Competition from Ukraine is a pressing problem for the Polish transport industry

After the European Union abolished road permits for Ukrainian carriers for bilateral and transit journeys, they are taking the Polish transport market worth PLN 136 billion by storm. The Polish transport industry suffers from this – and not only Poland.

European-Ukrainian transport agreement

As a result of the war in Ukraine and the difficult situation our eastern neighbor finds itself in, in 2022 the European Union signed an agreement with Ukraine on road transport of goods. Its main goal was to support the Ukrainian economy, among others, by temporarily abolishing permits for road transport of goods between UE and the EU. Under the agreement, transits to third countries by both parties do not require permits, while the agreement does not allow the Ukrainian side to carry out cabotage or cross-trade transport within the EU without a permit. The contract is currently extended until June 30, 2024.

Unequal competition

As could easily be predicted, the agreement created new prospects for the Ukrainian transport industry. Before the outbreak of the war, the vast majority of Ukrainian exports were carried out by sea – almost 90% of export goods were exported from the country this way.  Since signing the transport agreement with the European Union, most of Ukrainian exports have been taken over by road transport. However, this is not the end, as the agreement opened the door to the European transport market for Ukrainian carriers – without the requirements or obligations that European carriers must meet. And this is where the problem begins.

As Polish carriers note, Ukrainians gaining EU privileges quickly began to push Polish companies out of attractive transport services to Ukraine, because they could not compete with them in terms of rates. Polish carriers say loudly that Ukrainian companies undertake cabotage transport and transfers to which they have no right. By offering competitive rates, they transport Polish exports to the West, and there they carry out subsequent transports using a leaky control system. This type of transport accounted for approximately 38% of all international road transport performed by Polish companies, so the competition is strongly felt by the industry.

The Polish transport industry has long been raising alarms and pointing to the unequal conditions in which it is forced to compete with Ukrainian carriers. Ukrainian transport companies have significantly lower costs, especially wages. In the case of drivers, they amount to approximately EUR 500-700 per month, while Polish entrepreneurs have to pay salaries of EUR 2,000-2,500. euro per month, and further increases are ahead of them, because 2024 began with a quite significant increase in the average forecast salary.

Ukrainian carriers are able to offer freight rates that are even 30-40% lower also thanks to the fact that EU regulations, including the mobility package, are not applicable in this country. The regulations impose a number of obligations on EU entrepreneurs, the fulfillment of which significantly affects the costs of running a business. Ukrainian companies do not have to meet these requirements, which, according to Polish carriers, makes competition on the market unfair. Polish transport companies are reporting 25 or even 50% declines in the number of orders carried out.

Strikes by carriers without the desired results

The difficult market situation forced Polish carriers to initiate protest actions. The situation on the border with Ukraine has been tense for months. The Polish transport industry is of the opinion that the European agreement with Ukraine should not limit the development of transport companies in our part of Europe, and this is supported by carriers from other Member States, primarily Slovakia and Hungary.

In December 2023, the delegations of Poland, Slovakia and Hungary informed the EC about the impact of the agreement between the EU and Ukraine on the EU market. However, the European Commission – as in the dispute over agricultural products – sided with Ukraine. According to media reports, the European Commission will allocate funds to Romania for the urgent construction of a highway to Ukraine. It is intended to create a new connection as an alternative to the routes running through Poland and Hungary.

On February 8, during a meeting of the Parliamentary Infrastructure Committee, Deputy Minister Paweł Gancarz admitted that for now there is no prospect of a return of permits for carriers from Ukraine, and the European Union will extend the transport agreement for another year. This means that the most important demand of the protesting guides will not be met.

Finding a solution to this difficult situation is urgent, because, as Jacek Piechota, president of the Polish-Ukrainian Chamber of Commerce, notes, Polish business is losing heavily due to the tense situation on the Polish-Ukrainian border. In 2023, Poland recorded a positive trade balance with Ukraine amounting to over PLN 30 billion! PUIG analyzes indicate that over 70% of Polish exporters leave the transport responsibility to the buyer. In this context, the growing participation of Ukrainian companies in the implementation of these transports is nothing strange – Ukrainians prefer to outsource transport to their compatriots. Maciej Wroński, president of the employers’ organization Transport i Logistyka Polska, believes that perhaps in this field we should look for a solution for this unequal fight with competitors from across the eastern border. If the return to permits is unlikely for now, Polish companies should be convinced to order transport services from Polish carriers.

Ukrainian carriers are blocking the passages for Polish trucks

Time is running out, as the situation on the Polish-Ukrainian border is becoming more and more tense. Although Polish carriers suspended their protest until March 1, on February 20, the protest of Ukrainian carriers officially began and they blocked the entry to Ukraine of trucks with Polish license plates at the border crossings in Hrebenne, Korczowa and Medyka. The protest is a response to the blocking of roads on the Polish side, where farmers’ protests are ongoing, and is scheduled to last until March 15. Oleh Dubyk, head of the non-governmental organization “Ukrainian Transport Union in the Lviv Oblast”, announced that Polish trucks will be admitted to Ukraine with the same delay as Poles admit Ukrainian trucks to Poland. Current estimates indicate six blocked checkpoints and 2,500 Polish trucks standing in queues towards Ukraine.

Everything indicates that the entire border with Ukraine will be blocked. The transport industry finds itself in a situation where carriers from both sides of the blockade are fighting for survival. Unfortunately, there are no solutions on the horizon that would quickly and effectively break this deadlock.