The Ukrainian side has been intensively taking over this service from Hungarian companies as well as those from all EU countries bordering Ukraine. This disruptive move could leave firms in Eastern Hungary without contracts.

Ukraine has decided to build thirteen freight transshipment terminals along its western border with EU countries, of which six have already been completed. As a result, rail companies are now partly paying Ukrainian transshipment points for the service of transferring goods between wide and standard gauge tracks, for which they previously relied upon facilities in EU countries, such as Hungary.

STANDARD GAUGE RAILWAY REACHES MUKACHEVO IN UKRAINE

"It’s particularly bad for us because there is already a standard gauge railway reaching up to Mukachevo, which means that freight traversing Hungary can be easily transshipped at various locations along normal tracks on the Ukrainian side," explained Koppány Ajtony Bíró, Secretary-General of the Association of Hungarian Logistics Service Providers (MLSZKSZ), to the business daily Világgazdaság. Consequently, even the few remaining shipments that survived the collapse of rail freight transport through Ukraine last year might be lost to domestic service providers.

UKRAINE'S MOVE HURTS ALL NEIGHBOURS

According to Bíró, the Ukrainian side doesn't have to put much effort into logistics organization to take over the freight transshipment from Hungary. Although the railway line in Mukachevo is not in the best condition, it is enough for them to order standard gauge wagons, transship the goods, and send the train across the border where revenues are recorded on their side. Beyond that point, the Hungarian side has little involvement with the entire process. Two Hungarian transshipment points are affected by the Ukrainian move: Záhony and Bátyú; the latter is located on the Ukrainian side.

The ongoing bid to attract this service has been a step-by-step process since the beginning of the war in Ukraine.

Last year, there was already a significant increase in the volume of goods transshipped across the border. The phenomenon as pointed out by the Secretary-General naturally hurts countries that already have a larger throughput from Ukraine, such as Poland. However, it’s particularly painful for the Hungarian transshipment points because of the loss of the already shrinking trade volume, which is an essential source of livelihood for the Eastern Hungarian region.

DECades-long BALANCE Upset

As he stated, under the previous Soviet-Hungarian agreement, goods arriving from the East on wide gauge tracks were transshipped outside Soviet borders, in Europe, and those bound for the Soviet Union (today Ukraine) were transshipped on the Soviet (now Ukrainian) side. This used to result in an approximately fifty-fifty division of labor. Now, this seems to be tipping in favor of the Ukrainian side. (Incidentally as Világgazdaság reported in August last year a EU proposal suggests building a standard gauge track across the entire designated TEN-T rail freight corridor network in Ukraine.)

The expansion of Ukrainian rivals operating at lower costs is also causing difficulties in road freight transport, potentially leading to the demise of typically family-run businesses.