Index – Economy – No matter how good a deal it is, Hungary will hardly be the solution for deriving Ukrainian grain exports
The European Commission would help Ukraine to deliver some twenty million tonnes of grain stored last year from its customers over the next three months to the EU’s transport and rail infrastructure. In addition to bringing revenue to the Ukrainian economy, less aid would have to be spent on maintaining the viability of the war-torn country, which means that if it succeeds in to prevent a food crisis. , another wave of refugees targeting Europe could be prevented.
Nor is it incidental that the Ukrainian warehouses, which had not yet been bombed or unloaded by the Russians, should be released as soon as possible before the new crop is harvested, and then, as CNN found out on their own transport vessels – trying to sell in Mediterranean countries. With more or less success, as there were examples of the Russian consignment being suspected by Egyptian and Libyan port authorities and the ship not being released, the consignment was already welcomed in the Syrian port of Latakia, which had a very close relationship with Putin’s Russia.
The replacement of capacity by Ukrainian ports occupied or damaged by the Russians, possibly blocked, cannot be triggered on any possible route in months, which requires several years of infrastructural development in Romania, the Baltics and Hungary. . – said Szalma Botond, CEO of Plimsoll Zrt., Which deals with, among other things, rail and ship transport, and is a member of the board of the Hungarian Logistics, Procurement and Inventory Company, told Index.
The most obvious route would be the port of Constanta in Romania, where grain stored in the Odessa area can still be reached by rail via the two Ukrainian ports on the Danube and by touching Moldova. The Romanian government has quickly announced a huge railway development program in this regard, but its implementation will in no way solve this year’s problem in Ukraine.
On the Ukrainian side, the problem is that even if there are entrepreneurs who have several transport barges, they cannot sail down the Don River to southern Ukraine to be used to boost grain exports, Straw Botond said. the two million silos currently available in the port of Constanta will be fully utilized.
That is why Szalma Botond considers it a huge omission that the Hungarian state did not buy into the Romanian port for twenty years, when it had the opportunity, which is facing huge development and business opportunities.
Although Hungary has purchased ownership and use concessions for 32 hectares in the port of Trieste, so much has been announced since last year’s announcement that the area will be put out to tender for the environmental exemption of the area. .
The Polish ports (Gdańsk and Gdynia and Szczecin) and other Baltic ports included in the EU’s plan to alleviate the grain crisis in Ukraine are difficult to bypass. But here too, the redirection of wide and narrow gauge trains is a problem, and there are few rail cars available in the EU. Straw Botond mentioned as an example that his company would have ordered wagons from Poland to transport 1,500 tons of salt by rail, but they could only set it up with a four-week wait. The logistics expert estimates that it is otherwise good if half of the twenty million tons of Ukrainian grain export demand has railcar capacity. Only European industry would have the need to supply Ukrainian vegetable oil, ore, steel, coal and other bulk materials, which should also be organized.
In connection with the previous plan, the main problem is that of transport capacity even by default scarce: while a cargo ship can hold between 65 and 120 000 tonnes of grain, depending on the type and port, a line can hold up to 1,500 tonnes and a truck up to 20 tonnes. And then we didn’t even talk on the integrity of railway lines in Ukraine, although it is striking that the typical European transport routes for Chinese goods have not been particularly attacked by either party. Another problem is the change of track between the Ukrainian and the new railway lines: there are not yet enough wagons on the EU side to transport or use grain.
A severe lack of capacity is hampering Hungarian rail transport
Certainly not in Hungary, as Rail Cargo Hungária points out Communication The company, which handles three – quarters of the Hungarian rail grain transport, also wants to transport about 1,500 tons of Hungarian crops a year. It is worth noting here that, by the way, Hungarian crop exports mean larger and significant quantities: at least three million of the five to six million tons of wheat produced on average, but also millions of tons of the six to eight million tons of maize.
However, the majority of them leave the country on the Danube due to the decades-long problems of rail transport and when the water level is adequate – although there is not enough standing barge for the needs. In the first quarter of 2022, 41,000 tons of crops arrived from Ukraine, organized by Rail Cargo alone, from which an additional 85,000 tons are forecast to be shipped by the end of June.
In any case, compared to the one million tons of Hungarian grain indicated above, Rail Cargo has received an indication since the war that there would be a demand for up to five million tons of Ukrainian grain a year in Hungary due to the replacement of Black Sea ports. “We receive a request every day to ship up to one million tons of grain from Ukraine, but this is unsolvable only through the Záhony region,” said Salma Botond, adding that
it has a Ukrainian customer who would have to ship four million tonnes of crops, but is already happy to get a thousand tonnes out of the country every week.
At present, the transhipment / transshipment capacity of Záhony is five hundred thousand tons a day, which is sad compared to the fact that before the change of regime, the export of ten million tons of goods per year was solved with a worse machine park. But in his experience, that was also a problem for the public service provider this year, in order to transfer the vegetable oil interested in the railway to a truck, they solved the pumping of a thousand tons of oil a day with the involvement of an intermediary company, which bought a pump and a pipeline of the appropriate length for one million orders. Although a container terminal was built as a private investment in Fényeslitke, it has not yet been handed over, and grain is typically transported by rail with other equipment and not in containers.
In process theory, it sounds good that the port of Trieste, Rijeka or Koper can be reached via the Hungarian railway network, but the condition of the railway network is catastrophic, there are about thirty thousand slow signs nationwide, not to mention the number of track renovations, Szalma Botond noted.
Rail freight rates also dropped roughly
The surge in demand for rail cars is also a rise in prices at EU level, but it is still icing on the cake after EU electricity and fuel prices have subsided. Whereas previously the transport of a tonne of goods from A to B was 15 euros, now it can be as much as twenty to thirty
Said Straw Botond. In Hungary, the problems of private railways are compounded by the fact that the electricity needed for traction energy can only be obtained from MÁV, but the state railway company cannot give an electricity price offer one month in advance, it will only receive an invoice for the current market electricity price. However, there were examples in March and April that prices on current power exchanges were so volatile that domestic electricity suppliers offered contracts to domestic businesses on a daily basis, and if the customer did not decide within a day, they could see double-digit growth in 24 hours. on offer. However, this makes it difficult to organize transport, let alone price it. As Salma Botond described, freight rates without roads have risen by an average of thirty since its outbreak on February 24th.
(Cover image: Barley grains are poured from a mechanical arm and then loaded onto a transport vessel in the commercial port of Mykolaiv, Ukraine on July 2, 2013. Photo: Vincent Mundy / Bloomberg / Getty Images)