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Transport association president: rail freight volume has dropped to fifteen-year minimum

In 2017, Latvijas dzelzceļš transported 43 million tonnes of cargoes, which is the lowest freight volume in the past fifteen years. On top of that, there are no preconditions for the cargo decline to stop. This means the lowest point has yet to be reached, says president of Baltic Association – Transport and Logistics (BATL) Inga Antāne.

She mentions the seriousness of the situation in the industry and invites responsible ministry to act because unemployment already affects Latvia’s national economy. This is expected to affect not only people working in the industry but also all other residents.
 

BATL president says: «2017, as predicted, was the worst for the country’s railway freight in the past 15 years. Next year is expected to demonstrate an even more rapid decline even though in its letter to Saeima’s National Economy Committee, LDz mentioned that the expected volume for 2018 may reach 49 million tonnes. In the current situation, this is an impossible and utopian goal. No one can say that talks about a crisis in the transit industry are exaggerated. The crisis is here, and we will feel its consequences in 2018.»
 

The most realistic scenario for the situation’s stabilization is increasing freight volume with Belarus, where China has built a major logistics centre. Until now, we have not benefited from it much, because this centre has active cooperation established with Klaipeda port. For Latvia to attract cargoes from Belarus, the country has to do its homework and resolve problems that affect its competitiveness.
 

The association emphasizes that the first task is offering a competitive tariff. The industry has been asking Latvia’s Transport Ministry to improve the country’s competitiveness with rail freight for years. Problems have also been mentioned by partners in foreign countries. It was even mentioned in a report from the European Commission.
 

At the same time, Antāne mentions that partners abroad had mentioned problems with excessive railway infrastructure costs in the past. Instead of addressing this problem, however, the government intends to increase tariffs in 2018. As a result, Latvia has the highest railway infrastructure tariff among all EU member states. This means Latvia’s partners are less motivated to pick Latvia as a transit country for their cargoes.
 

«One other task is reducing excise tax for fuel, which, once again, will grow starting from 1 January,» says Antāne.
 

She continues: «LDz has to become many times more efficient – while the company’s tariff was 7.8 EUR/km before the crisis in 2007, it has since grown to 11.08 EUR/km. Just how effective was the restructuring of the country’s railway system?! It should be added that the company’s loans in banks reached EUR 50.44 million in 2007. Last year, however, this amount reached an astonishing EUR 177.33 million!»
 

Antāne also notes that Latvia has always had more rails per capita than other countries. To maintain the railway network, LDz has to carry at least 60 million tonnes of cargoes every year. While the current deficit is already 25%, it is important to consider ways to use competitive tariffs to attract transit cargoes.
 

It should be said that the president of BATL also emphasized that it is important to open Latvia’s railway system for actual open competition – fully liberating the railway market, which means it will be made open to the same external conditions that apply to Latvenergo to make it interested in ensuring competitive conditions in accordance to the developing situation, not merely use its monopoly.
 

Finally, BATL president notes that it is highly important to form a unified tariff policy and develop a flexible and competitive system for calculating infrastructure fees on equal terms for Riga, Ventspils and Liepaja direction to help unify the transit corridor’s offer. The established policy is unfriendly for regional ports and puts them in a situation of unfair competition.

BNN

22-12-2017
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