bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Monday 26.01.2015 | Name days: Agneta, Agnis, Ansis
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

Economic Diary of Latvia. How to lend money to another and still profit from it

«According to results of a recent survey by SKDS, 69.6% of Latvian residents do not support amendments to increase micro-enterprise tax from 9% to 11%,» – says Chairman of Latvian Chamber for Commerce and Industry Janis Endzins.

Women in Latvia are worried about military safety more than men

Residents in Latvia are concerned the most about economic and social security. Residents are also highly concerned about Latvian military and political security.

Latvia to send nine electric generators and 4,000 blankets to Ukraine

In response to Ukraine’s plea for help, Latvia will send nine electric generators and 4,000 blankets as humanitarian aid. This and transport expenses will cost Latvia EUR 103,000.

Authorities confiscated 507,000 counterfeit euro notes in six months

In the first half-year of 2014, authorities confiscated a total of 507,000 counterfeit euro notes from circulation, which is 44% more than there was in the same period of 2013.

The first militant with ties to Latvia may have been killed in Ukraine

According to information posted on a website dedicated to the conflict in Ukraine, the first Latvian citizen who decided to join the ranks of Ukrainian separatists may have been killed.

Exceeding milk quotas could result in a two-million euro fine for Latvia

This year’s milk quota is expected to be exceeded by 101%, which may result in a fine of more than EUR 2 million for Latvia, as confirmed by deputy director of Agricultural Data Centre Erna Galvanovska during the meeting of the Agricultural Organizations Cooperation Council.

Mayor of Bauska: Lembergs’ ill-considered remarks show megalomania and lack of tact

Remarks of the CEO of Ventspils basketball club Aivars Lembergs regarding the basketball hall in Bauska and calling it a slum only demonstrates his megalomania and serves to insult residents of a region of Latvia, as mentioned by Mayor of Bauska Raitis Abelnieks in his interview to LETA.

Latvia to export oatmeal porridge to China

Rīgas Dzirnavnieks grain processing company has begun exporting oatmeal porridge products to China. The first products are set to be delivered to Hong Kong, which marks the farthest destination for the company’s products to date.

Demonstration in support of arrested Ukrainian pilot Nadiya Savchenko to be held in Riga

Latvian Ukrainians Congress invites Latvian residents to support Ukrainian pilot Nadiya Savchenko, who is currently kept under arrest in Russia. A special demonstration will be held on Monday, January 26th, the day of the opening of the European Council’s parliamentary assembly.

Masters of Ventspils and police car park – true owners are revealed

It has been possible to determine who actually uses the expensive cars that are officially registered as owned by Ventspils municipal police.

Driving conditions satisfactory on main roads and complicated on regional roads

According to reports, driving conditions on main roads in Latvia are satisfactory as of Friday, January 23rd. Meanwhile, the situation on regional roads is made complicated by ice.

Experts: Strelchenok’s evaluation would benefit everyone

Corruption Prevention and Combating Bureau must not be divided. Its possible transition under the wing of Internal Ministry would terminate the bureau. But if Yaroslav Strelchenok’s compliance with requirements of his post is finally carried out, everyone would only benefit from it, say experts of NGO sector.

SRS considers closing Gai Bei for good, as fraudulent activities continue

Because fraudulent activities with cash register systems continue at Gan Bei restaurants, State Revenue Service may decide on closing some of the company’s branches or putting an end to all of Gan Bei’s activities for good, notes SRS Director Inara Petersone.

Justice Ministry requests certain law amendments to be withdrawn

Latvian Justice Minister Dzintars Rasnačs has requested the withdrawal of controversial amendments to the Law on the Press and Other Mass Media approved during January 15th 2015 meeting of State Secretaries.

Lithuania’s litas-to-euro swap has not altered real estate prices

Unlike in Estonia and Latvia, Lithuania’s euro adoption has not slowed down real estate market in the country. The pre-euro forecasts of a more tepid realty market have proven to be inaccurate mostly.

Industrial producer prices in Latvia up by 0.4%

Compared to 2013, average level of producer prices in Latvian industry rose by 0.4% in 2014. The prices of products sold on the domestic market rose by 0.2%, whereas prices of exported products - by 0.6%.

Berzins to inform Russia about his plans for May 9th before informing Latvia

For the President of Latvia Andris Berzins, the decision on whether or not to partake in festivities dedicated to Victory Day in Moscow has been «inside his whole life».

Data highway Tallinn-Frankfurt unveiled in Estonia

Prime Minister Taavi Rõivas unveiled on Wednesday, January 21, a data highway from Tallinn to Frankfurt am Main, Germany, that will allow exchanging computer data at speeds up to 9.6 Tbit/s.

Kaimiņš asks to assess possible breach of ethics code by Balodis

Parliamentary deputy Arturs Kaimiņš from the Latvian Regional Alliance has asked Saeima Mandate, Ethics and Submissions Committee to assess the possible breach of deputy ethics code by the Chairman of Saeima Zolitude Tragedy Investigation Committee Ringolds Balodis.

Ventspils municipal police functions as car park with drivers for city’s «masters»

The police of Ventspils municipality are basically made to look like maintenance crew of «masters» cars’ and on-demand drivers for them, as reported by Pietiek portal in regard to a comparison of car parks of the police and the city council.

France’s plan to prevent further acts of Islamist terrorism

The French government on Wednesday, January 21, announced sweeping new measures to both improve the country’s internal intelligence abilities and to keep Muslims from radicalisation.

Opinion: terror acts in Paris at the beginning of Latvia’s presidency are Europe’s 9/11

This year’s annual Saeima foreign policy debates focus on security challenges the European Union now faces. Officials also discuss Latvia’s opportunities during presidency over the EU Council.

Saeima expands range of persons relieved of paying road tax

From now on persons who take care of children whose disability is not related to motor functions will be relieved from paying Vehicle Operation Tax. This is provided by the recently conceptually approved amendments to the Law on the Vehicle Operation Tax and Company Car Tax proposed by Saeima Budget and Finance Committee.

Majority of insurance claims of 2014 were paid for arm and leg injuries in Latvia

Approximately 80% of insurance claims in Latvia were paid for leg and arm injuries last year. The rarest injuries included head, chest and back or eye injuries.