In retaliation for Western sanctions, Russia has closed its borders to trucks registered in EU countries. Lithuanian hauliers said the Russian market accounted for a diminishing share of their business, although markets further east might be lost for ever.
When the EU adopted new sanctions in spring banning Russia and Belarus from transporting goods throughout the Community, the Lithuanian-Belarusian border was lined with large queues of lorries. The expectation then was that Russia would react immediately and introduce symmetrical bans.
But then only Belarus responded and it took Russia six months to react. Last weekend, Moscow announced a ban on the entry of EU-registered trucks.
Lithuanian hauliers say they have anticipated the move and prepared for it. Moreover, before the war, the Russian market accounted for around 7% of all cargo shipped from Lithuania. Since the war start volumes have fallen even further.
“Exports of transport services in the second quarter were around 25% lower than a year ago,” says Tadas Povilauskas, an economist at SEB Bank.
Lithuanian carriers, especially the big ones, have been shifting their focus to Western markets since 2014, he says. Therefore, the Russian ban will mostly affect small transport companies.
“When the war in Ukraine broke out, everyone basically wrote off Russia. And the only reason they are working is probably because there are either contacts from the past or the lure of high freight prices to make money from. Or maybe historically they have an old fleet of trucks and that is why they go there,” says Povilauskas.
Hauliers are also reassured by Russia’s move because the ban includes many exemptions. Carriage of various foodstuffs, certain machinery and equipment will continue to be allowed. In addition, there are also certain zones within Russia itself that can be entered and reloaded.
This is a classic loophole allowing haulers to bypass restriction, says Tautginas Sankauskas, head of the Lithuanian association of freight forwarders and logistics Lineka.
“You leave the cargo at the place, where it is picked up by a truck from another country,” he explains.
Lithuania not only transports cargo to Russia, but also transits through Russia to Central Asian countries such as Kazakhstan, Uzbekistan and others. With Russia also banning the transit of EU trucks through its territory, hauliers estimate that they are likely to lose around 2% of their traffic.
Finding alternative routes for the Asian markets could be both too expensive and too difficult.
“The southern routes, as well as the routes through Turkey, Iran – I don’t think that our carriers will go there. We need to understand that the market is filled in those countries,” says Zenonas Buivydas, secretary general of the Lithuanian Carriers Association Linava.
Before the start of the war in February, Lithuania’s freight transport to Russia totaled around 800 million euros annually. (LRT/Business World Magazine)