The EU is under pressure since funds to support Ukrainian grain exports via rail seem scarce. Attacks on Ukrainian Danube ports make the situation very complex and put more pressure on the rail to undertake the export task. Rail services, however, are significantly more expensive than sea transport, and Ukrainian exporters are already struggling and asking the EU for financial support. This happens while Ukrainian Railways are starting their first westbound services to Poland with the help of their new subsidiary UZ Cargo Poland.

After the Green Deal broke down, the focus of Ukrainian agricultural products returned to rail and barge services as a resort to facilitate grain exports. The initial plan entailed rail transport services mainly via Moldova and secondarily via Poland. Additionally, barge services would be deployed on the Danube River to transform Ukrainian, Moldovan and Romanian Danube ports into grain export hubs together with the Romanian port of Constanta.

Nevertheless, attacks on the Ukrainian Danube port infrastructure earlier this week made the barge transport solution quite more complex and unsafe for now, and rail gradually becomes a one-way option. Andrii Dykun, chairman of the Ukrainian Agri Council, told RailFreight.com that Moldovan Railways provided their services to Ukraine with a very valuable discount that could alleviate the already high costs that Ukrainian exporters face.

In the current situation, though, the Moldovan route cannot accommodate all the grain volumes trying to leave Ukraine. Consequently, the Ukraine-Poland route returns to the spotlight, and the same goes for all the issues it carries with it. On the other hand, a new service from Ukrainian Railways that includes the port of Gdansk provides some space for optimism.

Not enough money

Turning from sea to rail transport again entails additional costs with which Ukrainian exporters are not happy. That is why the Ukrainian Agriculture Ministry sent an official letter to the EU trade chief Valdis Dombrovskis asking the Commission to provide financial aid for the extra transport costs, which according to a Reuters report, amount to 30-40 extra US dollars per tonne.

The same report claims that the EU is far from being able to satisfy such a request, and quotes from anonymous Commission sources claim that there is no solution in place. Additionally, they mention that the EU has already tried to simplify the grain export process by establishing a special tariff regime for Ukraine, which unfortunately did not provide the desired results and resulted in five EU member states, including Poland, banning the import of Ukrainian grain.

Consequently, the EU is currently facing a dead-end. Poland and the other states that have banned Ukrainian grain imports are pressuring for the ban to be extended further after 15 September. Until a solution is reached on this matter, facilitating rail exports and cutting down costs seems unlikely. More routes have been pitched to aid grain exports via rail, with Lithuania aiming to establish a Baltic export corridor and Greece and Bulgaria willing to move some of the volumes out of Moldova and Romania via the Bulgarian railway network and towards the Greek port of Alexandroupolis. However, both ideas are not ready to implement since they also entail considerably higher costs considering gauge changes and insufficient equipment.

Ukrainian Railways launch new service

While everyone ponders how to find a way out of the situation, Ukrainian Railways takes action. The state-owned railway company is already putting its new Polish subsidiary UZ Cargo Poland on the tracks with a new service to the port of Gdansk. The new intermodal service will connect Gdansk with Kyiv, Odesa, Dnipro and Vinnytsia. The border crossings utilised for the new service include Yagodin, Izov, Mostyska and Chop. However, not all will lead to Gdasnk since some trains will also connect with other European railway corridors.

The service’s operator will be the Transport Centre Lisky, a branch of the Ukrainian Railways, while the whole endeavour was set up and will run with the contribution of UZ Cargo Poland, Laude Smart Intermodal and PKP Cargo Connect.