During the logistics work in wartime, our company, with the assistance of international banking institution, has found a mechanism to provide guarantees against military risks when working with European railway operator LTE on the territory of Ukraine. Therefore, our current fleet of wagons allows us to transport 1,500 tons (net) per week by rail from Ukraine to the EU. In the near future, this volume will be significantly increased according to transportation orders.
There are also several factors that reduce logistical risks in the current situation.
– The railway transshipment base of our logistics company is located in two cities in the Zakarpattia region, in close proximity to the borders of Hungary, Slovakia, Poland, and Romania. All these countries are members of the EU and, most importantly, NATO. Chop is located 7.4 km from the border with Hungary, and Mukachevo is 40 km away.
Throughout the active hostilities, there have been no recorded long-term damages to the logistical chains in Ukraine. The transportation system operates smoothly throughout the country. No grain trains, other goods shipments, or civilian cargo vehicles have been destroyed as a result of missile attacks.
No rocket strikes have been recorded in the Zakarpattia region since February 24, 2022. There are two reasons for this:
– Despite its rhetoric, Russia is afraid and does not want NATO to join the war. When on November 15, 2022, as a result of repelling a missile attack on objects in the Lviv region, missile debris fell in the Polish city of Przemyśl, killing two local residents, panic began among the occupying forces in anticipation of a military response from NATO, according to the advisor to the President of Ukraine, Mr. Arestovich.
– As is known, the leadership of Hungary refused to provide any military equipment to Ukraine. Moreover, the Hungarian government does not allow other EU or NATO members to deliver equipment to Ukraine through Hungarian territory. Previously, Hungary blocked the approval of an €18 billion aid package to Ukraine and blocked the allocation of another tranche of €500 million from the European Peace Fund (EPF).
In addition to the aforementioned, one of the five institutions of the World Bank Group, MIGA, has already started providing guarantees to insure against military risks from the Trust Fund for Reconstruction and Economic Support of Ukraine (SURE). And this work will continue, which will create additional positive signals for businesses wishing to work with Ukraine during and, most importantly, after the war.
The press service of the Ministry of Economy of Ukraine reported this on June 22, 2023. The relevant agreement between MIGA and the German banking holding ProCredit was signed in the presence of the Minister of Economy of Ukraine, Yulia Sviridenko, in London during the URC-2023.
MIGA is a multilateral investment guarantee agency that is part of the World Bank. MIGA supports foreign direct investments in developing countries by insuring investors against non-commercial risks such as expropriation, war, and civil disturbances. In 2022, the agency provided guarantees for 54 projects totaling $4.9 billion.
Conclusions: The organizational and financial scheme of the company’s operations and the location of transshipment bases for railway transport in the Zakarpattia region of Ukraine are critically important factors for the smooth functioning of logistics chains regardless of the timeline for the end of active military operations in Ukraine.
As for road transportation, the maximum risks are limited to potential temporary road closures in case of emergencies. These risks are mitigated by a well-developed network of roads that have been actively reconstructed and expanded since the hosting of the UEFA European Championship in 2012.