What price will the Ukrainian and Polish sides have to pay for the blockade of the border?
In a situation where the main sea route is blocked, cargo air transportation is impossible, and the railway has limitations due to the difference in track width, road freight transportation remains the only option for transporting the export of products from Ukraine and the import of goods, as well as military and humanitarian cargo from abroad.
The Polish-Ukrainian Chamber of Commerce emphasizes that “In connection with the blockade and systematic destruction of the Black Sea ports, which before the full-scale invasion accounted for more than 60 percent of Ukrainian exports, exports were reoriented to railway and road routes. The increase in automobile transportation from Ukraine is not a business trick but the result of Putin’s policy.”
An economic trap
After blocking the fourth road freight crossing, the trap closed. The Ukrainian side is already feeling the consequences of the blockade. It seems that Poland has not yet realised the scale of the disaster that has befallen her. The tsunami wave is nonetheless gaining strength and may hit later.
The three-week blockade has blocked Ukraine’s border with a main trading partner, and in terms of how devastating its consequences are for the Ukrainian economy, has been compared to the Russian blockade of the Black Sea ports.
“For bleeding Ukraine, the blockade of the land border means a drop in foreign trade turnover and, as a result, a loss of revenues to the budget, a loss of opportunities for new economic projects,” notes the Polish-Ukrainian Chamber of Commerce.
What losses has Ukraine already suffered today?
The Ministry of Finance of Ukraine is analyzing the impact of the blockade of checkpoints on budget revenues, but the institution is not yet ready to provide the final figures. However, businesses note that the closure of the border has significantly reduced Ukraine’s income. According to Oleksandr Kyrylyuk, the director of the international transportation department of the international logistics company Zammler, the company loses 350 euros a day for each truck stuck at the border.
According to the calculations of the European Business Association, the expenses of one Ukrainian company per day, on average, amount to UAH 1 million. Based on the surveys conducted by the EBA among 55 logistics companies, after two weeks of the strike, the total amount of losses amounted to at least UAH 305,880,000 (€7.7 million).
According to preliminary estimates of the Federation of Employers of Ukraine and AsMAP of Ukraine, the estimated direct losses of the Ukrainian economy from the blocking of checkpoints on the Polish-Ukrainian border, as of November 23, amount to more than 400 million euros, and indirect losses to several billion euros.
But while the border blockade continues, the calculations can only be preliminary; for now, it is only the tip of the iceberg.
Unfulfilled contracts by Ukrainian companies will lead to the loss of business partners. It is unlikely that the Ukrainian counterparties will be able to sign the contracts that are currently being concluded for next year. “If you don’t want to cancel the contracts, return the permits for commercial transportation,” advised the All-Polish Association of Carriers.
Due to the danger of blocking the border of any wave, foreign companies can transfer their production from Ukraine to other countries. The collapse of the industry in Ukraine will kill the Ukrainian economy, which risks becoming a raw material appendage.
Impact on Christmas trade
The losses of companies, accordingly, are related to the price of goods, which before Christmas and New Year will not only increase in price but may not reach store shelves at all.
The value of the goods of various trade chains, such as Auchan, Silpo, ATB-Market, Novus, and Varus, whose trucks are waiting to cross the border, ranges from 300,000 to 5 million euros. That’s according to Nataliya Petrivska, executive director of the public union “Ukrainian Food Retail Alliance”.
At the border, Polish goods stand in line: frozen vegetables and fruits, confectionery, cheeses and alcohol, say retailers. There is also a gradual shortage of vehicles.
“Even if the company manufactures ironing boards, it still falls into a trap because of the blockade,” Nataliya Artemchuk, manager of the tax and customs committees of the EBA, told trans.INFO.
Managers cannot ensure production with raw materials, enterprises stop, workers are sent at their own expense, people have nothing to feed their families. Enterprises also cannot sell their products. Polish importers lose huge sums due to the border paralysis.
Losses on the Polish side
The Association of International Motor Carriers of Poland (ZMPD) believes that it is necessary to defend one’s interests at the moment and calculate losses later.
“No analyzes have been conducted yet, and there are no data on the losses of Polish carriers,” said Jan Bucek, president of ZMPD. “We are currently looking for opportunities to negotiate with the strikers. Their frustration grows, and so does their determination. Nobody even tries to talk to the protesters, so they are, in fact, becoming more and more radicalized.”
According to the calculations of the Polish-Ukrainian Chamber of Commerce, based on a survey of two dozen member firms of the organization, the losses will be huge, they will be counted in billions.
“At the state level, such studies have not been carried out yet,” Jacek Pehota, head of the Polish-Ukrainian Chamber of Commerce (PUIG), told trans.INFO. “According to the information we received from 21 companies, the losses due to the border blockade from the Polish side amount to more than 100 million zlotys, and these are only preliminary data, which do not include fines for non-fulfillment of contracts and termination of contracts.”
