Russia’s full-scale invasion of Ukraine has created many challenges for Ukrainian exports.
Difficulties of exporting during the war
The main problems of export activity are:
- loss of part of domestic and foreign sales markets;
- problems with the shortage of qualified personnel, the mobilization of men, the departure of women abroad;
- a problem with logistics, since before the war most of the logistics routes passed through the territory of Russia and Belarus;
- had the capacity of customs posts;
- an increase in the cost of transportation services and a significant increase in delivery times, blocking of ports, loss of competitiveness due to the ultra-high transport component, a lot of problems with rail transportation;
- refusal of foreign partners to cooperate because of the danger and risks of non-fulfillment of agreements due to war;
- state regulation of the exchange rate due to the difference in rates. Exporting enterprises lost a lot when making foreign exchange transactions;
- an increase in monetary and time costs associated with all procedures for customs clearance and shipment of products due to air raid alerts, power outages;
- the impossibility of timely completion of foreign exchange transactions due to the closure of ports, customs crossings, foreign exchange restrictions and, as a result, the imposition of penalties;
- additional checks of banks regarding the ultimate beneficiaries to establish the absence of ties with the Russian Federation and sanctions legislation.
It should be noted that in October the general rhetoric of the majority of respondents was that, despite the above problems, business has gradually adapted to new conditions and has established an export process.
There were almost no questions to the regulatory authorities of Ukraine. From time to time there were problems with phytosanitary control, complaints about the slow work of the customs of the Republic of Poland.
Stopping exports to Russia, Belarus and new markets
Changes in the export of enterprises after February 24, 2022:
- 60% of respondents noted that export volumes have decreased;
- 20% noted an increase;
- 20% – the level of exports has not changed significantly compared to the pre-war period.
Entrepreneurs indicated that they stopped exporting goods to the Republic of Belarus and the Russian Federation, and also began to trade less with former CIS countries such as Kazakhstan, Uzbekistan – due to complicated logistics and a significant increase in its cost.
The geography of export countries has partly changed. Consequently, some companies, for example, replaced the lost market of Belarus with the Baltic countries, finding new partners there. A representative of one of the enterprises noted that their company began to export to the United States during the war.
The range and types of products have not changed much. Some exporters noted a more loyal attitude of counterparties, providing better conditions, deferred payments and longer delivery times. An increase in consumer loyalty could be manifested by labeling products of Ukrainian companies with patriotic motives or by packaging products in packages with yellow-blue stickers.
In general, the increase in export volumes was due to an increase in the cost of contracts and the number of orders from contractors.
Evaluation of the work of the State Customs Service
Most enterprises noted that they build relations with customs purely in the legal field, the issue of contracts, bribes is a thing of the past.
Systemic problems and shortcomings in the performance of customs procedures were not noted, they indicated problems of a subjective nature. For example: queues at checkpoints, spending a lot of time to make decisions. The quality of communication between customs officers and business is satisfactory. Sometimes, according to respondents, there was a shortage of personnel at customs.
Customs problems can be solved through:
- maximum digitalization of services provided by customs – to minimize the human factor;
- linking the electronic queue to specific customs declarations (not just by issuing electronic coupons) in order to avoid abuse;
- general control at customs checkpoints between Ukraine and EU countries;
- accession to the EU;
- completion of additional tracks at checkpoints and the withdrawal of “problem” vehicles there;
- Increasing the number of responsible personnel at customs Customs should perform a service, not a fiscal function.
In general, most of the problems can be solved by expanding (where possible) the capacity, as well as building new modern road and rail border crossing points in the west of Ukraine, improving the technical and organizational compatibility of the railway systems of Ukraine and the EU.
