Rail freight traffic will continue to drop - Ossinovski

RIGA - Rail freight traffic through the Baltic states will continue to decrease, and even in the optimistic case scenario, if the war in Ukraine comes to an end and relations with Russia gradually normalize, there will be no return to previous rail freight volumes, Estonian businessman Oleg Ossinovski, the owner of rail transport company Skinest Rail, told LETA. 

Ossinovski noted that Russia's war in Ukraine has fundamentally changed logistics in the region - the European Union (EU) has introduced sanctions, Russia has introduced countersanctions, and Belarus has isolated Ukraine from the 1520 millimeter gauge railways. All these factors have led to a downturn in rail freight business. In the first half of 2022 the downturn was not that pronounced, but in the fourth quarter the drop was significant and is likely to increase in the following quarters, Ossinovski said, adding that the Baltic states only have land borders with Russia and Belarus, which means that rail freight traffic will keep slowing. 

At the same time, Ossinovski indicated that the traffic of rail freight from the east started to  decrease already before the war. In Estonia, it has been decreasing since 2007 after the local authority relocated a Soviet-era monument in Tallinn. In Latvia, the downward trend has been observed in the past couple of years. 

"We should just forget about the freight volumes Latvia had in 2012, 2013 or in 2014, for instance, - they will never return. So those who dream about 60 million tons should just forget about it. Back then it was just a coincidence of various factors which will never repeat again. If Latvia ever has 20 million tons of rail freight again, it will be excellent. I think there will be less," Ossinovski said. 

Apart from the state-owned Operail, there are currently three companies actively involved in rail freight transportation - the Sillamae port, Go Rail and Latvia's LDz Cargo. The Latvian company is operating one route and carrying freight from the Paldiski port to Koidula railway station at the Estonian-Russian border. 

"They are shipping palm oil, if I am not mistaken. The oil is delivered to the Paldiski port, then it is filled in tanks and LDz delivers it to the border. Personally I do not see anything wrong in this," Ossinovski said. 

"Whether LDz Cargo, as a state-owned enterprise, is or is not obliged to follow moral principles, is a good question," he added.