Latvian Railway fears severe impact from dropping volumes
The lack of traffic from Belarus and Russia, which is impossible to replace fully, and the continuously dropping rail freight volumes have the Latvian Railway cornered. According to the Latvian transport minister Tālis Linkaits, the national railway company is prepared for all possible scenarios, with the worst one including even the termination of 600 employment contracts.
Linkaits explained the situation that the Latvian Railway (LDz) finds itself in during the Latvian television show Rīta panorāma. According to his words, rail freight volumes during March “could increase by 30 per cent compared to the same period of last year. However, this is due to companies trying to take their cargo out of Russia as soon as possible”.
This means that the temporary volume growth does not indicate the whole picture. In fact, volumes are dropping dramatically, and the rail freight traffic that Latvia used to have with Belarus and Russia cannot be fully substituted. Latvian Railway prepares for the best-case and worst-case scenarios. In the worst-case scenario, “rail freight volumes could drop by 85 per cent, and the national railway company would possibly need to terminate the contracts of 600 employees”, said Linkaits.
Working on alternatives
LDz is currently working on an action plan to deal with the situation. The first announcements on how it aims to handle the decreasing volumes will be available in May. However, the company was already drawing a diversification strategy looking for alternative traffic flows. For instance, as Linkaits mentioned during the Rīta panorāma show, “since autumn 2021, Latvia has been receiving cargo from Kazakhstan, specifically coal. Moreover, Kazakhstan is looking into ways to use Latvia as an alternative to St. Petersburg”. However, how and through which route is still unclear.
In general, though, Latvia is looking towards Central Asia and China to attract more rail volumes. Apart from Kazakhstan, Uzbekistan is also on the list of countries that could send their cargo to the Baltic state. “The ministry is hard at work negotiating with countries like Kazakhstan, Uzbekistan and China to secure freight”, said Linkaits.
Lithuania was on the same page as Latvia after its relations with China went through some turbulence a few months ago. Lithuania had called Turkmenistan to launch cargo flows towards the Baltics, keeping in mind that the most efficient route was through Russia. This is where Latvia’s mission could become more complicated with the Russian route being out of the game.