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The World Bank analyzed the state of the transport and logistics system in Ukraine and provided its assessment and recommendations. According to analytical data on the sector’s work from February 2022, experts recognized a high ability to adapt to war conditions. But given the importance of Ukraine for international trade, the industry must find tools to reduce loads, as detailed in the Dragon Logistics blog.
Freight Transportation Development Strategy
International transportation in conditions of military aggression by the Russian Federation faced considerable challenges. The risks associated with martial law are:
- transportation safety;
- changes and restrictions in routes;
- staff shortage due to mobilization.
These factors and the increase in prices for resources, in particular electricity, fuel, and spare parts, have become a threat to the competitiveness and effective development of the logistics industry. Ukrzaliznytsia proposed to increase tariffs for container transportation, the gross weight of which is more than 26 tons. However, all market participants opposed it, and the European Business Association made a statement about the threat of such a step. Increasing tariffs will significantly reduce transportation volumes and negatively affect the development of intermodal infrastructure.
The World Bank recommendations specifically mention the importance of operational efficiency and the development of logistics, which will allow us to counteract the risk of losing income. All companies interested in the development of freight transportation, including container transportation, are looking for solutions. Among them, specialists see the following steps:
- search and development of alternative routes;
- interaction and support of international partners;
- use of modern monitoring systems;
- simplification of document processing procedures;
- cooperation of all types of transport (in particular, expanding the use of sea and rail transport, which will reduce the load on road transport).
Sea transportation, despite the occupation of territories and the threat of shelling and mining of the water area, is still relevant, convenient and economically profitable, especially container transportation over long distances. Currently, the operating ports of Ukraine are Pivdennyi, Chornomorsk, Odesa, including the ports of the Danube region – Reni, Izmail, Ust-Dunaysk.
Given the risks associated with security, logistics companies have alternative options, namely cooperation with European partners. One of them is multimodal transportation with a combination of vehicles. For example, the company Dragon Logistics uses sea transportation to the port of Constanta, Koper, Hamburg, Gdansk, and cargo is sent to Ukraine from the port by road.
Uninterrupted logistics and cooperation with international partners are the key to Ukraine’s competitiveness in the global market. These factors are also critically important for the development of the country’s economy and support for small and large businesses.