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It is worth investing in transport infrastructure despite the war – EBA

30/ 11/ 2022
  This is the opinion of the participants of the Infrastructure Index Survey conducted by the European Business Association together with the law firms Arzinger and Sayenko Kharenko. This year the Index was focused on assessing the state of the transport industry and the impact of hostilities on the functioning of transport infrastructure. View the presentation Thus, 79% of transport industry representatives consider it necessary to develop a network of strategic universal transport hubs in the western regions of Ukraine. Experts believe that the new infrastructure can act as a reserve of capacities and provide, if necessary, a quick reorientation of export chains. At the same time, 76% agree that it is worth developing transport infrastructure projects (sea terminals, railways) of European neighboring countries at the expense of Ukrainian investments, as this will help to ensure the diversification of export-import logistics. The respondents named the most relevant investment logistics projects in Europe and Ukraine that are (1) the development of motorway overpasses connecting Ukraine and European countries, (2) the construction of strategic universal transport hubs in Ukraine as backup capacities in case of repeated aggression of russia, (3) the development of the European gauge (1435 mm) in Ukraine. The implementation of the grain deal has significantly reduced the pressure on railway logistics. At the same time, 35% of logistics experts surveyed by us believe that there is no alternative to this agreement. The other 40% name the western connection across the border (rail, road, ports) as an alternative, 29% –   the construction of transshipment and storage terminals in the territory of European neighboring states, and 16% believe that the Danube cluster can become an alternative to the grain corridor.  The vast majority of transport companies, namely 71% did not stop their activities and continue to work today, 23% stopped work, but have already partially resumed, and 6% stopped work, but have already fully resumed it. Among the transport companies surveyed by the EBA, 66% suffered direct losses as a result of hostilities. Of these, 55% estimate the level of damage as significant, 42% – as insignificant, and 3% consider recovery impossible or inexpedient. After the end of the war, 44% of companies plan to restore the damaged facilities, and another 24% plan to restore them in the near future. At the same time, 27% of companies have already restored their capacities. And only 5% do not plan to restore them. Half of the companies plan to get compensation for the damage. However, among those who have such plans, 45% have not yet taken any measures, while 38% have assessed damages, 33% have recorded damaged/destroyed property and collected evidence, and 17% are looking for consultants and experts to carry out the above activities. At the same time, 9% have already filed a claim for damages, and 16% have initiated criminal proceedings. The companies named the biggest wartime challenges: in the first place – the change in logistics due to the blockade of ports, in the second – the decrease in demand for goods/services, and in the third –  problems with energy supply. Marina Sharapa. Partner at Arzinger. The results of the survey show that the transport companies have mostly recovered from the spring decline, and assessed the challenges and risks, at least in the short term. Let′s be realistic, it is too early to talk about any predictable recovery of the transport industry in the period of despair of war, active hostilities, and constant rocket attacks. However, already now, business understands that after the war there will be a task not only to return to the pre-war state of the industry but also to implement new opportunities, primarily related to the development of infrastructure and logistics in the western direction. Vladlena Lavrushyna. Associate, Sayenko Kharenko. The EBA survey showed that Ukrainian business understands and supports the importance of investing in Ukraine′s transport and logistics infrastructure despite the war. Currently, Ukraine urgently needs a comprehensive program for the development of the transport sector, which will include both immediate measures (development of the railway network and operating ports to support exports to Europe, reconstruction of roads, bridges, and other destroyed and damaged transport infrastructure) and medium and long-term legislative and institutional changes (construction of airports, highways, Euro-gauge railways, development of public procurement and public administration systems, anti-corruption policy, etc.) To develop and implement such a program, Ukraine will need, particularly, financial and technical assistance from international stakeholders (EBRD, World Bank, EIB, USAID, JICA, etc.) and partner countries, as well as the private sector. Although the reconstruction and modernization of the transport infrastructure will be long and difficult, it is important to start strategic planning now, developing partnerships, seeking financing, and prioritizing the necessary projects and reforms for its effective and rapid implementation in the future. For reference: The Infrastructure Index is conducted by the European Business Association since 2020. This year, in a special version of the Index, we sought to assess the state of the transport industry, the impact of hostilities on the functioning of transport infrastructure, and identify relevant initiatives to stabilize the transportation and logistics market. The survey was participated by 83 transport and logistics professionals of the EBA member companies. The main partners of the survey are Arzinger and Sayenko Kharenko.

