Wagons full of goods are standing still, companies are counting losses

The suspension of work by some employees in the Railway Infrastructure has stopped more than 220 wagons, of which about 130 were full of goods intended for transshipment at the Port of Bar, and has paralyzed freight and passenger traffic in the country. While the Port of Bar and the Railway Infrastructure state that losses are accumulating quickly, but do not specify them, Montecargo announced that it is losing about 20 thousand euros per day due to the downtime. Passengers are being transported by 25 to 30 buses per day instead of trains.

A group of 85 train dispatchers, remote control dispatchers (TC) and traffic dispatchers from the Railway Infrastructure Company (ŽICG) have permanently suspended their work, and thus train traffic throughout Montenegro, as of Friday, because they are demanding higher salaries from the company's management. They officially announced this blockade last Wednesday and requested a meeting with the leaders of ŽICG. Yesterday, the workers and management had a meeting that lasted several hours, but did not lead to an agreement, so the blockade of rail traffic has entered its fifth day.

Director of the Port of Bar Ilija Pješčić told "Vijesti" that the extension of the suspension could also jeopardize multi-year contracts that bring in the largest share of revenue and that the company depends on regular rail transport, because around 65 percent of annual transshipment is realized only through deals with the companies Uniprom and ZiJin, while the new contract with Elektroprivreda Srbije is also at risk.

Costs are multiplying rapidly

“At the beginning, I would like to emphasize that the implementation of two current multi-year commercial contracts, which account for an average of about 65% of the total annual volume of transshipment in the 'Port of Bar', directly depends on the reliability of the railway's operation - the contract with the company 'Uniprom metali' - Nikšić, which relates to the transshipment and storage of bauxite, and the contract with the company 'ZiJin' - Bor, which relates to the transshipment and storage of copper concentrate. The above clearly leads to a conclusion about the dimensions of the dependence of the 'Port of Bar' business on the regularity of the delivery/dispatch of goods by rail. The above can be generalized by stating that the smooth flow of the aforementioned goods implies the functioning of a multi-component logistics system (producer - railway - port - shipper - buyers - ...) of which one link is currently broken, which has made it as a whole non-functional. Therefore, each of the entities participating in the aforementioned logistics system is, due to the current situation, faced with direct and indirect costs, which are multiplying at a rapid pace and, in unfavorable "In some scenarios, if the situation is prolonged, they may even lead to the redirection of goods flows to other logistics routes, or to the loss of major business for the 'Port of Bar'," Pješčić pointed out.

According to him, the "Port of Bar" has direct measurable losses that are equivalent to lost revenue from the transshipment of goods that would be delivered by wagons, losses due to the underutilization of resources that would be engaged in the transshipment operations in question.

"Specifically, right now there are over 220 wagons (on the railway in Serbia and Montenegro), of which about 130 are full of goods that need to arrive at the Port because they have been announced to be reloaded onto a ship. We also have an announcement for a bauxite ship in about a week, but there is no delivery of goods from Nikšić, because it is blocked by the suspension of work by some employees of ŽICG. However, I repeat, if the situation were to be prolonged and this were accompanied by a reduction in the amount of goods that are being directed by rail to the Port of Bar or even a complete redirection of the flow of goods, then the costs would be difficult to measure, because the work with Uniprom for the reloading of bauxite for the Port of Bar means about three million euros annually, and the copper concentrate transport business brings us over four million euros," said Pješčić, adding that "competition on other logistics routes is not standing still and is already offering solutions to our partners, if the crisis continues, to redirect the goods to other ports in the region, which would be disastrous for us."

He said that it is important to add that the implementation of a new significant contract for the "Port of Bar" should begin in early September - the transshipment and storage of coal for the needs of the Serbian Electric Power Company, which will directly depend on the adequacy of the functioning of the railway - the coal should be delivered to the Port by ships, and then transported by rail to the place of consumption (thermal power plants in Serbia).

Buses are selected through a tender.

"The expected annual revenue from the new deal with the Serbian Electric Power Company is over 2,5 million euros, and the first ship with 65.000 tons of coal has set sail from the Port of Bar. The whole situation is particularly risky in relation to this deal because business partners may, appreciating the actual risks, change their position on the reliability of the route via the Port of Bar and return to the coal supply models via other ports, which they previously used," Pješčić pointed out.

He emphasized that all of the above does not mean denying the right of any category of employees to demand an improvement in their employment status, but only an attempt to point out the evident complex risks (with enormous possible consequences) with which the interruption of the transport of goods by rail is associated.

ŽPCG said that it is understandable that they are suffering certain losses due to the suspension of rail traffic, but at this point it is difficult to talk about exact amounts.

"The costs primarily relate to organizing alternative transportation and refunding passengers who decide to cancel their trip, as well as obligations under the transportation contract. However, at this moment, the most important thing for us is to ensure continuity of service and that passengers have an adequate replacement for rail transport," the state-owned railway company said, adding that in addition to the financial aspect, there are also organizational challenges, such as coordinating alternative transportation, passenger scheduling, logistics on international lines and providing supporting services.

According to the current timetable, ŽPCG hires 25 to 30 buses per day, for which, according to the company, the costs vary depending on the route and the number of passengers for whom alternative transportation is provided.

"They are, of course, not negligible, but as a public company we feel a responsibility to prioritize the smooth transportation of passengers. The engagement of alternative transportation is carried out exclusively through a contract between ŽPCG and a carrier selected through public procurement - we do not engage in ad-hoc engagements," ŽPCG stated.

They added that, although this is an emergency situation, all departures are organized with alternative bus transportation in accordance with the current timetable, and that passengers, of course, notice the difference compared to train travel, but ŽPCG is making efforts to ensure that the regularity and quality of service remain at the expected level.

"Competition on other logistics routes is not standing still and is already offering solutions to our partners if the crisis continues to redirect goods to long-distance ports in the region, which would be disastrous for us," Pješčić pointed out.

Montecargo loses 20.000 euros a day

Montecargo told "Vijesti" that they are losing 20.0000 euros a day due to the disruption of rail traffic.

"However, this blockade leads to a violation of contractual obligations towards business partners, which threatens our reputation as a reliable transporter. A longer-term interruption may result in the permanent loss of strategic clients, such as large energy and industrial companies, which may redirect transport to other routes and service providers," the state-owned company said.

They cite, for example, that a contract for the transport of coal for the needs of the Serbian Electric Power Company was signed, which will begin implementation in early September and its value is 2.250.000,00 euros, and this deal was redirected to the Port of Bar for the first time. "This is just one of the deals that Montecargo has concluded this year, which further clarifies our already given statement about the millions in losses that we would suffer, and we can only assume how much losses those companies that do business with us will have, namely: Port of Bar, Port of Adria, Uniprom metali, Stelantis, TCL, HBIS, Stratemis, Mbox, Panšped, Elan Continental, Srbija Kargo...", the company said.

Montecargo assessed that this situation further complicates the already sensitive situation in the railway system, which is struggling for survival and development, and if the problem is not resolved quickly, the consequences will not only be temporary, but long-term and systemic.