The head of the Polish-Ukrainian Chamber of Commerce and former member of the Seimas also added: “We had a huge positive trade balance with Ukraine, which means that Polish entrepreneurs and the Polish economy will suffer huge losses.”
Jacek Pihota noted that Polish manufacturers who are manufacturing in Ukraine cannot deliver their products to consumers in the European Union on time due to the blockade. Because of this, they have huge losses. But the worst thing is that Poland is losing trust, the head of PUIG emphasized:
“Poland is losing credibility in the eyes of international partners, in the eyes of the world, as a country that cannot ensure the free movement of goods across the external border of the European Union. We are losing credibility as a country that could be a hub for rebuilding Ukraine. The consequences of this situation will be very long-lasting.”
“Today, the European Union treats Poland with caution, assessing the situation as 'unfriendly steps,'” said Volodymyr Balin, vice president of ASMAP. – Maybe Poland is not very interested in being in the EU?”
Echoes of the situation in Europe
Ukrainian businesses express surprise at the short-sightedness of European authorities.
“Similar to the situation that has developed in Ukraine, a similar scenario is unfolding in other European countries,” notes Nataliya Artemchuk. “Initially, companies incur losses, eventually leading to a decline in the country’s income.”
The European Business Association reports the closure of European companies in Ukraine.
“European corporations, which had structural divisions in Ukraine, are currently deciding to relocate them to other countries,” reports the manager of the tax and customs committees of the EBA.
Natalia Artemchuk also notes that the automotive industry is shifting from Ukraine to Africa.
“Now we will be driving cars made on the African continent.” Natalia also adds that food manufacturers are considering moving their production, as delays at the border compromise the quality of dairy and fresh products.
However, the mass exit of Polish companies from the Ukrainian market has not been observed yet.
“So far, there have been no signals from Polish companies about exiting the Ukrainian market; they continue to operate,” says Jacek Piehota. “Even when a Russian missile hit the Lviv Fakro plant, they did not cease their activities in Ukraine… But it is uncertain what will happen next.”
Problems with electronic queuing
The demands of the strikers (which, by the way, were changing) include the return of permits for Ukrainian drivers, a live queue at the two checkpoints at the border “Nyzhankovychi” and “Ustylug,” a separate queue for empty cars at YeCherz, and a ban on the registration of companies with eastern capital.
“The people who are on strike do not fully understand the specifics because they worked in other markets, including Belarusian and Russian,” notes the vice-president of AsMAP in a personal conversation.
Regarding the requirements for the “Shlyah” system, Volodymyr Balin categorically states:
“The answer to the 'Path’ system is short but negative. 'Shlyah’ is a system for granting permission for temporary departure, up to 60 days. The Polish side wants all drivers working for Polish companies—and there are currently 117,000 according to our estimates—to leave freely. I’m sorry, but we are at war. The Ukrainian economy and the Armed Forces need these drivers more. Perhaps the governments of Ukraine and Poland will come to an agreement and allow these drivers to leave freely, but today this issue is not on the agenda.”
The vice-president of AsMAP agrees that there are problems with the electronic queue. Both Ukrainian and Polish carriers tried to manipulate the queue. But today it is almost impossible.
His Ukrainian colleague responds to the complaints of the president of the Association of International Motor Carriers of Poland that Polish drivers were being “thrown out” of the queue:
“Is the Polish carrier being kicked out of eCherga today? It also throws out the Ukrainian one because they registered when they were outside the borders of Ukraine, and you need to register on the territory of the country.”
Among the tricks, carriers also use a technique in which an empty car, registered as such, drives into a checkpoint, and in Europe at that time, they pull up a customs declaration, Balin said.
Yan Buchek says during the conversation that the Ukrainian side does not want to make compromises:
“However, both on the Polish side and on the Ukrainian side, there are no officials responsible for our countries, there is no understanding of the situation and no willingness to compromise. Polish carriers want their empty cars not to be registered in eCherz but to drive without a queue. This is discrimination against Ukrainian carriers, but we are looking for compromises,” added the head of AsMAP.
The Ukrainian side agreed to create an electronic queue for vehicle registration at the Ustylug-Zosin and Nizhankovychi-Malhovice checkpoints, similar to the queue for buses, where after registration, vehicles pass in a standing order.
“If even for a while the order was restored at the border, then in a few months, we would return to the point of departure, i.e., such a mess in which Polish drivers lost,” said Jan Bucek.
In the rhetoric of the protestors, the leitmotif is the theme of capturing the Polish market by Ukrainian carriers.
“This is not true – Volodymyr Balin spreads his hands. Liberalization of transportation improves the situation for us exclusively in bilateral and transit transportation. We do not compete with the Poles because we cannot, in fact, work in their market. The entire European market—no more than 100,000 shipments per year.