This is the opinion of the participants of the Infrastructure Index Survey conducted by the European Business Association together with the law firms Arzinger and Sayenko Kharenko. This year the Index was focused on assessing the state of the transport industry and the impact of hostilities on the functioning of transport infrastructure.

View the presentation

Thus, 79% of transport industry representatives consider it necessary to develop a network of strategic universal transport hubs in the western regions of Ukraine. Experts believe that the new infrastructure can act as a reserve of capacities and provide, if necessary, a quick reorientation of export chains.

At the same time, 76% agree that it is worth developing transport infrastructure projects (sea terminals, railways) of European neighboring countries at the expense of Ukrainian investments, as this will help to ensure the diversification of export-import logistics.

The respondents named the most relevant investment logistics projects in Europe and Ukraine that are (1) the development of motorway overpasses connecting Ukraine and European countries, (2) the construction of strategic universal transport hubs in Ukraine as backup capacities in case of repeated aggression of russia, (3) the development of the European gauge (1435 mm) in Ukraine.

The implementation of the “grain deal” has significantly reduced the pressure on railway logistics. At the same time, 35% of logistics experts surveyed by us believe that there is no alternative to this agreement. The other 40% name the western connection across the border (rail, road, ports) as an alternative, 29% –   the construction of transshipment and storage terminals in the territory of European neighboring states, and 16% believe that the Danube cluster can become an alternative to the grain corridor. 

The vast majority of transport companies, namely 71% did not stop their activities and continue to work today, 23% stopped work, but have already partially resumed, and 6% stopped work, but have already fully resumed it.

Among the transport companies surveyed by the EBA, 66% suffered direct losses as a result of hostilities. Of these, 55% estimate the level of damage as significant, 42% – as insignificant, and 3% consider recovery impossible or inexpedient.

After the end of the war, 44% of companies plan to restore the damaged facilities, and another 24% plan to restore them in the near future. At the same time, 27% of companies have already restored their capacities. And only 5% do not plan to restore them.

Half of the companies plan to get compensation for the damage. However, among those who have such plans, 45% have not yet taken any measures, while 38% have assessed damages, 33% have recorded damaged/destroyed property and collected evidence, and 17% are looking for consultants and experts to carry out the above activities. At the same time, 9% have already filed a claim for damages, and 16% have initiated criminal proceedings.

The companies named the biggest wartime challenges: in the first place – the change in logistics due to the blockade of ports, in the second – the decrease in demand for goods/services, and in the third –  problems with energy supply.

Marina Sharapa Partner at Arzinger
The results of the survey show that the transport companies have mostly recovered from the spring decline, and assessed the challenges and risks, at least in the short term. Let′s be realistic, it is too early to talk about any predictable recovery of the transport industry in the period of despair of war, active hostilities, and constant rocket attacks. However, already now, business understands that after the war there will be a task not only to return to the pre-war state of the industry but also to implement new opportunities, primarily related to the development of infrastructure and logistics in the western direction.
Vladlena Lavrushyna Associate, Sayenko Kharenko
The EBA survey showed that Ukrainian business understands and supports the importance of investing in Ukraine′s transport and logistics infrastructure despite the war. Currently, Ukraine urgently needs a comprehensive program for the development of the transport sector, which will include both immediate measures (development of the railway network and operating ports to support exports to Europe, reconstruction of roads, bridges, and other destroyed and damaged transport infrastructure) and medium and long-term legislative and institutional changes (construction of airports, highways, Euro-gauge railways, development of public procurement and public administration systems, anti-corruption policy, etc.) To develop and implement such a program, Ukraine will need, particularly, financial and technical assistance from international stakeholders (EBRD, World Bank, EIB, USAID, JICA, etc.) and partner countries, as well as the private sector. Although the reconstruction and modernization of the transport infrastructure will be long and difficult, it is important to start strategic planning now, developing partnerships, seeking financing, and prioritizing the necessary projects and reforms for its effective and rapid implementation in the future.

For reference:

The Infrastructure Index is conducted by the European Business Association since 2020.

This year, in a special version of the Index, we sought to assess the state of the transport industry, the impact of hostilities on the functioning of transport infrastructure, and identify relevant initiatives to stabilize the transportation and logistics market.

The survey was participated by 83 transport and logistics professionals of the EBA member companies. The main partners of the survey are Arzinger and Sayenko Kharenko.

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