How Ukrainian retailers are dealing with border blockade

Ukrzaliznytsia allows carriers to bypass blocked sections of the Polish-Ukrainian border

Fuel delivery by train, lagging imports, and inventory shortages — what is happening with Ukrainian retailers during the road blockade ^[1] on the border with Poland and Slovakia.

At the end of last week, the first thirteen trucks crossed the Ukrainian-Polish border on railcars, Ukrainian Railways reported. The trucks passed through the Izov-Hrubeshiv railway station, thereby bypassing the border crossing blocked by Polish truckers. Will this save Ukrainian businesses?

Checkpoints are up

At the beginning of November, Polish truckers began a strike on the border with Ukraine, blocking the passage of freight transport at three border crossings: Korchova - Krakovets, Grebenne - Rava-Ruska, and Dorogusk - Yahodyn. And at the end of November, a fourth crossing – at Sheniny - Medyka – was added to this list. Slovak carriers have also carried out similar strikes several times at the Vyšné Nemecké - Uzhhorod checkpoint. Thousands of trucks are stuck at the border. According to calculations by the European Business Association, each day of downtime costs each company about UAH 1 million. According to the Federation of Employers, the economy of Ukraine has already lost more than EUR 400 million ($431 million) due to the strike.

The protesters’ demands include bringing back permitting for Ukrainian carriers, strengthening transportation rules for foreign carriers, creating a separate electronic queueing system for cars with EU license plates, and gaining access to Ukraine’s Shlyakh system. "The problem will be solved in a few weeks," says Yuliya Svyridenko, Ukraine’s Economy Minister. Ukrainian officials are likely pinning their hopes on the new government of Donald Tusk, the head of the Civic Platform opposition coalition in Poland.

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Ukrainian retailers

Until recently, transporting goods by road was cheaper than by rail. "On average, it costs $15 less per ton," says Vasyl Danylyak, CEO of OKKO gas station chain. However, after the border blockade began, this calculus changed. Automobile logistics tripled in price — from $60 to $180 per ton, so OKKO reoriented towards delivering fuel by rail.

Imports make up approximately 35% of the product offerings of Aurora, Ukraine’s largest chain of "dollar stores," explains its CEO Taras Panasenko. Over the past month, their delivery time has increased significantly — whereas they used to be able to receive orders within in a week, it now takes 20 days. "Our losses have already amounted to UAH 8 million," he says. But he adds that his company’s Ukrainian suppliers are also suffering, since raw materials are also stuck at the border.

The winter holiday season is the most active for retail. Ihor Khizhnyak, CEO of internet retailer COMFY, says that everyone was preparing for it in advance by building up stocks, so retailers and buyers are only now beginning to feel the effects of the border blockade. "We are already experiencing up to a 30% shortage of large household appliances. The situation is better with small household appliances, where shortfalls do not exceed 10-15%," he says.

But, he adds, if the situation does not change, the Ukrainian market will face a significant shortage of household appliances and electronics by the end of 2023.

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Read the original article on The New Voice of Ukraine ^[6]

References

^{^} blockade (english.nv.ua)
^{^} Poland’s Tusk pledges to resolve Ukraine border blockade once in government (english.nv.ua)
^{^} Stable truck movement resumed at largest checkpoint on Ukrainian-Polish border after 5 week blockade (english.nv.ua)
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