bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Ceturtdiena 18.09.2014 | Name days: Liesma, Elita, Alita
LithuaniaLithuania

Russian embargo shockwaves started crippling Lithuanian haulers

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULinas Jegelevičius fot the BNN

Russian embargo has punched Lithuanian haulers hard in the face – after staggering for a bit in shock, the heavy body of national logistics is starting to slump. This is an illustrative description, but it reflects best the situation among Lithuanian carriers, expecting help from the national Road Carriers’ Association (RCA) Linava.

Many still assessing the damage

Its vice-president Rimantas Martinavičius told BNN that here unusual calm has been lingering for the last three weeks since the announcement of Russian embargo in the sector.

«But now the silence is breaking up, as some haulers acknowledge they are being cornered up by Russian embargo. Meanwhile, others don’t send yet a Mayday call, but try to assess the blow and are working frenetically on business alternatives. But by the beginning of September when the association will hold an all-member meeting, I believe, we’ll start seeing the real toll,» Martinavičius told.

In fact, some of the haulers have already raised their hands up, handing their truckers pink slips.

As of early August 27, Vilnius-based logistics company Hofa was the first in the line to have publicly announced of mulling laying-off 210 of its workers, among them 120 drivers.»

«Nearly all our business activity was about fruit and vegetable exports to Russia. We transported the green goods to Russia and provided Russian market some other logistic services.  With the red flag up, our business is over,» said Dainius Drūteika, company’s director.

Over the last three weeks, the hauler saw disappearing most of the lucrative business orders. Of its 100 freezer-trucks usually riding the Russian roads, now only 20 of the fleet still crisscross Russia, but their near future in the country is dim. With the Russian cord cut off, the majority of workers have been idling.

«But as finding new markets and diverting to them takes quite some time, having the personnel cuts might be imminent», the businessman insisted.

Swapping markets is hard

And the alternatives that Hofa is now working strenuously on are not limitless, he says.

«The way-out of the plight is the same as before: turning around and heading to Europe. There aren’t just too many other options. The dreams about as far markets as Morocco, which we’d considered at some point in the past, can’t leave the realms of dreams, as we don’t have necessary permits to operate in the country,» said Druteika.

The company has done some commercial haulage as far as in the dangerous Afghanistan in the past.

And turning to Europe amid the crisis is far from being simple, the transporter noted.

«Work in Europe is absolutely different. Alike many Lithuanian logistic companies, we would need to become there part of large local transportation companies. When dealing with Russia, all the managers and drivers had to have a good command of Russian, and now they have to be taught decent English in order to be able to carry out the assignments in Europe. It is not simple,» the Hofa head told.

Some Lithuanian transport specialists, he noted, already toil for the biggest Western European logistic companies, but, as a rule, their duties ultimately boil down to the technical stuff – buying trucks, obtaining necessary licenses, hiring drivers and handing them over to the maternal company’s administration.

«This is how far the Lithuanians would be allowed proceed in the West», Druteika told.

Other haulers in worse plight

Meanwhile, Algimantas Kondrusevičius, Linava president, hoped that Hofa, which he characterized as a modern and experienced company, will manage to get out of the murky situation.

«There’re other transport companies, much smaller in size than Hofa, which now ended up being in a whole lot worse situation. They are not just 100 percent oriented to Russian market, but what makes things worse they carried only Lithuanian dairy products to Russia. For them, having worked with the closed circle of clients many years there, plunging into other markets is really uneasy. It is akin to plunging into a bush of nettles,» the association head spoke illustratively.

Unwilling to come up with any particular names, he insisted that there are «several dozen» haulers throughout the countryteetering on the brink of abyss.

«As a rule, they are medium-sized enterprises, employing 20-30 trucks, which without liaisons with the West, cannot be quickly steered to that direction,» Kondrusevičius told.

He told he knew a logistics company in Šiauliai, a city in northern Lithuania, which in the wake of Russian embargo has been running only three out of its 23 trucks.

«And there’s acuter competition among the drivers within the company,» he noted.

According to Linava, there are 27 thousand Lithuanian trucks on the international roads- around 7-8 thousand of them are refrigerated trucks.

An impressive one-third of the fleet whisked the goods to Russia until now.

Pleas for help sent

Facing the immediate aftermath of Russian embargo, some haulers have sent part of their truckers on forced leave or paid holidays. But the exact scope of the embargo-related layoffs will turn up in the early fall, Linava president warned.

