The move into the Ukrainian rolling stock market could be seen as a surprise. Earlier reports from Ukraine suggested that the wagon lease market is oversaturated, with rental prices for a wagon between two and four euros per day.

Yet, LTG Cargo is positive. “Looking ahead, we view the Ukrainian market with a long-term perspective. The rolling stock in the country is worn out and has suffered significant damage due to the war. Ukraine’s reconstruction will undoubtedly require robust rail logistics and rolling stock”, a company representative explains.

Wagons and shunting locomotives

The head of LTG Cargo Ukraine, Saulius Stasiūnas, went on to explain that rolling stock in the country is needed. “At the beginning of the war in Ukraine, freight traffic fell by half – from 314 million tonnes in 2021 to 151 million tonnes in 2022 – but in recent years it has been gradually increasing.”

“The industry in the country has adapted and is operating, so rolling stock is needed for freight transport and work at terminals. Most of the wagons we plan to lease are covered wagons, which can be used to transport various cargoes, from construction materials to food products, and platforms for transporting containers.”

The majority of LTG Cargo Ukraine’s wagons are already leased, and discussions are currently underway regarding the leasing of shunting locomotives of type ChME3. Those have been modernised in Vilnius last autumn.

Future expansion

LTG Cargo Ukraine plans to expand its rolling stock fleet to better serve Ukrainian businesses, says LTG Cargo. Over the next two years, the company will acquire an additional 120 wagons and it expects to add 2M62K mainline locomotives to its fleet. Furthermore, the arrival of new electric locomotives in Lithuania could also lead to the addition of Siemens diesel locomotives to LTG Cargo Ukraine’s fleet.

The portfolio of LTG Cargo Ukraine’s customers for freight forwarding services is now managed by LTG Cargo Polska, LTG Cargo’s Polish subsidiary.

Ukraine and Latvia

Latvia has been preparing for initiatives such as this one for quite some time. Already in August, Latvian Railways stated that it was ready to start exporting Ukrainian grain through its infrastructure and ports. However, Ukrainian Railways insisted on the fact that effective cooperation would be ensured only when reaching Baltic ports would cost around the same as reaching Polish ones. Moreover, a little over a month ago, the Freeport of Riga acquired new discharging containers to stimulate bulk goods transportation, especially grain. The new equipment could reduce the reloading time from train to vessel by two-thirds, accounting for around 20 hours. “We hope that this first test for the entire logistics chain will turn out to be successful, and from now on we will receive trains with Ukrainian grain in the port of Riga regularly,” highlighted Ansis Zeltiņš, manager of the Freeport of Riga.

Also read:

• Fluctuating Baltic rail freight figures reflect challenging transition
• Ukraine has started grain exports using Croatian infrastructure
• The complicated relationship between Poland and Ukraine
• ‘The Baltic route can be a good solution for Ukrainian grain exports’

How is intermodal winning?

Setting up intermodal services to and from Lithuania was challenging up until a year ago. “We did not have enough equipment to serve the market since there was massive demand after the war in Ukraine started. However, the situation is now more stable, and we also invested considerably in more assets, like intermodal units, electric locomotives and specialised wagons able to carry containers and semi-trailers,” says Scuncikas.

He further explains that the semi-trailer market in the Baltics is still occupied mainly by non-cranable semi-trailers. The company uses VEGA’s r2l technology to load semi-trailers on trains. However, convincing customers to use such technologies was a little challenging for LTG Cargo, considering the additional costs entailed.

Staying on track

LTG Cargo avoided a figurative derailment this year after it saw its volumes declining considerably following the war in Ukraine and the cut off of Russian and Belarusian traffic, which was dropping regardless, even before the sanctions came in. Scuncikas underlines that the company is developing according to the forecasts. “There were some surprises that helped,” he explains. For instance, the fact that the subsidiary LTG Cargo Polska contributed to coal transport in Poland boosted the company’s revenue.

“Our not new, but ongoing Kaunas-Duisburg business will increase frequency next year, while we see increased demand for the further connection to the port of Trieste via Duisburg,” he mentions. Another product that was tested in spring and became regular in June is the Kaunas-Warsaw-Slawkow service. “We have a win-win situation here because we can provide two services with one train. We have enough time to stop in the Warsaw region and then go to Slawkow,” he says.

He also underlines that Slawkow will play a critical role in the company’s future operations: “We can reach Ukraine, send shipments to Italy and many other regions from there. Additionally, Slawkow can be critical for future Middle Corridor services. However, now we want to focus more on small and medium-sized customers for single container services, for instance.”

