This year left no doubt for anyone that the only possible direction for the country’s development is set towards the west. Therefore, today the country’s transport chain is on the way to restructuring and integration with the European one. One of the main tasks for this is to increase the level of cargo containerisation, since this type of transportation is considered more traditional for the EU and Asian countries.

Using the example of the ten-year history of Levada-Cargo company, we will tell you how the container market in Ukraine has developed over the years, and how the company has grown from a small operator to an entity managing one of the largest container terminals in Ukraine.  

How it all began

Levada-Cargo got involved in the container business back in 2012. “All this time we were looking at the European market. We saw how Poland, Germany and other countries were developing in this area, so we understood that the transformation of logistics chains in Ukraine was also inevitable,” Volodymyr Demenko, the head of the company, recalls.

At that time, the first positions in the trade balance for Ukraine were held by the post-Soviet countries. Historically, the entire transport chain was meant to work with our eastern neighbours — we worked with railway semi-trailers, grain trains, covered train cars. However, two years after Russia’s partial occupation of Donbas and the annexation of Crimea, business started to rapidly lose its usual sales markets and look for alternatives. These were the countries of the European Union and Asia. However, the usual method they use to deliver cargo is a container transportation. It’s evidenced by the numbers: In Germany and the Netherlands, the containerisation level is 55%, while in China, it is 70%.

The main reason, according to Volodymyr Demenko, is the fact that a container is a unified storage, which allows transporting 99% of cargo types, starting with gases and culminating in coal, liquids and other goods. “China is a large producer of various cargo types, and this makes it possible to unify freights. The same is true for Europe. There is no alternative to deliver cargoes to these countries in grain trains or railway semi-trailers, which we are used to, so it is necessary to adapt our infrastructure to these requests,” Demenko says.

Overcoming the crisis

2014 and 2015 became crisis years for the market — the volume of containers, both in ports and on the railways, decreased significantly. At that time, it gave rise to the idea of building a chain of container terminals across the country. This was seen as a potential and possibility of uniting two markets for cargo delivery — Ukrainian and European. However, building terminals, creating platforms and containers requires a lot of money. “We needed a strategic investor,” Volodymyr Demenko says.

Over the following years, the business began to gradually revive, which is evidenced by the numbers. In 2018, the indicators reached a new historical maximum over 10 years. Back then, the volume of container overloading in the ports amounted to 846,500 TEU, while Ukrzaliznytsia transported 334,900 TEU. Ukrzaliznytsia noted that the market of container transportation in Ukraine has enormous opportunities and the primary task for the company is to create new services for customers and partners to make these opportunities real.

However, it was not easy for market players to develop at that time. Traditional problem with the speed of trains, pricing and others. Despite this, Levada-Cargo continued to offer shippers new options. One of them was the development of a 30-foot container, which was primarily a response to the lack of grain trains. In addition, all these years the company continued to invest in the fleet and platforms and today has approximately 700 platforms in operation and more than 1000 containers for the transportation of various types of products.

A new history

The opportunity to implement the project conceived back in 2014-2015 became available only in 2020, when the company joined Lemtrans.

“This acquisition will allow the company to offer shippers new comprehensive solutions and gain additional competitive advantages for further development. Market trends show the need to expand transit opportunities, and Levada-Cargo as part of our company will help us get stronger in this area. With its help, we are going to operate container terminals and develop them,” the head of Lemtrans, Volodymyr Mezentsev, once said.

To build the terminal, we chose an area 4 kilometres away from the Ukraine-Poland border. The Mostyska container terminal can hardly be called an ordinary land terminal, since its area is several times larger than the usual one, making up 36.5 hectares. In February of this year, Volodymyr Demenko talked about the details of the project: “At the first stage, we will have the opportunity to transship 100,000 TEU annually. Investments have already amounted to USD 12 million. At the second stage, we plan to build warehouse facilities. The third step is to increase the throughput by another 200,000 TEU. As a result, we want to reach volumes of 300,000 TEU annually.

At that stage, a wide and European track was already laid along the terminal, and modern equipment to work with various types of containers was purchased. “It will be launched in the spring of 2022,” Demenko said a few days before the start of the war.

A year of war

Due to the outbreak of the war, the opening was postponed. Nevertheless, it was clear that the project was more timely than ever for the market — the closure of the ports led to a change in the usual logistics chains and most of the cargo was processed by the western border crossings.

Over the first weeks of the war, the company focused its efforts on volunteering. Along with the EBA and Ukrzaliznytsia, the Railway Helps Ukraine project was created, which allowed to arrange the delivery of humanitarian aid to the civilians from European countries.
“In a situation where logistics chains are disrupted, it was very important not to give up, but to continue looking for ways to help,” Demenko recalls.

The company, together with its partners, managed to complete the construction and put the Mostyska Container Terminal in operation in the summer. “The container terminal in Mostyska has already been opened. Now we have an opportunity to allow regular trains on the European and Ukrainian tracks. Currently, the terminal load reaches 65%. We also adapted to the needs and completed a grain terminal that can handle 60,000 tons of grain per month. Furthermore, we work with big-bags and bulk cargo,” Volodymyr Demenko notes.

In today’s situation, the development of land transport connections with Europe has become one of the main tasks, both for the state as a whole and for business. At the last EBA’s meeting, Oleksandr Kamyshin, head of Ukrzaliznytsia, noted that we can talk about European integration only by developing container traffic system. “The vibe that Europe lives on is containerisation. This is what we should move towards,” he said.

New border terminals, investments in European port infrastructure, additional train cars and containers are needed to increase throughput. All this would require quite a large investment. But Volodymyr Demenko believes that these transport corridors will still process significant traffic even after the end of the war.  

“Our company and Lemtrans, as an investor, have plans to start building the following terminals. This will have a positive impact on the development of freight rail traffic system in Ukraine and may attract additional investments in related areas,” Volodymyr Demenko says. "We continue to invest in the country’s economy, since we believe in the future of Ukraine.”