EU announced the fifth package of sanctions. Among others, the EU is looking to ban access to EU ports for Belarusian and Russian road transport operators and Russian as well as Russian-operated vessels. However, this will not impact rail freight operations from Russia to Europe. Moreover, this ban on road shipments through Russian vessels doesn’t impact the movement of essentials like agriculture, food products, humanitarian aid, and pharmaceuticals. These essentials are excluded from the ban in the interest of the EU.
However, including the transport sector in the latest sanctions list will likely “drastically limit the options for the Russian industry to obtain key goods,” the European Commission said. In the EU sanctions against Russia, the transport sector is explicitly targeted for the first time.
At RailFrieght Summit’s special edition in Brussel yesterday, Land Transport director at the EU Commission, Kristian Schmidt, stated Russia being a landbridge between Europe and China as the reason for excluding the rail freight sector.
“The sanctions are intended to hurt Russia and balance the EU interests. We have to carefully assess whether it is in our interest or not to affect that business”, he said, adding that in the previous sanctions, Russian Railways has been subject to financial sanctions.
He also commented, “This has had an impact in terms of dropping demand. There is the insurance issue, we are well aware of that. In general, there is a chilling effect on the sector.” With the ‘insurance issue,’ he referred to insurance companies across the world reluctant in covering transport on the corridor via Russia due to war risks.
Besides, another EU sanction banned the import of coal from Russia. Being the first ban on an energy source since the war began, this would indirectly impact the logistics sector. However, it still refrains from imposing a ban on importing oil and gas, to Ukraine’s dismay. Other sanctions include an export ban on advanced semiconductors, machinery, and transport equipment. Another sanction imposed a full-transaction ban on four key Russian banks including VTB, the second largest Russian bank.
These sanctions came as a response to the reports of human bloodshed of unprecedented proportions led by Russia in Bucha and other areas. On this, the EU Commission said “These atrocities cannot and will not be left unanswered. The perpetrators of these heinous crimes must not go unpunished. The EU has set up a Joint Investigation Team with Ukraine. Its task is to collect evidence and investigate war crimes and crimes against humanity in Ukraine.”
During the summit, participants from the logistics industry increasingly realised that they could hurt their business in one way or another when discussing sanctions. For instance, Does banning Russian vessels hurt the port of Kaliningrad’s trans-shipment capacity, a Russian enclave?
A track and trace technology company present at the summit legitimately asked if advanced semiconductors included the product it sells. However, the sanction lawyers present from BenninkAmar could not answer this question directly. They answered, “You will need to study the text once it is available.” Since the detailed text is not available yet, it could take a while before making these details available. Not unimportantly, there is a wind-down period, allowing for existing contracts and shipments to be completed.