Unilateral restrictions imposed by Latvia on the transit of Russian- and Belarusian-origin grain would not stop Russian exports from reaching global markets but would instead redirect cargo to other transport corridors, while Latvia could lose legal cargo, port and railway revenues, international customers and competitiveness, the Latvian Stevedoring Companies Association (LSA) warns. The Association is urging policymakers to assess who would actually bear the cost of such a decision before introducing new restrictions.
The LSA stresses that Latvia’s security and support for Ukraine are priorities and calls on the state, at both national and European Union level, to use sanctions, controls and economic instruments that genuinely reduce Russia’s and Belarus’s revenues and their ability to finance the war. The LSA supports legally justified restrictions that achieve this objective. However, it warns against choosing instruments whose main economic consequences fall on Latvia, its international partners and global food supply chains if their impact on the aggressor states’ revenues is not supported by data.
The LSA stresses that grain stolen from the occupied territories of Ukraine, as well as sanctioned, illegal or unverifiable-origin cargo, has no place in Latvia’s transport system. Port companies cooperate with the Customs Board of the State Revenue Service, the Food and Veterinary Service (PVD), the Financial Intelligence Unit (FID) and other competent authorities to prevent such cargo from entering Latvia’s transport chain.
The LSA supports the government’s decision to strengthen controls over the origin of grain in transit, including by giving the PVD the authority to take samples from transit cargo and conduct laboratory tests, as well as further improvements to control mechanisms in cooperation with Ukraine and other EU countries. The industry is already cooperating with the competent authorities by providing the necessary information and support for cargo controls and traceability and is prepared to continue jointly strengthening and improving these mechanisms.
At the same time, the LSA urges against imposing a unilateral ban on the currently permitted transit of Russian- and Belarusian-origin grain to third countries, or introducing an economic instrument whose actual purpose would be to make such transit through Latvia impossible, before its real impact and consequences have been assessed. Unilateral measures by Latvia alone will not prevent Russian grain from reaching the global market – cargo will seek alternative transport corridors. Latvia, meanwhile, risks losing legal cargo, port and railway revenues, international customers and its competitiveness.
“If the objective is to reduce Russia’s revenues and its ability to finance the war, we must choose an instrument that actually achieves that objective. A unilateral Latvian decision that merely redirects legal international cargo to corridors in other countries while leaving Latvia with the economic losses does not achieve this goal,” the LSA stresses.
Making the transportation of Russian- or Belarusian-origin grain through Latvia more expensive does not automatically mean that Russia or Belarus will bear the additional cost. Grain is bought and traded on international markets by international companies, which then deliver it to third countries, including countries in Africa. Depending on the specific contract, the additional costs may be borne by the cargo seller, the international trader, a participant in the transport chain or the final buyer.
Therefore, the impact of a tariff on the aggressor states’ revenues cannot be determined solely on the basis of the cargo’s origin – it is necessary to assess who actually bears the additional costs throughout the transaction and supply chain.
A tariff as a disguised ban is not a solution
The LSA calls for a clear distinction between customs tariffs, railway infrastructure charges, port infrastructure fees and commercial service prices, as each of these instruments is governed by its own legal framework. Latvia operates within the common EU and international transport market. Therefore, before introducing an economic instrument designed to make cargo of a particular origin more expensive, its legal basis, proportionality, implementation mechanism and the party that will ultimately bear the additional costs must be assessed.
If the actual purpose of increasing charges is to ensure that legal cargo of a particular origin no longer chooses Latvia as a transit route, the compatibility of such an instrument with Latvian, EU and international law must be carefully assessed, as must the potential consequences for contracts that have already been concluded.
Such decisions may result not only in economic and reputational losses but also in legal challenges and claims for damages. When the European Union significantly increased customs tariffs on imports of Russian and Belarusian grain into the EU in 2024, it deliberately did not extend those restrictions to transit through the EU to third countries. EU regulations specifically state that this approach was chosen with global food security considerations also taken into account.
Cargo will not disappear – it will change route
Ports in the Baltic states and other countries in the region compete for international cargo flows. When choosing a transport corridor, cargo owners assess price, available capacity, delivery times, predictability and risks. If one corridor becomes significantly more expensive or unavailable, companies look for alternative routes.
On some routes, the price difference between Latvian and competing transport corridors is already only a few euros per tonne. Therefore, even relatively small changes in costs or risks can influence cargo owners’ choices.
At the same time, discussions on Russian grain transit are also taking place in the other Baltic states, with countries strengthening origin controls and considering further restrictions. Solutions should therefore be coordinated as much as possible at Baltic and European Union level to prevent cargo from simply being shifted from one country to another.
Latvia has an opportunity to attract new Central Asian cargo
The Central Asian route is particularly important and represents one of the strategically significant areas of cooperation for both Latvia and the European Union. Central Asian cargo already accounts for part of the cargo turnover at Latvian ports, and Latvia has opportunities to increase these volumes. In recent weeks, Kazakh partners have expressed interest in additional routes for shipments of Kazakh wheat and oilseed cargo through Baltic ports, including those in Latvia.
Restrictions on goods originating from Russia or Belarus do not in themselves apply to cargo originating from Kazakhstan. However, a significant share of these shipments depends on the Russian railway network, meaning that possible Russian countermeasures or disruptions to the transport corridor could also affect Central Asian cargo flows to Latvia.
It is in Latvia’s interests to develop a secure, legal and competitive transport corridor that is capable of strictly controlling cargo origin while preserving Latvia’s position in international supply chains.
Impact on global food supply chains must also be assessed
The issue of grain transit is not merely a matter of Latvia’s domestic politics – the consequences of decisions may also affect broader food supply chains.
In its latest food price assessment, the UN Food and Agriculture Organization (FAO) states that disruptions to Black Sea trade logistics, alongside other factors, are putting upward pressure on international food commodity prices. At a time when traditional export routes through the Black Sea and the Sea of Azov are severely disrupted, market participants are seeking alternative export corridors, including routes through the Baltic Sea region.
Reducing the number of available transport routes or artificially increasing their cost may raise logistics costs and risks. Depending on contractual arrangements, these costs may be passed further along the supply chain and ultimately reach final buyers, including countries where imported grain is an important part of food security. There is therefore no basis for automatically assuming that the economic costs of a Latvian decision would be borne directly by Russia or Belarus.
Before introducing new restrictions, the LSA calls for their expected outcome and actual impact on Russian and Belarusian revenues to be substantiated, compared with the economic costs to Latvia, and assessed alongside alternative cargo routes, legal risks, implementation timelines and the consequences for existing contracts and international partnerships.
If, following a unilateral Latvian ban or economic restriction, Russian grain continues to reach the global market via another route while Latvia loses cargo, revenue and customers, Central Asian cargo flows are put at risk and the costs of international food supply chains increase, then such an instrument has failed to achieve its stated objective.
Action is necessary to prevent grain stolen in Ukraine, sanctioned grain or other illegal cargo from entering Latvia. However, the solution must be strict, effective and evidence-based controls that stop illegal cargo, rather than disrupting legal global food supply chains.
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