The new law on mobilization has significantly shaken the field of road transport because the latter must look for a new risk management strategy. The lack of drivers, trucks left abroad in the middle of flights, the impossibility of predicting the actions of border guards when checking documents – everything that the field of road transport is already facing. However, the law came into force only a few weeks ago. As a result of all the listed challenges, the conditions of road transport have changed significantly. The blockade of the borders by Polish carriers, who renewed their resistance a few days ago, is being signaled. “Dark times” impose their limitations, and this forces transport and logistics companies to look for more flexible and efficient solutions.
Global Ocean Link General Director Pavlo Linnyk told Mind what factors influence the transformation of road transport in Ukraine and what immediate solutions are needed by road transporters.
FOPs also require reservations
Every day, many drivers working for Ukrainian logistics companies cross the state border. At the same time, there is no clear system for booking international drivers. This was stated by the vice-president of the Association of International Motor Carriers of Ukraine, Volodymyr Balyn. According to him, the current reservation system does not consider the specifics of the industry. For example, Government Resolution No. 76 does not regulate the issue of armor for FOP. Instead, a significant part of carriers work precisely as individual entrepreneurs.
Representatives of the industry rightly believe that it should be considered as critically important for the economy: like the agricultural sector, IT, and other important areas. So it is not surprising that drivers are already protesting against ill-conceived changes.
Drivers are being replaced by women and men 60+, but the industry needs systemic solutions
The described problem needs to be solved urgently because the business cannot adequately conduct its activities in connection with the introduced restrictions. First, those who created the issue should deal with the solution. Both at the level of regulatory and legal acts and at the level of their implementation, there should be no artificially created complications that paralyze the work of entire industries.
There are fewer and fewer drivers. And if nothing is done in the direction of constructive changes, then point X will come when it will be necessary to completely switch to rail transportation due to the impossibility of finding a car for the route. And here it will not even be about the price.
We work in our industry legally and have the status of critical importance for the economy of the enterprise, so we solve the issue by booking our driver employees. But even this does not become a “panacea” because there have already been cases of removing the driver from the flight for re-checking: even when he is booked. This, at a minimum, leads to a loss of time when the delivery of the cargo is delayed for 1–2 days. This adds to many misunderstandings with customers.
If we analyze this situation in the context of “what happened and what happened”, then the strengthening of checks at the border created a certain pressure on the industry. So, previously it was enough for drivers to show invoices and registration in the Shlyah system. Now border guards must ask for military registration documents. The protest held by the drivers clearly testifies to their attitude towards this.
If the problem is not solved at the legal and organizational levels. In the near future, we may face the fact that it will become extremely difficult to hire a car for transportation because drivers will be afraid to get behind the wheel. In particular, this may cause logistics disruptions in the eastern regions. In the west of Ukraine, for example, Polish carriers may come to replace Ukrainian carriers. However, they are reluctant to go to the eastern regions. The consequences will be felt by everyone: both exporters and importers. The issue will not escape those market players who carry out internal road transport. One of the options for transport and forwarding companies can be the involvement of women who are not subject to mobilization, and men of unappealing age, in particular, 60+. This is one of the solutions currently used by market participants.
However, such solutions have drawbacks, in particular, when it comes to training drivers who have not had long-term experience in working with trucks. Driving a car is much easier than, for example, understanding what happened if the car broke down on the road. For this, you need to have the appropriate skills and sufficient practice. Therefore, it is time to wait for a quick adaptation of female drivers to the new conditions.
However, it is impossible to completely solve the problem in this way. Currently, an active dialogue between the state and private business is needed. Only this allows us to discuss a two-sided vision of the problem and ways to solve it.
Drivers of draft age refuse to return to Ukraine
Cases of cars left abroad by hired carriers have become more frequent. Everything is solved by the quick dispatch of replacement drivers, but the trend itself is alarming and shows that the legislation on booking drivers is not well-thought-out. There are rare cases of drivers being removed from flights right on the way under customs.
Lawyers have to intervene in the situation. As a result, there is a slight panic in the road transportation market. And although the prices have not gone up yet, it is increasingly difficult to find the optimal car. So, according to the statistics of the GOL company, 22 drivers who were not in the state, but hired for transportation, ran away only in the week of May 13-17.
During May 20-24, another 15 drivers escaped. Of course, the problem was completely solved by the company itself. Therefore, the client’s business has not suffered from this yet. Of course, all cargo that can be loaded into a container can be alternatively transported by our team by both rail and road transport.
But here everything depends wholly on desire and undefined readiness of the client to reformat. However, the trend itself, how the implementation of the mobilization legislation affects the transport and forwarding industry, is worrying.
Potential consequences are an increase in price and time for logistics
It is also worth considering what the consequences may be if the concern is not solved. This is an increase in the cost of goods as a result of an increase in the cost of transportation. And if the final cost of some goods reaches a critical limit, it will be unprofitable to import them.
In addition, it is worth remembering basic behavioral economics, when in the case of difficulty in making one choice, consumers make another. More customers will switch to rail transportation. And this is logical because the train will not be stopped on the way by removing the driver.
The next inevitable consequence in the long-term context will be a slump in the markets for cheap products. This will happen because the cost of logistics will increase. It will be impossible to transfer this factor to the final consumer. The part of the market related to the ports of Reni and Ismail and transportation through the Romanian port of Constanta will also decline. As practice shows, many drivers no longer want to go in this direction because it is here that driver checks have become more frequent.
Some believe that for the white market undefined carriers, the situation will be better than for the so-called gray segment, but it is difficult to predict. It is also possible to find an alternative and replace motor vehicles with railways where there is such an opportunity. For example, in cooperation with the ports of Poland, such a format has been established. Despite all the mentioned alternatives, it is worth understanding that they will not solve the problem systematically.
The ratio of the volume of cargo transported by road in our company is 2 to 1 (that is, 66% is by car, and 33% is transported by rail). We are a multi-directional company. Among the cargoes are household chemicals, minerals, steel, polymers, fertilizers, household appliances. All these market segments require uninterrupted transportation for the industry to function effectively.
Carriers must unite their efforts
The conclusion the industry can draw from this issue is that proactive participation from market players and dialogue with legislative initiators are essential. On their part, it is crucial to refrain from making rash decisions that could severely impact the entire supply chain, leading to shortages and even problems with delivering humanitarian aid. These mistakes have already been made today. Whether they will be corrected in time will be revealed in the near future.
Ukrainian logistics is undergoing dynamic changes influenced by factors such as war, political and legal decisions, and a whole range of other circumstances. However, the key aspect is that its representatives constantly keep their finger on the pulse of the news and seek ways to effectively respond to new challenges.
