Ukrainian Railways Determines Outcome Impacting Baltic Wagon Proprietors - Daily Estonian Report
Rewritten Article:
Ukraine's sudden ban on foreign wagons has sent shockwaves through the Estonian rail community, as this move primarily targets Baltic countries, specifically Estonia, due to its considerable impact on local wagon owners, reports Estonia's daily, Postimees.
Basically, the Ukrainian railways organization took this action due to a decline in transportation in war-torn Eastern Ukraine. Combined with an overabundance of wagons and fierce competition, Ukraine decided to ban foreign wagons to favor local business interests.
Businessman Oleg Ossinovski expressed his concerns in a live broadcast of the Russian-language Postimees, stating that Ukraine's decision is both pragmatic and cynical.
"They accept aid from Estonian taxpayers but won't allow them to work on their territory. Ukraine has granted preferences to its own companies. Local wagon owners lobbied for the ban on foreign wagons, and as a result, all Baltic wagons have been halted," he stated.
The restrictions primarily concern Baltic countries and Kazakhstan. Russian wagons are no longer present on Ukrainian tracks, and there are only a few from other nations. According to Sergei Jakovlev, a member of the board of Oleg Ossinovski's company Skinest, more than 500 freight wagons, belonging to Estonian firms—over 200 of them to Skinest, the remainder to Teslar Trans, Koviton, Procura&Trustees, Maxirail, and Kunda Trans—are currently in use in Ukraine. Jakovlev estimates the total economic value at approximately 20 million euros, a sum that could be considered "frozen."
Kaido Zimmermann, CEO of Estonian Railways, clarified that the movement of wagons for export and import is not banned. In fact, Estonian Railways helped one company navigate the export-import process by engaging with Ukrainian Railways. However, minor complications persist, such as delays in releasing wagons for repairs.
Both Zimmermann and economic expert Raivo Vare acknowledge that protectionist measures are not uncommon in the railway sector. In the past, Estonia itself has employed such measures when in possession of an overabundance of wagons. Yet, at present, there's no need for such procedures.
However, Vare and Jakovlev, a leading figure at Skinest, found the timing and context of the news surprising. "This is especially distasteful given the political environment," Vare commented, implying that Ukraine should maintain amicable relations.
He goes on to argue that Ukraine's actions are not solely a rail issue but rather a broader political-economic and political situation. "If we criticize U.S. President Donald Trump for supposedly persecuting allies, then what makes Ukraine's actions any different?" he questions, drawing a parallel to Ukraine's actions.
Jakovlev echoed similar sentiments, stating that in light of Estonia's significant support for Ukraine throughout the war, the current hardships inflicted upon Estonia are disheartening.
"Since the start of the war, investors have been willing to leave their wagons in Ukraine. Removing this asset from Ukrainian territory could serve as an alternative, allowing investors to avoid the potential risks associated with the war situation, as the wagons could be bombed at any time," he explains.
It is worth noting that earlier criticism was directed towards Skinest over its moral duties during the war in Ukraine due to freight shipments affiliated with the company bound for Russia. Last week, the entrepreneurs met with the Ministry of Foreign Affairs, with whom they discussed the issue and were informed that correspondence would be sent to Ukraine's transportation minister soon. Information available to Postimees suggests Ukrainian Deputy Foreign Minister Olexandr Mischenko has already contacted Ukrainian Railways in regards to the matter.
Enrichment Insights:
1. Reasons Behind the Ban: - Ukraine's decision to ban foreign wagons is mainly driven by economic factors and the need to bolster local industries. - Reduced transportation in war-torn Eastern Ukraine and an overabundance of wagons have led to fierce market competition, prompting the local wagon owners to lobby for the exclusion of foreign wagons.
2. Impact on Estonian Railway Community: - This move significantly impacts Estonian and other Baltic railway communities, particularly local wagon owners. A total of 500 freight wagons owned by Estonian firms are now in use in Ukraine, with an estimated economic value of approximately 20 million euros.
3. Challenges Faced by Affected Companies: - Economic Losses: The immediate financial impact is substantial, leading to potential lost revenue for affected companies. - Operational Challenges: It may necessitate significant logistical and financial investments to find alternative markets or routes for the wagons. - Strategic Adjustments: Companies might need to adapt their operations, such as diversifying their investments, similar to LTG Cargo in Lithuania, which has shifted towards privately owned wagons to suit European models and ensure sustainability under regional disruptions.
- The ban on foreign wagons in Ukraine, solely affecting Baltic countries and Kazakhstan, is a significant matter for local business interests inEstonia, particularly wagon owners, due to the loss of over 500 freight wagons with an estimated economic value of approximately 20 million euros.
- Ukraine's pragmatic yet cynical decision to prohibit foreign wagons, prompted by economic reasons like a decline in transportation in war-torn Eastern Ukraine and fierce competition, has raised concerns among certainbusiness leaders, such as Oleg Ossinovski.
- Despite the movement of wagons for export and import not being explicitly banned, challenges persist for Estonian companies, including delays in releasing wagons for repairs, causing operational complications.
- Economic expert Raivo Vare acknowledges that protectionist measures like Ukraine's ban on foreign wagons are not rare in the railway sector but finds the timing and context of the news surprising, implying that Ukraine should maintain amicable relations given Estonia's significant support during the war.
- Skinest's top executive, Sergei Jakovlev, states that removing wagons from Ukrainian territory could be an alternative for investors to avoid potential risks associated with the war situation, as the wagons could be at risk of being bombed at any time.
