Logistics firm: Operail Russian goods ban may lead to 100 job losses

A ban on state-owned freight rail carrier Operail from hauling goods of Russian origin, or goods imported into Russia, may lead to around 100 job losses at a company which uses this route.

ERR News


In addition to the job losses, the ban will cost state coffers around €3 million in lost tax revenue the Estonian arm of logistics firm Katoen Natie would have paid, the company says.

Minister of Economic Affairs and Communications Riina Sikkut (SDE) reviewed guidelines which the state, as the legal owner of Operail, imposes on the company, earlier this month.

A single sentence of these guidelines was altered, to install the ban on Operail from transporting goods of Russian and Belarusian origin, starting January 1, 2023.

Operail sent a letter to its clients several days later, which stated that it will no longer be involved in any cargo shipments relating to Russian companies, from the new year.

Operail board chair Raul Toomsalu told Delfi’s business portal Ärileht (link in Estonian), that in the last quarter of this year, around 50 customers had booked the transit of goods to and from Russia, using the company’s locomotives and rolling stock.

The short notice accompanying the ban’s issuing has put several businesses in a difficult situation, Toomsalu said, including Katoen Natie, whose main business in Estonia is the transit of cocoa beans and products.

These are imported via Muuga and sent onward by rail to Russia.

Mart Melles, CEO of Katoen Natie’s Estonian branch, questioned why the Estonian state is imposing additional sanctions on Operail, passed on to his company, over and above the internationally agreed restrictions placed on Russia; sanctions which only harm Estonian firms, he said.

The transit of the goods Katoen Natie is engaged in, which sees the raw materials travel from Africa and Asia to Estonia, then to Russia, involves a cycle of about 60 days, he said.

“This means that there is stock on its way to us which cannot be loaded into wagons when it arrives,” Melles said – in other words goods which will not arrive in Estonia before January 1.

Switching to road transit to transport these inventories is viable, but several times costlier, Melles went on.

“Most likely, the goods will still go to their destination, via Latvia, but we will have to seriously consider closing the company,” Melles added – a move which would cost 100 jobs and around €3 million in tax revenues to the state, he says.

Other companies to have reported difficulties arising from the Operail transit ban to and from Russia include the HHLA TK Estonia container terminal, located in Muuga.

Headquartered in Antwerp, Belgium, Katoen Natie is an international logistics service provider and port operator which employs around 13,000 people worldwide, the company says on its website.

Editor: Andrew Whyte