Russia’s full-scale invasion of Ukraine created many challenges for Ukrainian exports.
Difficulties of export in the conditions of war
The main problems of export activity are:
- loss of a part of domestic and foreign sales markets;
- problems with the lack of qualified personnel, mobilization of men, departure of women abroad;
- a problem with logistics, since before the war most of the logistical routes passed through the territory of Russia and Belarus;
- low capacity of customs posts;
- the increase in the cost of transportation services and a significant increase in delivery times, blocking of ports, loss of competitiveness due to the extremely high transport component, a lot of problems with railway transportation;
- refusal of foreign partners to cooperate due to the danger and risks of non-fulfillment of contracts due to war;
- state regulation of the exchange rate due to the difference in exchange rates. Exporting enterprises lost a lot when carrying out currency transactions;
- increase in money and time costs associated with all procedures of customs clearance and shipment of products due to air alarms, power outages;
- impossibility of timely completion of foreign exchange transactions due to the closure of ports, customs crossings, currency restrictions, and as a result, the imposition of fines;
- additional inspections of banks regarding the final beneficiaries to establish the absence of connections with the Russian Federation, and sanction legislation.
It is worth noting that in October, the general rhetoric of most respondents was that, despite the problems listed above, the business gradually adapted to the new conditions and improved the export process.
There were almost no questions to the regulatory bodies of Ukraine. Periodically, 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 sales markets
Changes that occurred 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 did not undergo significant changes 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 exporting countries has partially changed. Therefore, some companies, for example, replaced the lost market of Belarus with the Baltic countries, finding new partners there. A representative of one of the companies noted that their company started exporting to the USA during the war.
The nomenclature and types of products have practically not changed. Some exporters noted a more loyal attitude of counterparties, provision of better conditions, payment delays and increased delivery times. An increase in consumer loyalty could be manifested thanks to the marking of products of Ukrainian companies with patriotic motifs or the packaging of products in packaging with yellow and blue stickers.
In general, the increase in export volumes was due to an increase in the value of contracts and the number of orders from counterparties.
Evaluation of the work of the State Customs Service
Most of the enterprises emphasized that they are building relations with customs purely in the legal field, the issue of agreements and bribes is a thing of the past.
Systemic problems and shortcomings in the implementation of customs procedures were not noted, problems of a subjective nature were pointed out. For example: queues at checkpoints, spending a lot of time making decisions. The quality of communication between customs officials and businesses is satisfactory. Sometimes, according to respondents, there was a lack of personnel at the customs.
Possible solutions to customs problems are seen through:
- maximum digitization of services provided by customs – to minimize the human factor;
- tying the electronic queue to specific VMDs (not just by issuing electronic coupons) to avoid abuse;
- joint control at customs checkpoints between Ukraine and EU countries;
- accession to the EU;
- completion of additional tracks at checkpoints and removal 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 there is such an opportunity) capacity, as well as building new modern road and railway crossing points of the state border in the west of Ukraine, improving the technical and organizational compatibility of the railway systems of Ukraine and the EU.