What kind of competition are we talking about? According to the Agreement between Ukraine and the EU, transportation must be carried out exclusively through the territory of Ukraine. There is no logic in transporting goods from Germany to Poland through the territory of Ukraine.
The head of AsMAP of Ukraine also notes that today Ukraine is not interested in Polish carriers. The battle is for the future:
“Polish carriers look at the Ukrainian market from the point of view of perspective. Before the war, 35 percent worked on the Ukraine-Poland market. Poles were more interested in going to Russia and Kazakhstan, and further to the East, as it is profitable to cover long distances. Today, Polish carriers carry out only 10 percent of the Ukraine-Poland route. Transportation is halted by the security situation. On the Ukraine-EU market, 15 percent. transportation is carried out by non-residents.”
“If in the future we will be partners, then this partnership must be built,” said Jan Bucek. – You can’t push your partner out of the way. We need to find a way to use that road so that there is room for two.”
The border should not be the Berlin Wall
The checkpoints have been blocked for more than three weeks. We asked experts from the Ukrainian and Polish sides how to unblock the border.
“There is no simple solution,” replied Jacek Pehota. – The border of a democratic EU member state is not the Berlin Wall!”
“There is only one way out – diplomatic negotiations,” believes Oleksandr Stupak, head of the NGO „Strength of Unity.” „It is a strange situation when the requirements are not fully understood and are almost impossible to fulfill.”
AsMAP of Ukraine suggests seeking justice in the Polish courts:
“We filed an appeal. If the commune decides that the appeal is justified, it will itself make a decision to cancel the protest. Although representatives of the communes are not in the mood for communication and show support for the strikers.
Volodymyr Balin emphasizes that it is also necessary to prepare lawsuits from carriers, consignees, consignors to receive compensation from communes, or strikers who violated the law and blocked work.
“Honestly speaking, I don’t have a recipe for ending the protest,” Yan Bucek admitted. Today, we do not even have an addressee who could select the demands and satisfy them; the old government does not want to deal with this, and there is no new one yet.
The ZMPD president also advised:
“The Ukrainian side should analyze the circumstances that led to discontent on the part of the Polish side. Do, at least, what can be done from the Ukrainian side. … It is necessary to bring order, at all levels, in particular, in transport.”
Concerns of the European authorities in Brussels
Negotiations between the Ukrainian and Polish sides, as well as Brussels, are ongoing, but no results have been reported so far.
“Brussels has no direct levers of influence,” noted Nataliya Artemchuk. “Due to the calculation of the damages caused to the state, a decision can be made to reduce the financing of Poland by the European Union.”
Those who were supposed to solve the problem, i.e., the Polish authorities, are surprisingly short-sighted. But this, at least, is understandable—the old government is leaving, and the new one has not yet been formed.
“I don’t understand why they should accumulate negative baggage?” Nataliya Artemchuk wonders. “It will go down in history that they did not resolve this issue, and Poland suffered huge losses. Even after the situation is resolved, everyone will remember.” The position of the Polish guarantor, or rather its absence, is surprising.
“ZMPD appealed to the Prime Minister and the President so that they, using their powers, together with their Ukrainian colleagues, try to satisfy at least part of those demands,” Jan Bucek said.
The head of the ZMPD suggested that those drivers who are on the Ukrainian and Polish sides should be let through, and then the borders should be blocked, but without the truck drivers who have been waiting for weeks at the border in terrible conditions, without the humanitarian disaster that befell both Polish and Ukrainian drivers on both sides of the border.
A Humanitarian Disaster
While the authorities, both Ukrainian and Polish, are scratching their heads, Ukrainian drivers have been standing at the border for more than three weeks. And if the toilets appeared on the fourth day of the blockade, they only started thinking about the supply of food and fuel much later. A few weeks later, a humanitarian convoy was organized. The Ukrainian authorities even attempted to carry out an evacuation.
“How easily it is possible to create a humanitarian disaster out of nothing inside a civilized country,” the EBA representative wonders.
Currently, there is a humanitarian crisis at the border; two Ukrainian drivers have already died in the queue. And the performance of the theater of shadows continues. A dozen drivers (although more than 300 were announced by the strike organizers) at each point on the border was blocked. The fact that they also lose 350 euros on one truck does not bother them. Everyone knows where „ears grow” from—Russia continues the war on all fronts.
“Everyone understands very well that the carriers participating in the strike are financed by pro-Russian parties, in particular, the Confederation,” noted Natalia Artemchuk.
In addition, the so-called “protest of shadows” turned out to be a surprisingly successful PR move.
“This increases the popularity and recognition of the local authorities that allowed the protest in media circles; everyone writes about them. But this can turn against Poland itself,” warns the representative of the EBA. „Do they not understand what kind of monster they have warmed on their chests?”
And while everyone is looking for a way out of a difficult situation, Polish carriers warn:
“The protest will spread: after Medica, we will block Zosin.”
trans.INFO has contacted the Ukrainian Ministry for comment.