How Belarusian Railway Functions under the Sanctions

07.18.2022

Belarusian Railway has unexpectedly become the beneficiary of difficulties in logistics caused to the sanctions. This is evidenced by statistics on the volume of container shipments.

Blessing in Disguise

According to Belarusian Railway Press Service, in January-April 2022, the total volume of export container traffic by rail increased by 1.3 times compared to the same period last year and amounted to more than 50 thousand TEU containers. At the same time, April 2022 saw the maximum volume of container exports, which is 1.6 times higher than the same period in 2021.

As a rule, the company copes with the arising difficulties successfully: together with shippers search for optimal solutions, develop logistics schemes to ensure the delivery of goods to foreign markets by rail. In order to improve the quality of services for export shipments, additional telephone lines have been opened on 12 April 2022. Since then, over a thousand appeals from cargo owners regarding the provision of rail freight for exports have been handled and over two hundred new contracts for transport services have been concluded.

Container freight is the most in-demand and competitive service today.

Route for Every Passenger

Passenger transportation services remain no less requested. Thus, during the May holidays (29 April — 9 May 2022) alone the Belarusian Railway carried almost 2.2 million people. This is an increase of 16.5% over the same period last year. Over 119,000 passengers travelled on international trains between Belarus and Russia during the holidays.

Exchange Rate Differences Worsen Things

In spite of a good operating performance, the financial position of the Belarusian Railway has worsened compared to last year, primarily due to the impact of exchange rate differences. While the revenue of a carrier in Q1 2022 amounted to MBYN 92.4 (+19.4% over the same period last year), and the operating profit amounted to MBYN 22 against MBYN 13.8 a year earlier, taking into account exchange rate differences (MBYN 111.5), the net loss of the Belarusian Railway reached MBYN 111.1 against a loss of MBYN 7.4 a year earlier. Due to loss-making operations, the company continues to build up liabilities, which increased by MBYN 365 in Q1 alone, reducing its net assets to MBYN 14.8.

Investments are on Track

Despite the difficult financial situation, the planned renewal of the rolling stock continues.

Overall, despite the unfavorable conditions, the Belarusian Railway’s operational performance looks good compared to the rest transport companies. The company has clearly seen the disruption of established supply chains and has ramped up its shipments.

At the same time, the company’s financial situation remains difficult due to a high level of debt and exchange rate differences.

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