Railways in Ukraine are working to the maximum of their capability

Edvīns Bērziņš, former President of joint-stock company Latvian Railway, now the owner of Win Win Transport Solution, President of the Ukrainian Logistics Alliance and Advisor to the Investment Council of the Cabinet of Ministers of Ukraine, talks about the war in Ukraine, transit diplomacy and transit prospects in Latvia in an interview with Neatkarīgā.
07.03.2022. Ritums Rozenbergs
 
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You are currently in Latvia. Does this mean that transit in Ukraine has come to a standstill, that all economic life is subordinated to the needs of the war?

At the moment, everything is under the sign of war. I am constantly in contact with Ukraine, with colleagues I work with and other people I support. The most important thing right now is to find out what everyone in Ukraine needs in a given situation. The railways in Ukraine are working to the maximum of their capability. They are operating under war conditions, primarily for the evacuation of people and the movement of military equipment. Humanitarian and military goods are needed in Ukraine today and now, and will be needed tomorrow and the day after tomorrow. It is therefore essential that these logistical platforms are operational. The coordination of these platforms is something that we can help with. At the moment, Latvia is providing a lot of support to Ukraine, both in terms of fundraising and donations, and also in terms of sending things. The problem is the volume of goods. Help is coming from all over the world, not just from Latvia. Not only individuals but also companies are donating. Ukraine has money but nothing to buy, because all the goods there are running out. We need to supply real things intensively. And another thing. In order to secure supplies, a complete logistics cycle must be ensured, so that the goods that are needed reach the consumer who really needs them. The selection of the goods to be shipped is also important. It is important not to send just for the sake of sending in the first place, but to send exactly what is really needed where. That is why, here in Latvia, we have been coordinating deliveries from day one in cooperation with our Chamber of Commerce and Industry and the Ukrainian Logistics Alliance.

Did you leave Ukraine when the war started?

On Tuesday morning, two days before the war started, I decided to fly to Tallinn to continue pushing the hydrogen locomotives issue. The Estonians are now starting to produce such locomotives. At five in the morning on Thursday, I received a call from the third secretary of the Latvian Embassy saying that action had to be taken - the war had started. From this point of view - the notification and evacuation of our citizens - our Foreign Ministry and Embassy worked very efficiently. The news of the outbreak of war changed my plans. By a lucky coincidence, I had all the necessary documents and was able to travel to Latvia. The very next day I managed to go to the Ukrainian-Polish border. There were problems in Poland at that moment too, for example, diesel was not available everywhere. It was a surprise that such things were sold out in Poland. We are setting up a system where the demand comes from Ukraine for the supplies they need. Within two hours, we find out who can or cannot supply what and give the Ukrainian side a concrete answer. If Latvia has what it needs and we are ready to help, the goods are delivered to the Polish border within a very short time - 24 hours. At the moment, none of our trucks will enter the war zone in Ukraine. The other side, our partners, have in the meantime already provided a green corridor for supplies to go with the military into Ukraine to the specific place where these supplies are needed. We must take into account that, unfortunately, at the moment, there are already robberies taking place in Ukraine. They are provoked both by the Russian side and by criminal elements. I very much hope for peace and an end to the war soon, but in any case, this assistance will be needed for a long time to come. My hat is therefore also off to the assistance that is being provided through our Ministry of Defense. Humanitarian aid can also be provided through this logistical chain that has been set up. My hat is off to the people of Ukraine, such as Andrey Stavnitser, an entrepreneur with a very good reputation, who, together with his like-minded people, have created this green corridor. Logistics is crucial in this war in order to be able to provide the necessary goods at the right time and at the right place in the war zone. The Ukrainians are now organizing themselves, defending themselves. Self-defense units have been set up in every house, in every neighborhood. Each of them has many different needs. It is becoming more difficult every day to obtain products. We can only express our sincere admiration for the patriotism with which Ukrainians defend their country. The world has never been so united against such aggression.

Will the world change because of this?

It will change. Absolutely, including transit and economic cooperation. In the past, logistics could be planned five years ahead. Nowadays, only for a very short time. Everything is changing rapidly, both prices and logistics. They have to be changed quickly. My Ukrainian colleagues tell me that money has no value there now, because there is nothing to buy. I am hoping both for peace talks and for the common sense of the Russian people that peace will be achieved as soon as possible. I was one of those who did not believe until the last moment that there would actually be an attack. I accepted that there might be some kind of provocation, but not large-scale hostilities, where shells are flying, where the country's electricity supply is sometimes cut off, where mobile phones do not work. All due respect to my fellow railwaymen who provide transport by rail. They are mainly limited at the moment to Poland, where there is no occupation zone. Moreover, Poland has the same gauge and Ukrainian trains can enter Polish territory. Evacuees are therefore able to enter Poland by train.

In the future, Europe should indeed consider investing in the transition of Eastern Europe to European gauge. I do not see where we will be able to go in the next five years with the broad gauge from the Latvian side. Maybe only someone can drive in here. The differences in gauge were introduced for military reasons from the outset. It has always been the most efficient and quickest to move heavy military equipment and troops by rail. Looking to the future, from a logistical and transport point of view, the European economic area would need a common rail network. If we are talking about Rail Baltica, I have always said that the project has no economic basis, that it is not a business project, but a political one. But it is necessary. We need to be aware, and to be honest, that the cost of building the railway infrastructure will be high. That is why we need to ask Europe for funding at an early stage. Ukraine, too, must switch to the European standard railway. Opportunities will arise for new high-speed rail routes. After the war, this will certainly have to be done, because the infrastructure was already not in the best condition.

