Logistics and relocations
2.08.2022
Martial law establishes both certain legal features regarding the movement of vehicles, as well as actual restrictions related to the destruction of infrastructure or defense against sabotage groups and other offensive actions of the enemy. Resolution of the Cabinet of Ministers of Ukraine No.1455 dated December 29, 2021, authorized officials of the Army, Police, National Guard, and the State Border Guard Service forces may inspect, temporarily restrain or prohibit the traffic of vehicles, luggage and cargo. In addition, cargos (goods) are subject to control on road checkpoints entry / exit. The number of such checkpoints has been growing chaotically for several weeks since February 24 this year, and transport has been inspected in almost every settlement that slowed down the road traffic. According to the Ministry of Internal Affairs, from mid-March the number of checkpoints had been reduced from 1,500 to 1,000.
In addition to planned and legally prescribed restrictions, the location of enemy forces, the indiscriminate nature of targets for their attacks, and the current situation in the war zone may force the authorities to take immediate additional measures on logistical issues. We recommend attending very carefully to route planning and avoid or, the very least, minimize the passage of dangerous areas and in communication with the military administration, in particular, taking care in advance of passes for travel in areas with limited traffic and during curfew. Life in exchange for health, and health is a priority to the assets (that may be damaged) or income (that may be lost).
In addition, since August 1, according to the decision of the Kyiv City State Administration, carriers and ground public transport have been obliged to stop during an air alert in a safe place in accordance with the Traffic Rules. The Metropolitan, in turn, will not carry out transportation on ground sections and will close the operation of open-type stations.
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Supporting the army and the livelihood of the civilian population is a strategic and ultimate goal of the business in the face of threats to Ukraine's sovereignty. One of the options to normalize business is to relocate it into the region with more benefits for expansion and/or stable economic operations. That is, location near active hostilities or even a stricter curfew plays to competitive disadvantage: workforce is available for a shorter time or only at home, they have to spend more resource on rescue and safety, businesses and employees are more likely to perform mobilization assignments, executives can be suspended from the office. In the war zone, there are additional risks of destruction or seizure of resources – human, financial, transport, production facility, office, warehouse etc. Thus, partial or complete relocation of the enterprise may be worth the costs compared to the risks of staying:
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The Government of Ukraine has announced a program on temporary domestic relocation of business from the affected regions to safer ones. They promised to support "cost free" relocation, to assist in selecting of a location for production facility, evacuation and accommodating staff, selection of workers in the places of deployment after the move, support in restoring logistics, purchasing raw materials and finding sales markets - provided companies will preserve production capacity and workplaces.
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A number of Ukrainian exporters, such as the IT industry companies and FMCG suppliers, are gradually integrating their value chain abroad. They transfer some of the offices, relocate warehouses and technological processes of production (packaging of finished products, storage and distribution etc).
Two above options may complement each other. To do this, you need to submit an online application for relocation, specifying the specialization of the enterprise, the number of employees, production capabilities, needs for production space, raw materials, placement of employees, as well as the method of transportation.
All applications are processed promptly. The duration of the examination is from 1 to 3 days for enterprises that are of primary importance for the defense complex, the livelihood of the population and the support of the economy in wartime. Regarding other enterprises (non-priority) - applications can be considered for up to 5 days.
There are no grounds for refusing to relocate. There is the priority of consideration of the application, the possibility of dismantling, the availability of a location with the necessary conditions for work in the receiving regions and the order of transportation. Currently, enterprises are being relocated to one of nine regions (Transcarpathian, Ivano-Frankivsk, Lviv, Ternopil, Khmelnytskyi, Chernivtsi, Vinnytsia, Volyn and Rivne regions).
The relocation of enterprises is carried out in three ways: independently; by JSC "Ukrzaliznytsia"; by JSC "Ukrposhta". They ensure the passage of roadblocks, draw up transport invoices and other documents that make it possible to compensate the company for transportation costs. Other carriers are also engaged as subcontractors, depending on the needs of the enterprise.
International relocation programs, which entrepreneurs can apply for at the same time as submitting an application for a state support program, help in moving an enterprise and establishing a business in a new place. In particular, two international programs are currently helping. One is financed by the American agency USAID, the other by the United Nations Development Program (UNDP). Each has its own specialists who work individually with heads of business entities, study needs, assess available opportunities, develop business plans, and help resume work at a new location.
As of July 15, a total of 678 enterprises were relocated to safe regions under the relocation program, and 68% of them (467 enterprises) have already resumed their work.
Regarding moving business abroad, the physical transfer of equipment and technology to Ukraine's neighboring economics such as the EU, Moldova, Turkey or Georgia has not become more difficult than it was before the martial law. On the contrary, the relocation of Ukrainian workers and vehicles to the EU has become simpler: every Ukrainian can now cross the border and start working for any company for up to 18 months, followed by an extension for a total of up to 36 months. Employment permits are not required, except for administrative notifications to the relevant authorities and obtaining temporary protection in the host country. Please note, however, that work is allowed only in the country of registration, the employment in other EU or EEA country, even remote (online) is prohibited.
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