Ukrainian retailers say Polish border blockage prompting prices for imported goods to rise - poll

MOSCOW. Nov 28 (Interfax) - The blockage of the Polish-Ukrainian border has considerably complicated the delivery of imported products to Ukraine from Europe, and even though retail chains give priority to Ukrainian products to mitigate consumer risks, this situation has still increased the risk that prices for some products might rise, as seen from a poll of retailers carried out by Ukrainian media.

"KOLO prioritizes Ukrainian production and Ukrainian products, which are a key element of our work strategy. However, it is important to understand that some products, such as cocoa, coffee, oranges, or salt, are mainly imported. We currently assess the risks, in particular, as concerns confectionery, alcohol, cheeses, and citrus fruits, at UAH 25 million to UAH 30 million per month," Marina Sergiyenko, general director of the KOLO retail chain, said.

KOLO is currently forming some stocks at warehouses in view of the upcoming Christmas and New Year period, while the blockage of the Polish-Ukrainian border is negatively affecting the business processes, she said.

"This could prompt a shortage in some goods on the shelves. It's important to understand that this could also affect Ukrainian-made products due to a lack of components for their manufacture or packaging materials," she said.

The ATB press service said that the border crossings that are blocked now are used to ship goods not only from Poland, but also from the Baltic countries, Germany, the Netherlands, and Belgium, which account for quite a large share of the ATB Market product mix. In particular, the share of Polish products is high among dairy products, frozen vegetables and fruits, pasta, soft drinks and alcoholic beverages, detergents, and cosmetics sold in its stores, it said.

The press service of the Epicenter retail chain said it operates via Polish seaports, including the Gdansk and Gdynia, and while the border blockage has affected the range of products shipped to Ukraine from abroad, the share of imported goods in the retailer's product mix is not very high.

"Our team has worked for years to reduce our dependence on imports. We have switched to Ukrainian manufacturers, prefer national suppliers, and are developing our own production. Therefore, all these measures are mitigating the Polish border problem," it said.

KOLO said that the use of alternative checkpoints cannot solve the problem, since a considerable number of transport vehicles there entails extra financial costs and slows down the border crossing process.

"For example, the use of the Ukrainian-Romanian border can increase the time of delivery by two to three days, adding 600 to 1,000 euros per voyage to the shipping costs. In such conditions, even if goods can be shipped across different borders, problems with temperature conditions during transportation may be critical for food products, which could lead to further losses and worsen the market situation," Sergiyenko said.

Natalya Krasnikova, Eco Market deputy general director for logistics, said the stocks at some of the retailer's distribution warehouses have shrunk, which was immediately prompted by the fact that only about half of orders for delivery from Europe have been carried out due to the border blockage.

"In this situation, we see that carriers are reluctant to take any new orders (load their vehicles with freight) during the strike, because they may face penalties from buyers if they are unable to honor their obligations," she said.

These factors are unlikely to have a strong impact on prices for end buyers in the short term, but if the situation persists, prices will begin to rise, primarily for imported goods, Krasnikova said.

"The prices for domestic goods should change minimally, except for those goods where the share of imported components is prevalent. All of this can reshape the market in favor of Ukrainian companies whose production facilities are located in Ukraine, whose product components are also produced here, and whose enterprises produce enough to fill the niches that were previously occupied by imports," Krasnikova said.