What happens with Ukraine as a New Silk Road transit country?
After Silk Road transit traffic through Ukraine to the Polish border was blocked, another suspension of Ukrainian traffic was reported this week. A temporary ban on the transportation of coal from Russia to the Slovak station Haniska near Košice was issued. But this time, Ukrainian Railways emphasised, the ban was an initiative of ZSSK Cargo, the Slovakian operator.
This was mentioned on the website of Ukrainian Railways, amidst a dispute that seems to have unfolded between the Ukrainian and Polish authorities. Transit restrictions between these two countries have been in place since 30 November 2021, with a new set of restrictions issued on 20 January 2021. The news of another ban in the same country poured oil on fire, even though the Slovakian ban is a different matter. We have put together what we know about the situation.
The Slovakian ban
On Tuesday 25 January, Ukrainian Railways reported that ZSSK Cargo had sent a telegram, announcing the temporary ban on the transportation of coal from Russia to Slovakia. The decision was made by U.S. Steel Kosice, the customer of the shipment, without detailing its content.
“Ukrainian Railways immediately complied with the request of its Slovak colleagues, as required by international rules and signed agreements. Such restrictions have been introduced before, colleagues have repeatedly limited the shipment of raw materials for the metallurgical industry, taking into account certain operational tasks”, the railway company states.
It adds: “Reports of restrictions imposed by the Ukrainian authorities are not true. The resumption of coal supplies to the Ganiska station will take place on 28 January.
What is also noteworthy about the statement by Ukrainian Railways, is the last sentence: Ukrainian Railways fully complies with all international obligations and urges not to use the operational aspects of the work of railways for political purposes or for disinformation campaigns.”
With this, it seems to refer to the general assumption that the current ban of transit to the Polish border is all but construction related, but very much politically based. For this, we need to take a look back at the transit ban so far.
When the ban was initially announced, construction works were cited as the main reason. The Kovel-Izov-Derzhkordon line between Ukraine and Poland needed to be electrified. Apart from that, the railway section from the central city of Znamianka to the western city of Zdolbuniv was undergoing track maintenance and modernisation works.
On 20 January, another ban was issued for all traffic to and from Poland and countries like China, Kazakhstan, Russia, Azerbaijan, or Georgia through Ukraine. The official reason was still construction work, but by now this had been questioned by many people involved. In fact, Timofey Murakhovsky from Ukrainian Railways told RailFreight.com that PKP had not renewed their contract for the use of UZ-owned wagons in time, and only Ukrainian Railways-owned wagons could be used on transit.
Dive a little further into the discussions, and you soon find many more speculations on why the transit of rail freight traffic to and from Poland is currently banned. The most popular one is the assumption that there is currently a disagreement between the respective ministries about the road permits of Poland for Ukrainian truckers.
Every year, Poland issues a maximum number of permits per country for the use of their roads. Ukraine has requested a higher number of permits for 2022: 200,000 permits per month for 2022 instead of the 160,000 monthly permits issued in 2021. However, Poland wants to reduce the number of permits, and has not accepted the special request.
On December 17, 2021, the Ukrainian government confirmed its intention to apply to international arbitration if Poland reduces the number of permits for trucking companies by 2022. Many believe that with the transit ban, it is putting pressure on the Polish government to issue the permits requested.
Preference for Hungary and Slovakia
Another theory was provided by Jakub Jakóbowski, an expert of the Center for Eastern Studies on the Polish railway website Rynek Kolejowy. Adding to the road permit explanation, he believes that Ukraine may be more in favour of transit of Eurasian trains to Slovakia and Hungary, as this is a longer distance than to the border with Poland.
In Hungary, the East West Gate is currently under construction, which is expected to boost the border region for Eurasian traffic. Hungary is trying to increase its role on the New Silk Road, and Slovakia has been doing the same for many years. On the contrary, the Polish railway network is congested, the traffic speed is low and the track access charges high. Improvements are being made, but according to industry players not fast enough. This could also explain a shift of interest in other borders in Hungary, some argue.
Is Ukraine modernising?
Back to the construction works in Ukraine. Indeed, the country is investing heavily in its infrastructure, as it has been aiming to increase its role as a transit country on the Eurasian corridor in the past few years. This is why it is at least surprising that the railway company is willing to suspend such vital transit traffic.
Poland is an important trading partner for Ukraine. In the first ten months of 2021, the value of Polish imports increased by 68 per cent, amounting to 4.4 billion US dollars. This almost twice exceeds Ukraine’s exports to Russia, and three times its exports to other Ukrainian neighbors, such as Hungary and Slovakia.
In 2020, 40 trains from Poland to China and back passed through Ukraine. In 2021 there were already 124 trains. The timetable for December 2021 included 87 trains from and 6 trains to China, but they never departed due to the transit ban. Logistics companies that are involved in this route are disappointed and astonished, as they have worked equally hard to realise the route.
Ukrainian Railways has not responded to questions from RailFreight.com about the decisions taken.