Expansion to more countries in plans

Much of LTG Cargo’s success owes to its Polish and Ukrainian subsidiaries–LTG Cargo Polska and LTG Cargo Ukraine. For instance, LTG Cargo Polska is undertaking operations across Poland and all the way to Duisburg. “They are running all the shipments from Lithuania to Western Europe, while LTG Cargo Polska locomotives also continue towards Duisburg. Of course, we also have some German partners helping out,” says Scuncinkas.

LTG cargo Ukraine had to keep a low profile for some time after the war started; however, it is picking up pace again. The company runs a train operation and freight forwarding business through its Ukrainian office and helps export Ukrainian grain or minerals, among other things.

Will LTG Cargo follow a similar strategy to expand to other countries too? “We have plans to expand our appearances in more Western European countries. It’s a little bit too early to say about the exact countries or exact models that we will select. As soon as we confirm everything internally, we will take steps towards opening the branches or getting new licenses,” highlights Scuncikas.

CO2 calculator success

An additional service offered by LTG Cargo is the recently introduced CO2 calculator. The company provides CO2 certificates to its customers using domestic and international services. “We are implementing a solution already tested in other countries like Germany, Austria, Italy and the Netherlands, but we tailored it to our own needs and customers’ needs using our intermodal trains,” underlines Scuncikas.

“Everyone talks a lot about sustainability,” he continues, “but we are relatively new in the market, and it is nice to show to the customers that it is possible to save millions of kilos of CO2 emissions when simply turning from road to rail.” Nevertheless, the need to calculate CO2 emissions is strong the other way around too. “Last year, we already got several requests from the clients to calculate the CO2 emission savings. The demand is growing, and we see that because of the long-term commitment to environmental goals from Lithuanian customers, we will provide even more in the future,” concludes Scuncikas.

You took over LTG Cargo’s leadership in a turbulent period. How do you assess your service so far? Did you learn any lessons?

Because of the war in Ukraine and the impact of sanctions on operations, which led to a substantial loss of freight, we have taken steps to help our customers and us adapt to the new reality.

In recent months we have been striving to compensate for the losses by actively expanding in Poland and other Western countries and fulfilling the needs of Lithuanian and Ukrainian clients.

Adapting to a changing market requires long and consistent work by the entire team. This period has taught us to think and strategise in shorter terms, in some sense, even to put aside the idea of having the long-term plans carved in stone. To adapt and find new operating methods, we have learnt to react and plan with speed and agility and make bold non-standard decisions.

How easy is it to come up with quick and efficient solutions? Is it a matter of good network, cooperation or just bold decisions?

It does require the focus and determination of the whole team. We have modified the way of work and decision-making. We focus on uniting the team, drawing clear priorities and reacting quickly. Nowadays, we manage to establish new routes and adapt our services in a few months, though previously it may have taken up to a year to deliver a similar result. Also, good collaboration would be impossible without timely exchange of information and maintaining relationships with existing and new clients.

What is LTG Cargo’s primary focus at this point?

At this point, we are aiming to provide the best possible support to Ukraine and Ukrainian clients. We hope that soon we will be able to transport not only grain or, for instance, sunflower oil and corn, but other types of goods as well. To do that, we are partially resuming the operations of LTG Cargo Ukraine, which will once again provide expedition services.

Another objective is the expansion in Poland and Western markets. With LTG Cargo Polska, we intend to provide freight transportation services between different parts of Poland, not only across it. During this year, LTG Cargo and LTG Cargo Polska have mastered new and international ways of operating and providing new services; therefore, we intend to move forward.

Regarding Western routes, our route from Kaunas Intermodal Terminal in Lithuania to Duisburg in Germany started this year and is already a success. We already operate three weekly trains and hope to increase the volume to five weekly trips by the end of the year.

We see this route as the backbone of our international operations, meaning we plan to establish new routes around it. One of the directions we are looking into for new destinations is Italy. We also see potential to expand to Great Britain, the Netherlands and other countries. From another side, we see much potential in renewing the Amber Train route, which would connect Estonia, Latvia, and Lithuania for freight transportation by rail.

If you could briefly describe the main logistical strengths of LTG and Lithuania, what would they be?

We are starting to operate as the international hub for intermodal transportation: we gathered great expertise, professional talent and competencies. We have two railway gauges at our disposal, actively operating intermodal terminals in Kaunas, the southern gateway for Rail Baltica and the junction for the vital connection between the new line and the capital Vilnius; and in Šeštokai at the border with Poland. We can load all types of semi-trailers and transport containers, not only general freight wagons. Also, Lithuania provides an excellent sea gate through the ice-free Port of Klaipėda.

What do you expect from the event in Vilnius? And what should the guests expect from LTG?