«The transport business understands well that laying-off the drivers is tantamount to ruining the business, so all the companies in the sector do whatever they can find solution,» he said.

Nearly 2000 transport companies are registered in Lithuania, according to Martinavičius.

With the future becoming even gloomier, the haulers’ functionaries expect that Lithuanian Government will throw them a buoy in cushioning the severity of Russian sanctions.

«We really expect a reasonable behavior to the sector from the authorities as far as putting off tax payment is concerned,» he said.

Meanwhile, Robertas Dargis, president of Lithuania’s Industrialist Confederation (LIC), hinted that the actual scope of the aftermath of Russian sanctions could be assesses only around in a month from now.

But he insisted Lithuania is likely to avoid the worst blow, like the ones that Lithuania had dealt with amid the 1998 Russian economy downturn.

He says the business now comprehends well Russian market’s risks and therefore has diversified their business activities since 1998.

Russia can’t be disavowed

Dargis cautioned all at a LIC meeting early in the week not to completely cut the ties with Russia.

«While assessing the risks and dangers, it is advisable to maintain the dialogue with Russian businessmen…We all should speak of what awaits us all in the future,» the LIC head said.

So far transportation, as well as dairy, stockbreeding and vegetable farming have been ill-effected most by Russian embargo, according to Marius Skarupskas, the deputy Economy minister, who spoke at the LIC meeting.

He said the government has a stack of measures aiming to ease the sectors’ existence. Among them is hiring of foreign consultants tasked with making the transit to foreign markets easier-but he stopped short of saying whether the Social-Democratic government is going to respond to the embargo-hit sector’s tax alleviations or postponement pleas.

Lithuanian businessmen are cry-babies

But some Lithuanian prominent economists bristle against a thought of aiding the troubled sectors at the expense of others.

«I look at it realistically. It is not new that Lithuanian businessmen plea for help. It’s been always like that, regardless of whether Russian sanctions are into effect or not. I’d say whimpering is an exceptional characteristic of national business. But being aware that Lithuanian governments are virtually catering to the needs of cry-babies, I can bet that Government will give in to the sectors’ pleas. It will come at the expense of the public sectors-teachers, professors and doctors,» Aušra Maldeikienė, a prominent economist, told BNN.

Ref: 020/111.111.103.1448


Leave a reply

  1. Linda says:

    How is Kalingrad getting supplies? Closing borders here?

    Thumb up 0 Thumb down 0

Poor and large families to pay for electricity at «Start» tariff after market’s opening

After the market’s opening in 2015, poor Latvian families will be allowed to pay 11.64 cents per 1 KW/h for 100 KW/h they consume every month. Large families, on the other hand, will be allowed to pay the same price for every 300 KW/h every month.

Debts of Latvian residents to be compiled by Credit Information Bureau

In order to secure more efficient availability of credit information and improve credit risk management, from now on debts of Latvian residents will be compiled by the Credit Information Bureau. This is provided by the Credit Bureau Law approved by the Saeima this Thursday, September 18th.

Businessmen impacted by Russian sanctions to have tax payments deferred

Businessmen who are now experiencing delays with their tax payments because of the Russian embargo will be allowed to have their payments deferred or divided into separate instalments. This is provided by amendments the Saeima approved to the Taxes and Duties Law and State Revenue Service Law this Thursday, September 18th.

TM: short-term income should not prevent adoption of sanctions against aggressors

«Latvia and its allies have to do everything in order to reduce the escalation of the situation in Ukraine. If this can be achieved by increasing sanctions, then this should be done without concerns about possible losses,» – believes Latvian Transport Ministry’s parliamentary secretary Viktors Valainis.

Corner House’s heating system requires more than EUR 20,000

The Corner House will remain open for visitors for one more month. Because of problems with its heating system, it is planned to be closed on October 19th. The former KGB building remained empty for many years. To make sure the basements of the KGB building are able to satisfy people’s curiosity in the future, significant investments are necessary.

Bicycle lanes in Riga Centre were planned without analysis of traffic flow

Bicycle lanes on Elizabetes, Dzirnavu and Lāčplēša streets in the centre of Riga were created without prior analysis of traffic flow and consideration of the impact on the general traffic movement.

Scotland holds referendum for independence from the UK

During the referendum on September 18th, Scottish citizens will decide whether or not their country should remain part of the United Kingdom or become independent.

