, Hungary, Poland. After the closure of transit through Ukraine trucks went to Germany, France and other European countries," he says.

Now Russian haulers have only one option - to follow through the territory of the Baltic countries, and then go on the ferry. It will be much more expensive: according to Pavlyuchenko, ferry price in the two sides amounts to more than 1200 EUR, and total cost of transportation, from the central part of Russia to Germany and back, an average of 3,500 EUR. Earlier, Director General of "Russian transport lines" calculated that if trucks have to overcome part of the way to Germany by ferry, it will require between 600 and 1,000 EUR extra for the flight costs.

Related: Ukraine suspends transit of Russian cargo trucks

At the same time, the head of the Association of International Road Carriers Eugene Moskvichev told that Russian carriers in 2015 made 160 thousand travels through the territory of Poland. If each of them rise in price at least for 600 EUR, the cost of Russian transport companies in 2016 will grow by at least 96 mln EUR.

What does Russian export through Ukraine?

trucks
gazprom.ru

According to the International Trade Centre (ITC), most goods from Europe to Russia come from Germany, Italy, France, the Netherlands, and Spain. In 2015, these countries have imported goods in the $ 34 bln, $ 18.4 bln came from Germany, which imports equipment and spare parts, automobile parts, pharmaceuticals, plastics, metal, etc. Italy and France in 2015 Russia imported goods for $ 8.3 billion and $ 5.9 billion, respectively, primarily it was industrial equipment, household appliances, pharmaceuticals, cosmetics, wine, shoes and furniture.

Shipments from southern Europe (Romania, Hungary, Slovakia, Spain) in 2015 exceeded $ 7.6 billion. According to the General Director FM Logistic Customs Alexei Misailova, rubber products such as tires from Hungary came as a transit through Ukraine. Also they carried home appliances, electronics and accessories for her, household chemicals and other goods of daily demand, consumer goods; they ceased to carry the products due to sanctions, Misailov said.

Russian-Ukrainian trade is in danger - in spite of all the constraints, it continues. According to the World Trade Center, in 2015, Ukraine took the 8th place in the Russian imports, but the volume of products imported from that country dropped by half compared with 2014 - from $ 10.7 billion to $ 5.7 billion.  Ukraine imported to Russia building materials, metal products, paper, cardboard, industrial equipment and furniture. "Last year all the logistics were performed mainly by Ukrainian carriers, Russian companies did not want to go to Ukraine because of the security threat," said General Director of FM Logistic Customs Alexey Misailov. Russian exports to Ukraine are mainly products that could be hardly imported by lorries - oil, coal, nuclear fuel, minerals and fertilizers.

Trade restrictions are unlikely to interfere Russian-Ukrainian cooperation, said Misailov, in this area Serbian, Hungarian or Romanian carriers work.

Who will benefit from the situation?

Companies from Russia, Poland, Lithuania, Belarus and Ukraine are actively involved in the trucking from Russia to Europe. To avoid problems at the border, the customer can refuse the services of Russian logistics companies in favor of Belarus or the Baltic countries.

The share of Russian transport companies in international traffic now is insignificant: it does not exceed 10%, says Misailov. "50% of goods from Western Europe were carried by the Polish companies, the rest was equally almost divided between carriers from the Baltic States and Belarus," he explains. The problem is that Poland and Russia still cannot agree on the number of travel permissions, so almost all Belarusian machines are involved on the route from Western Europe to Russia, transport companies are likely to use more carriers services from the Baltic states.

Would the imported goods become more expensive in Russia?

Importers claim that consumers will not feel the ban on land transportation. "Neither we nor our colleagues and competitors, importing alcoholic beverages from Europe, as far as I know, has never used the services of Russian logistics companies," told CEO of "Fort" wine trading company Mikhail Baduhin. "For transportation of wine specially equipped refrigerator with high demands on the temperature conditions are used. Therefore, the vast majority of alcohol importers use the services of European logistics, and no problems for their business are not arise, as Russia has no equipped trucks to carry the wine," he notes.

Related: Activists block movement of Russian trucks in western Ukraine

Belarusian companies are mainly responsible for deliveries to the Russian market of Western Europe, said Deputy Director General of Stada CIS Ivan Glushkov. One truck carries the goods for the amount of 300 thousand to 1 million USD, the route change will cost a few hundred dollars. Changing the logistics is not a problem, says development director of a pharmaceutical distributor "Katren" Anatoly Tentser. According to him, the drugs are expensive commodities, so the consumer will not even notice some increase in logistics costs. A source in the top management of L'Oreal in Russia said that the complications occurred due to the closure of Poland, the time and cost of delivery of products has. The manager of one of the largest networks of home appliances and electronics, however, said that in future changes in logistics routes counterparties might affect the cost of production. Nonetheless, everyone has the inventory, and we do not depend on the expiration dates.

Related: Blockade of Russia will cause $ 450 mln fall in exports

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