We are all pleased to welcome the “Railfreight on tour” event and appreciate that Lithuania has been observed as an important hub of railway transport. We look forward to meeting participants from various European countries for mutual discussions on conference topics, such as new corridors, changes in demand and supply balance in logistics, and possibilities to reduce the impact on the environment via intermodality.

Also read:

• Belarus agrees to grain corridor to Klaipeda, but on which terms?

• Poland and the Baltics can cooperate more and establish new corridors

• From the Aegean Sea to Lithuania: is a North-South corridor for Ukraine in the making?

Registrations for the event are open! You can look at the event’s programme here and register here.

Regional focus

Why launch RailFreight On Tour? Despite the globalised supply chain, business developments still take place intensely on a regional level. At RailFreight.com, we monitor these developments closely and report them. However, going to a location, exploring the business possibilities in person and meeting potential business partners or customers is invaluable.

That is why we decided to launch the RailFreight On Tour concept, where we bring local businesses and stakeholders closer to the rail freight industry. This is also what makes this event unique since attendees will be able to meet with local business representatives physically and discuss their plans and business aspirations.

Why Lithuania?

Lithuania has been on the rise recently. The country is investing heavily in rail freight, making it an attractive destination for cargo flows from multiple destinations. Lithuania can play a crossroads role between Scandinavia, the Baltics and Western or Southern Europe.

What is more, the country can launch cargo flows towards the East, with Turkey and Central Asian countries already looking at such possibilities and how to implement them. Intermodal transport is currently very high on the country’s agenda, with rail and port terminals ready to facilitate traffic and cargo forwarding.

Despite the difficulties Lithuania faced in the past few months due to geopolitical developments, like the war in Ukraine or the sanctioned Belarusian oil and fertiliser products, it has shown unprecedented robustness and agility. New routes with the European West are already launched, new partner agreements are signed, and more developments are underway.

This makes RailFreight On Tour-The Lithuanian Edition the ideal opportunity to explore the Lithuanian market, find out what it can offer to your business and, why not, meet your future partners.

Site tours and high-level speakers

During the event on 14 and 15 June, attendees will participate in a range of activities. From interesting site tours in terminal locations to a networking dinner and a conference programme covering burning issues.

The event’s speakers are high level, representing EU’s politics, the Lithuanian Railways, who are also co-hosting the event, Rail Baltica and various companies who have worked or plan to work in Lithuania. Will you also be there? Claim your ticket here!

“Our main advantage is the ability to cover a wide area of ​​cargo transportation. For customers who transport cargo between Lithuania and Ukraine, we can offer the entire route both in Ukraine and Lithuania. This means that for customers who want to transport cargo, it will be enough to have one forwarding partner instead of two or three in each country,” said Eglė Šimė, the head of LTG Cargo.

“If Belarus is not an option, we go through Poland”

The much-discussed ‘transit war’ between Lithuania and Belarus will not affect the subsidiary’s services, according to Šimė. As it’s already known, Lithuania banned the transit of Belarusian fertilisers from its territory. As a response, Belarus announced a ban on transit trains carrying oil products and fertilisers coming from Lithuania.

The latest ban does not seem to impact trains travelling from Ukraine to Lithuania yet. LTG Cargo Ukraine will be able to reach Lithuania via Belarus. Still, even if, at some point, this is not the case anymore, “we will seek to ensure transit opportunities through Poland,” explained Šimė.

Indeed, following Belarus’ ban on Lithuanian trains carrying oil and fertilisers, Poland seems to be the most viable option to divert traffic to and from Ukraine. LTG Cargo Ukraine could facilitate traffic through the new corridor, while in combination with LTG Cargo Polska, LTG could cover transportation along the whole route.

There are no concrete facts yet to determine whether Poland will be the new gateway for Lithuania. However, negotiations are underway, and soon the market will know their results. RailFreight.com is closely monitoring the topic and will provide detailed updates soon.

Rail Freight On Tour-The Lithuanian Edition

Are you interested in Lithuania’s rail freight potential? Do you want to get acquainted with the market, meet possible partners and explore business opportunities? Then the Rail Freight On Tour-The Lithuanian Edition is the right event for you!

On 5-6 April 2022, RailFreight.com travels to Vilnius, Lithuania, for the first-ever edition of the RailFreight on Tour travelling event concept, in collaboration with Lithuanian Railways. Do you want to join us? You can register here, and take a look at the programme outline here.

Also read:

• 47 million euros investment in Poland will see LTG’s business booming

• Lithuania-Ukraine seal rail cooperation

• Belarus withdraws its cargo, but Lithuanian Railways have the answer