Is it not the case that Ukraine has much better conditions for building high-speed rail lines than Latvia, where, unlike Ukraine, only a few hundred kilometers are electrified?

The Ukrainians have a base from which to draw electricity. It is cheap enough for them, thanks to nuclear power stations. They also have a base for refueling locomotives with hydrogen. The key to this story is to work out what energy supply will be most beneficial for a particular section of the railway. Norway's approach is noteworthy. There, each section of the railway line has been analyzed and it has been concluded what is more cost-effective on which section. It is all based on simple calculations.

You mentioned the hydrogen locomotive. Do these already exist, or is this an intermediate step between today and future projects?

Hydrogen is one way of powering mechanical means. It is a green enough way. Germany already has such locomotives, and Ukraine also has great prospects in this area for one reason: there are nuclear power stations where water is heated at night and can also be used to produce hydrogen. When I worked for Latvian Railway, we started working to get hydrogen locomotives here too. After I left, this project has come to a standstill. The first locomotive will be built in Tallinn and orders have been received for another 40 locomotives. These are all private investments. My hat is off to the Estonians, who have once again struck the right chord in terms of making money. That is why I went to Tallinn, because they are also interested in cooperating with Ukraine.

What does hydrogen production mean? Can it also be done in Latvia?

It is possible. I am sure that this technology will develop. It will also come to Latvia.

Will hydrogen locomotives significantly reduce the cost of freight and passenger transport?

Absolutely. Latvian Railway made the calculations at one time. The project pays for itself from five locomotives. I hope that the war in Ukraine will be over in a very short time and that the introduction of new technologies in rail transport will become topical.

What could be the future of Latvian transit in the light of the adopted Law on Ports, where Riga and Ventspils municipalities are to have only 40% of shares in port capital companies, while the state has 60%, and the fact that Prime Minister Krišjānis Kariņš has declared from the rostrum of the Saeima that transit is harmful to our country?

I have not followed the amendments to the Law on Ports in detail. What I do know is that there are different models of port management in the world. In my opinion, the most efficient model is for a port to be managed jointly by the municipality, the state and private stevedores. If we are talking about transit, its success is based on equal access to all ports, not when they are sorted according to the people who hold positions on the boards of free ports. Latvia is currently trapped in a kind of island. Russia is closed, Belarus is closed. There are possible logistical solutions through Lithuania, Poland, Ukraine, Turkey, if we are talking about land transit. There are not many options when it comes to ports. Will changing the governance model of ports help? For transit to flow through ports, there must be predictability and transparency in national transit policy. It is important that the state says that it supports transit or, on the contrary, does not support it. We can tell everyone for five years how important transit is to us, but everyone will point at what our Prime Minister has said about transit. If you are not interested in transit, why should we look at your ports? Look, the ports of Lithuania, Estonia and Finland are right there, and the leaders of those countries have never said that transit is harmful. The question arises: how do these statements go together with the Rail Baltica project, which also includes transit? By saying that transit is harmful, it is also saying that Rail Baltica is harmful. It does not go together somehow. If we do not need the ports, someone else will take them.

Would it be conceivable in Ukraine to imagine that the Ukrainian Justice Minister would go to the US to ask for sanctions against his own free port?

It is very difficult to judge. People are different and politicians are different. And, unfortunately, world events can be different too. What is important is the vertical and understanding whether transit is important for a country. If it is important, then it is important to develop this area, putting aside prejudices against some people. It is not just transit that is no longer developing for us. Railways already need subsidies. Judging by the current events in connection with the war, this subsidy figure will only grow. If it is around €20 million this year, it will be much higher next year.

But if we have to subsidize such a company, perhaps it would be easier to close the railway? We have already abandoned transit at the Prime Minister level anyway. Why subsidize something that is bad for us?

Until now, the country entered into an agreement with a company, in this case, the infrastructure owner Latvian Railway, on how this company is to be managed. Specifically, which projects should be developed, which should not. Let us say whether we need the Riga-Ērgļi or Riga-Liepāja or Riga-Gulbene rails. For example, a railway to Gulbene is negative from the point of view of costs, but important at the national economic level, because factories are developing in Gulbene, people create jobs, taxes are paid and the volume of goods they produce can be transported by rail. Cultural life is also developing there. If you cannot maintain this railway, then go to the state and say so. It is all written into the contract. Everything is there in front of you, how the railways are to behave. It seems to me that somebody has forgotten that there is such a contract. The five-year contract is about to expire. A new contract has to be approved. I have not heard anyone discussing this.

Perhaps the business of ports and railways is being deliberately undermined so that it can be privatized for a pittance and then, when the war is over and transit resumes, benefit twice as much?

Two and a half years ago, I approached the Latvian law enforcement authorities about what was happening at Latvian Railway. The document accurately predicted what was happening to Latvian Railway. This document is publicly available. It also mentions one of the options you mentioned. It is my conviction that Latvian ports and railways will have a future. Infrastructure is always a profitable investment.

Then it is just a matter of being among the lucky few who will participate in the privatization, but presumably you will not be allowed in because you have been declared evil by the authorities?

The Minister for Transport needed to get rid of me. I thought it was strange that the state, and more specifically the company, paid me to not work in Latvia for two years and to not help the railway industry with my knowledge and contacts in the world. So I had to be forced to retrain in Ukraine, to which I am now transferring my knowledge, and they seem to need me.

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