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  • How Russian aggression affected the transportation of transportation in Ukraine, - Iryna Kosse

    Iryna Kosse, senior research fellow of the IER, took part in the “Krynica Forum ’22 – Growth and Reconstruction”, Poland that is an international event bringing together business, politics and the world of science. Its goal is to strengthen the security, prosperity, social cohesion and economic position of Poland and the countries of Central and Eastern Europe.

    Key messages of Iryna regarding the transportation of goods during the war in Ukraine and its impact on the global economy:

    • Russian aggression towards Ukraine highlighted and amplified the challenges of European connectivity with the East. The countries suddenly realized that their infrastructure is not developed enough to process big volumes of freight and passengers. You probably are all aware of the situation but I will give a quick overview. In March 2022, the volumes of freight to and from Ukraine dropped to almost zero. At the same time, millions of Ukrainians fleeing the war flooded the passenger and automobile border crossing points. In April, the freight volumes picked up. There was a change in the composition of goods that crossed the western border of Ukraine.
    • For example, automobile border crossings saw a big increase in the imports of diesel and oil products. Not to mention the military equipment. Russian blockage of Ukrainian seaports forced agricultural producers to seek ways to export grain via neighboring countries. The main route was by railway to the Romanian port of Constanta. Nobody was ready for that. Ukrainian railway carrier  Ukrzaliznytsya loaded so many wagons with grain that there are still around 200 wagons waiting to be transported to Romania. In the following months, UZ started limiting orders for grain transportation. Romanian railway companies and Romanian port of Constanta were also not ready. Ukrainian grain exports is three times greater than the port capacity. There are big lines of wagons waiting to be transported to the port and offloaded at the port. 
    • Grain exports by trucks also faced difficulties. The crossing points did not have enough inspectors, customs and border control officers. They also lacked equipment like special scanners for trucks. 
    • Then the grain deal was signed. It allowed to increase the export of grain from Ukraine. In October, the  grain exports volumes reached their pre-war level. However, the capacity of this route is also limited. It depends on the number of inspection teams and the number of ship inspections that these teams can do daily. Media reported that around 120 vessels were waiting to be inspected. The Ukrainian ministry of infrastructure reported that 350 ships left Ukrainian seaports since the start of the deal. That means that at least a third of them is still stuck in the queue.
    • Good connectivity with Ukraine is important not only for Ukrainian companies but also for the countries neighboring Ukraine and for the EU as a whole. Development of those routes will allow to develop eastern regions of these counties. Ukraine's status as a EU candidate means that trade between Ukraine and countries of the union will continue to grow. That also means that the capacity of transport network has to be increased. There will be a need in additional storage facilities, services for truckers, railway reloading stations et cetera.
    • Ukrainian trade with the EU will remain at the same and even at a higher level after Ukraine wins the war:
    • Ukraine will be further integrated in the EU market as an EU candidate country
    • Business relocated to safer western regions of Ukraine will trade with the EU
    • Business contacts established during the war will remain
    • The world will need more grain, agricultural production in Ukraine will increase and Ukraine will use all alternative modes of transpiration to export it
    • Gradual move to exports of processed products will mean more trade with the EU because the demand for such products is there
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