Critical level of danger. The head of the metal cluster on the situation in the industry

After the start of Russia's special military operation in Ukraine, the metalworking enterprises of the Kaliningrad region faced "colossal" logistical difficulties and the problem of settlements with foreign suppliers. At the moment, hundreds of containers with cargo for local companies are stuck in European ports, and "no one yet has working mechanisms to remove stuck consignments of goods and raw materials." Oleg Chernov, HEAD of the Baltic Metalworking Cluster (BMC) and CEO of the Stahlwerk Industrial Park, told RBC Kaliningrad about this.

After complication of relations with European partners, the region's metalworkers are trying to completely reorient themselves to the Russian market. Now the share of foreign companies with which they cooperate does not exceed 20% of the total. BMK members mainly sell products to the domestic and Russian market.

Sea routes "froze"

“One of the main channels for transshipment of wholesale shipments of raw materials - the sea route - for our region was actually “frozen”. We fix the critical level of danger for cargo delays.

And now we are talking not only about European partners, but also about suppliers from Southeast Asia. The main problem arises at the stage when containers arriving at European ports, especially Poland, must be prepared for transshipment to our port of destination. But this is not happening - at the moment, hundreds of containers of regional companies, including our residents, are stuck in various European ports. The last three weeks have been especially difficult, after the implementation of the fifth package of sanctions,” says Chernov.

The expert explained that stuck goods are raw materials for production. “We know how to produce metal. We used to produce it more expensive than our Chinese partners, now we produce it cheaper,” he said.

Chernov noted that the cluster members are grateful to the authorities for the prompt work on the release of additional ferries to the Ust-Luga - Baltiysk - Ust-Luga line, but explained that "even this volume is not enough to organize the optimal transshipment of goods between Kaliningrad and the mainland."

“At the same time, delivery by ferries of vehicles or wagons is already carried out at a rate with an increased land coefficient - and this, for a second, is + 30% to the cost! And getting on the ferry schedule is not a task for the faint of heart: the queue for loading is scheduled a month in advance, ”says the head of the BMK.

Motor transport

The situation with land transport has stabilized over the past month - the speed of movement of goods has increased, and tariffs that have flown in 3 times a month ago have “rolled back”, says Chernov. Metal workers hope that the opening of the border crossing in Dubki in summer will increase the speed of transit and reduce the queues.

“I am sure that the formation of logistics hubs on the border of our region, following the example of neighboring Belarus, would be a great help in reducing the cost of cargo transportation and loading our vehicles. It would be logical to take advantage of the sudden advantage and reload on the Russian mainland those foreign cargoes that can be delivered to our region by foreign carriers. An additional advantage would be the permission to enter the line of vehicles with regional customs clearance. The number of trucks on the route "Kaliningrad - Mainland Russia" would increase, and the transportation tariffs would seriously decrease," the head of the BMK believes.

Railway route: an island of stability

The expert notes that the railroad is coping with the flow of goods in and out of the region, but individual wagon owners still refuse to send them to the region.

“In general, the situation with the availability of wagons has become much better than a month ago. The speed of movement of goods has increased. At the moment, this supply chain to the region is one of the most stable and well-predictable so far,” Chernov explains.

Compliance is the new banking reality

However, the optimistic mood of local companies knocks down compliance (bringing the company's activities in line with the requirements of the law, corporate, social and ethical standards - approx. RBC Kaliningrad).

“Foreign banks are beginning to carefully check transfers, one way or another connected with the Russian Federation. There are fewer and fewer who agree to accept payments from residents of RUSSIA and Belarus. Moreover, banks refuse to make settlements in any currency, including payments from our freight forwarders for transit.

So, for example, in April, three Baltic banks accepted payments from our railway forwarders. At the end of April, Swedbank gave up, closing the possibility of payments. The second in line is Luminor Bank, which is suspending payments in the near future. How long our third partner will last is unclear.

In a word, the risks of non-acceptance of payments are increasing every day, which may negatively affect the transit of our goods through the territory of Lithuania,” states the head of the metal cluster.

Force majeure in Russian

According to Chernov, Russian banks do not yet recognize as significant letters from foreign suppliers about the onset of force majeure.

“For us, this means the threat of violating the terms of foreign exchange transactions with penalties - and for amounts sometimes equal to 100% of the prepayment made.

As a result, our residents risk not only losing prepayments, but will also be forced to pay the same fines.

Now, on the recommendation of the Central Bank, we have reached an agreement with the banks and received a unilateral adjustment of the terms of the SVO, which is valid until the expiration of the contract. But the issue has not been finally resolved: when the contract expires, the issue will arise again, ”he explained.

The unpredictability of the situation is added by the stable growth of tariffs of natural monopolies, says Chernov. In his opinion, the main task facing the region's economy today is to maintain and increase domestic demand. This will become a serious motivation for the business to preserve itself, look for ways out of the next crisis, build new supply chains and continue to produce the product.

“Over the past month, we have seen an increase in orders for metalworking and metal services in our industry, although, it would seem, the demand on the market should naturally decrease. We also note that consumers are starting to refuse not only imports of metal structures and metal products, but are even reconsidering relations with suppliers from mainland Russia. Increasingly, Kaliningraders are looking for an alternative from a local manufacturer,” the entrepreneur sums up.

As RBC Kaliningrad wrote, since January 2021, metal products have risen in price by 20-35%, depending on the range. For the year, prices soared by 70-90%.