Ukrainian furniture manufacturers are grappling with transportation challenges, and without government intervention, Ukraine’s budget is experiencing millions in losses.

 

On November 29th, the Ukrainian Association of Furniture Manufacturers (UAFM) held a meeting with the owner of the transportation company RIO TRANS, Ruslan Shmakov, to discuss the situation with the blockade of border checkpoints with Poland. Furniture manufacturers are facing serious difficulties at border crossings, where trucks are stuck in queues in Zakarpattia and other crossing points, posing a serious threat to the industry’s continued operation.

The initially implemented queue was intended to alleviate the situation; unfortunately, this measure proved insufficiently planned and resulted in week-long queues. Additionally, due to the strike, the Poles closed their customs, causing problems for Ukrainian exporters. As it turned out, the Poles were unwilling to compete with Ukrainian manufacturers and demanded the cancellation of the transport visa-free regime and the return of permits for 200 thousand shipments per year within the EU for Ukrainian transport companies. They also demand the exclusion of empty Polish trucks returning from Ukraine from the “E-cherga.” These demands not only contradict the decision of the European Commission but also violate the environmental norms of transportation, as Ruslan Shmakov pointed out during the meeting with the UAFM.

 

Industry participants believe that decisive government intervention is necessary in this situation. Companies cannot solve these transportation difficulties on their own, leading to losses due to rising transportation service costs, downtime, contract non-fulfilment, and a lack of foreign currency revenue.

The border blockade with Poland, where trucks have been immobile for three weeks, has already led to an increase in transportation service costs. Currently, the furniture manufacturing sector is experiencing a real collapse, and manufacturers fear that it may only worsen.

The UAFM reports that the furniture market unites over 5,000 players, with a third of them focused on export. In 2021, the industry exceeded the $1 billion mark in exports for the first time. However, due to transportation difficulties, exports decreased by $200 thousand, and in the first half of 2023, exports amounted to $407 million.

Currently, companies are restructuring their logistics routes, but queues at open crossing points remain a problem, leading to losses for manufacturers.

The prolonged border blockades have already resulted in significant losses for furniture companies, with the Federation of Employers of Ukraine estimating direct economic losses from the blockade of several crossing points on the Polish-Ukrainian border at over 400 million euros!

Furniture manufacturers urge the state to intervene decisively in this situation and find ways to resolve transportation problems so that the Ukrainian furniture industry can effectively operate in the global market again.

We appeal to the President and the Cabinet of Ministers of Ukraine to:

• Organize meetings with the government of the Republic of Poland, representatives of Polish carriers, and border and customs services of the Republic of Poland to prevent discrimination against Ukrainian carriers and ensure the rule of law in front of the checkpoints.
• Take all necessary measures to organize meetings of customs and border services within the framework of the Memorandum on the implementation of the system of advance notification of emergencies on the Ukrainian-Polish border. The aim is to ensure the regularity of the border crossing process.
• Inform international organizations and authorized bodies of the European Union about the impossibility of performing basic tasks and functions at checkpoints due to unlawful actions of unidentified persons in the Republic of Poland.
• Conduct negotiations with neighbouring states – Slovakia, Hungary, and the Republic of Moldova, to prevent a similar situation at crossing points that are currently available for import-export operations and to discuss possible ways to support the continuation of exports and imports to and from Ukraine.

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