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Klaipeda city and port officials prepare for possible job losses and a sharp decline in cargo traffic due to the halt in Belarusian fertilizer shipments via Lithuania, but expect to avoid the worst-case scenario.
Klaipeda worried about job cuts and drop in cargo traffic due to halt in Belaruskali transit
© DELFI / Orestas Gurevičius

The government last week told Lietuvos Gelezinkeliai (Lithuanian Railways, LTG), the state-owned railway company, to terminate its contract with the US-sanctioned Belarusian potash giant Belaruskali, which exports around 11 million tons of fertilizers via Biriu Kroviniu Terminalas (Bulk Cargo Terminal, BKT) annually.

Also, the government expects to draft amendments to the Law on International and Economic Sanctions by the end of January to prevent any possible transit of these fertilizers through Lithuania. If the Cabinet approves such legislation in February, the parliament will vote on them under a fast-track procedure.

Klaipeda Mayor Vytautas Grubliauskas sees possible redundancies as a key loss for the port city resulting from the measure.

"Job losses in the directly affected stevedoring companies would be the biggest loss," he told BNS. "These are well-paid and highly valued jobs for highly skilled professionals. We have no specific figures, but it is said that it could be from several dozen to several hundred."

The mayor said the measure will primarily affect Lithuania as a whole as revenue from Belarusian fertilizer shipments has no direct impact on the city's budget.

"But what is bad for the state is bad for the city, too," he noted.

Vaidotas Sileika, president of the Association of Lithuanian Stevedoring Companies, says it is still difficult to predict how exactly the halt of transit shipments will affect the port in the near future. However, he thinks that the entire transport and logistics sector, including the port, will feel an impact.

Sileika believes that BKT will be able to adapt its terminal to handling other cargoes if fertilizer shipments via Klaipeda stop.

"It is a specialized bulk terminal, and apart from fertilizers, it can handle agricultural products and other bulk cargoes. It might require some investment to adapt it to other activities, but it is possible," he told BNS.

However, the association's president admits that it would take time to replace Belarusian fertilizers with other goods, adding that this could also increase internal competition within the port.

"The terminal handles 10 million to 11 million tons annually. Currently, it is practically impossible to find such an amount on the market to offset such a loss," Sileika said.

"In Lithuania and in neighboring countries, there are no new factories that manufacture products that could be transported through the port. We believe that there may be a redistribution of cargoes, such Lithuanian grains, within the port," he added.

Port CEO: not clear yet if Belaruskali fertilizers will disappear from port

Algis Latakas, CEO of the Klaipeda State Seaport Authority, says the government's decision on the LTG-Belaruskali contract does not mean that Belarusian fertilizers will not be shipped via the port.

"In any case, it is very difficult to say as there are no sanctions on the cargo itself or on trade [in Belaruskali fertilizers]," Latakas told BNS. "We'll see how this situation develops."

"Probably, we should not make categorical conclusions yet. LTG has yet to answer the questions because their infrastructure can be used by other carriers as well," he added.

Latakas reiterated that a halt to Belarusian fertilizer shipments would be a major loss for the port.

"If the cargo stops coming to the port of Klaipeda sooner or later, it will undoubtedly have a significant impact, because it accounts for a large part of the cargo traffic. Some 10.5 million to 11 million tons are a significant amount," he said.

The port's strategic plan foresees such a scenario and response to it, according to the CEO.

"We have mapped out a number of scenarios. This is not just about this cargo; it is also about the Chinese issue, and the transit of Belarusian oil products which stopped earlier," Latakas said.

"We have taken everything into account, and which plan we will use will depend on how events unfold," he added.

Faced with a decline in shipments from the East, Klaipeda port operators have to look for new opportunities in the West, according to the CEO.

"We are by no means turning away from this direction, but we can see that transit cargo through Lithuania is decreasing, so it is necessary to look for other options oriented toward the sea, toward the West," Latakas said.

"We are setting ourselves the task of becoming that port of accumulation. Some processes are underway and we already see some results in container transportation," he added.

For example, Mediterranean Shipping Company (MSC) has included Klaipeda in its shipping route between the West and India and Pakistan, the CEO noted.

BNS
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