American investor is prepared to pay only EUR 65-70 million for Citadele

American Ripplewood Holdings promised to buy Citadele Bank for approximately EUR 92 million. However, because the investor is allowed to pay in a longer period of time and considering Citadele’s results, the actual amount could be even lower.

Bordans: the situation in investigation structures is tragic

The police is capable of only fixating crimes at the moment. There are serious problems with the level of education of police officers in regard to investigation procedures and lack of proper training, believes Chairman of the New Conservative Party and former Justice Minister of Latvia Jānis Bordāns.

NAF Commander: a new form of warfare is being realized in Ukraine

Latvia still has a lot to do in order to be able to properly react to the hybrid-war we currently see in Ukraine, should such an emergency ever arise. On top of that, there is no guarantee that some other form of warfare will not surface in the world in the future, admits Commander of Latvian National Armed Forces Raimonds Graube.

Animal Freedom to protest against use of wild animals in Riga Circus

This Friday, September 19th, Animal Freedom organization plans to hold another protest outside of Riga Circus at 17:45. According to the organization, they plan to protest against animal trainers Oleksii and Veronika Pinko, who will be giving a performance with lions.

Provision of special status to Donbass and amnesty for separatists met with criticism

Ukrainian politicians and experts are dissatisfied with the decision the parliament made this week, which provides for giving special status to several areas of Donbass. They also oppose the provision of amnesty to separatists.

Delna: in terms of rule of law, this has been one of the strongest Saeima compositions

Even though the next Saeima will have to face many painful and unresolved matters, what Latvian deputies have managed to accomplish so far demonstrates that this was one of the strongest Saeima compositions in terms of rule of law, admits society for openness Delna.

LDz loses 500,000 tons of cargoes because of Ukrainian crisis

Europe’s long-term intention to reduce dependence on Russian energy resources and Russia’s plans to develop its ports and infrastructure could reduce the volume of cargo turnover for Latvijas Dzelzceļš, admits the company’s president Uģis Magonis.

Expert: Moscow is preparing Baltics for a repeat of Ukrainian scenario

The Russian government is preparing to realize the Ukrainian scenario in Baltic States by spreading reports that Russians in Latvia, Lithuania and Estonia are badly treated and that Moscow is forced to defend these representatives of the ‘Russian world’, warns well-known American analyst and expert in former USSR affairs Paul Goble.

Dombrovskis is prepared to support Latvia’s presidency in the EU Council

Latvian MEP Valdis Dombrovskis, who has also been nominated for the post of Vice-President and EU Commissioner for Euro and Social Dialogue by the next President of the European Commission Jean Claude Juncker, is prepared to start supporting Latvia’s presidency in the EU Council.

Latvian government agrees to sell Citadele Bank to Ripplewood Holdings

The Latvian government has accepted the offer extended to purchase Citadele Bank, as revealed by Latvian Prime Minister Laimdota Straujuma.

Authorities increase the volume of excise duty-free fuel for farmers

In order to reduce the financial burden, the Latvian government has decided to increase the volume of excise duty-free fuel for agricultural goods producers from 80 to 88 litres for the 2014/2015 economic year.

Seven Baltic universities considered some of the best in the world

This year’s QS World University Rankings includes seven universities of Baltic States. Among them is the University of Latvia – the country’s only representative on this list.

European Parliament ratifies the EU-Ukraine Association Agreement

This Tuesday, September 16th, the European Parliament voiced approval for the signing of the EU-Ukrainian Association Agreement, which, among other things, provides for free trade between the two sides. The Ukrainian parliament has also ratified this agreement.

Round timber procurement prices on a rise following recovery of construction loans

The average purchase prices of round timber in the first half of 2014 as compared to the second half of 2013 continued to increase.

Number of occupied posts declines in Latvia

There were 872.5 thousand occupied posts in the country at the end of the first half of 2014, which is 2.2 thousand posts or 0.2% less than in the same period of the previous year.

Payment cards are more popular in Latvia than they are on average in the EU

50.93% of all payments that took place in Latvia last year were completed with payment cards. This demonstrates a 2.46% increase in their use in comparison with 2012.

Security measures imposed against Aivars Lembergs remain unchanged

Judges of Riga Regional Court led by Boris Geiman have decided to leave the current security measures introduced against Aivars Lembergs unchanged.

Latvian Saeima to discuss a new tax policy strategy

This Friday, September 19th, the Saeima will discuss matters of state budget and tax policy, as well as present the new tax policy strategy for 2015-2018 that was created through cooperation with experts of sectors of national economy.