‘Ukraine cannot be on the sidelines of the New Silk Road’
The volumes of rail freight traffic between Europe and China are steadily increasing, and Ukraine cannot miss out on this opportunity. That is if it is up to Global Ocean Link. Together with PCC Intermodal, this Odessa-based logistics firm set up a regular direct rail connection between Poland and Ukraine this April.
Considering the circumstances, the results of the first two months are impressive, the company argues. It operates from the transshipment point Mostyska, on the border between Poland and Ukraine. “From here, you could go from any dry-port in the EU to any destination in Ukraine within seven days.”
The main aim of the partners has been to set up a regular service, a task in which they have succeeded, Global Ocean Link (GOL) says. “In the first two months more than 300 TEUs of cargo has been delivered at the final destinations. Despite a not so fantastic beginning, this project attracts 3-5 per cent new TEUs on each train.”
With the not so fantastic beginning, the organisation points to the corona crisis. “The starting period of this project was April 2020. Borders were under lockdown, only trains were able to pass without problems. However, just a few weeks before we started, road hauliers decreased their prices because of a fuel drop. In result, the starting volume of the first train was decreased by 30 per cent.”
Nevertheless, the train departed and others soon followed. The ambition is to schedule daily departures, with at least 70 TEUS per train. The main motivation is the already existing cargo volumes between Europe and Ukraine, that are now transported by road, the big competitor.
“EU is the biggest trade partner for Ukraine. Trade amounted to 44.6 billion euros in 2019 and 42 per cent of all international cargo flows are between the EU and Ukraine. Trade has grown steadily by 10-15 per cent each year since 2014. The top EU destinations are Poland, Germany and Italy.”
Beating the truck
The bulk of international trade flows is currently transported over road. Road traffic on the route represents 87 per cent of the market, according to GOL. But with such high demand, there is a lack of permissions, which result in price increases each July and August. Shippers need a more predictable transport option, the company argues. “Moreover, with rail the shipper could save 15-20 per cent of its usual transportation costs.”
Considering this excellent business environment, it is a must for rail to step in, the company believes. “Ukraine has got an impressive rating of railway density and fairly decent conditions of terminals’ infrastructure for domestic railway activity. Why not start a regular train connection for the international market?”
On the New Silk Road
Of course, Ukraine is not just focusing on Europe. The country is strategically located to be a main transit country on the route to China. Until now, most Eurasian traffic has gone via Poland to Russia, but the route via Ukraine is gaining popularity.
“New countries and cities are adding to the international rail connection every week. Overall, rail freight between Europe and China increased by 30 per cent year-on-year so far this year. Ukraine, as the biggest country in EU, couldn’t stay beside of a such developments. Ukraine has to be connected to the Eurasian rail network, it is only matter of time.”
Photo: The current destinations from Mostyska. In the near future, GOL plans to expand new routes to Central Europe, especially towards Italy.