The war between Russia and Ukraine will have 5 major impacts on global rail transit

Introduction

The intensity of the war between Russia and Ukraine is expanding beyond the battlefield. Following the financial sanctions marked by SWIFT, the IT, automotive, chemical, media, sports, education, and entertainment sectors have also been sanctioned one after another, up to the "cut-off" sanctions in the energy sector. Recently, the rail sector has joined the ranks of these sanctions. The International Union of Railways UIC has kicked former Russian Railways RZD, Belarusian railroad company BCh kicked out of the UIC membership list. The war between Russia and Ukraine is expected to significantly impact the rail industry in the coming years, not only in Europe, and Azure Track Rail brings you a complete analysis.

I. Secondary Impact of Financial Sanctions

The secondary impact of SWIFT sanctions is industry-wide, and rail is no exception. The effect is mainly the greatest for rail projects under execution, such as loan repayment practices, progress payments, and other practices denominated in U.S. dollars. Without remedies in currencies other than USD, problems such as delinquency and default will arise.

II.Influenced by the sanctioned party as Party A

The secondary impact of SWIFT sanctions is industry-wide, and rail is no exception. The effect is mainly the greatest for rail projects under execution, such as loan repayment practices, progress payments, and other practices denominated in U.S. dollars. Without remedies in currencies other than USD, problems such as delinquency and default will arise.

III.Influenced by the sanctioned party as party B

Even if the sanctioned party comes up with a remedy for settlement in a currency other than the U.S. dollar, it will quickly lose its foreign rail market as Party B.

Predictably includes locomotive manufacturer TMH and turnkey and operator RZD, especially in Russia, where TMH has been developing strongly in recent years. In addition to the CIS region, it has also won large orders in Argentina, Egypt, and even Europe. It has the momentum to break into the top five globally with the opportunity to develop rail transportation in Russia. And now its market share is likely to be eaten up by competitors.

IV. The impact of the European railroad map

The current Russia-Ukraine war makes the military alliance organization NATO NATO exposure, while the economic cooperation organization behind it - the EU EU, is easy to ignore. The EU zone, Schengen zone, Eurozone, and NATO zone cover economic, customs, financial and military fields, respectively; the actual core that can accelerate European integration is the economy, i.e., the EU zone. And among the many indicators of EU accession, rail connectivity is one of them. In recent years, Balkan Serbia has been vigorously developing the Pan-European Corridor 10, one of the essential means for the EU to expand its influence. Before the current war between Russia and Ukraine, the French President visited Ukraine. One of the President's trips before the war was to meet with Zelensky to sign a contract for 130 Prima T8 locomotives provided by ALSTOM to Ukrainian Railways! The main project is 85% financed by the French side. The influence of rail transportation is evident.

V. New Energy Locomotives and the Green Revolution

In addition to the global oil scarcity caused by the "cut-off" type of sanctions in the energy sector, the "cut-off" sanctions have also led to a worldwide oil shortage. The green revolution that the world has been advocating in recent years is a realistic consideration to eliminate the dependence on charcoal energy (natural gas also contains charcoal).

Global railroad locomotive manufacturers respond positively to this and vigorously develop hydrogen locomotives ALSTOM, SIEMENS, TALGO, CRRC, and ROTEM have been put into R&D and even delivered off-line. This Russia-Ukraine battle is likely to be an essential catalyst for accelerating the replacement of internal combustion locomotives for rail transportation.

Conclusion.

We hope to bring more connectivity and peace to this world through rail transportation.