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Wednesday 07.10.2015 | Name days: Daumants, Druvvaldis

Russian embargo shockwaves started crippling Lithuanian haulers

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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/

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  1. Linda says:

    How is Kalingrad getting supplies? Closing borders here?

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