Finland’s national train operator VR Group has begun the process of terminating its Russian cross-border freight contracts, with traffic expected to cease completely by the end of the year at the latest, and it is also looking to sell or liquidate its Russian freight joint ventures.

Following Russia’s invasion of Ukraine, on April 6 the VR Group board made a decision to stop freight traffic between Russia and Finland. International sanctions do not apply to rail transport between the EU and Russia, and so termination of the contracts has to be undertaken as specified in the contracts or negotiated on a customer-by-customer basis; VR said traffic could be stopped immediately if a customer agreed.

VR has drawn up a plan to shut down traffic in consultation with its customers and taking into account the security of supply, and the termination of contracts began on May 3. Its agreements with Russian Railways will end at the same time as the traffic ends.

‘We estimate that traffic will be reduced to about a third of the original level by the end of the summer’, said Acting Managing Director Topi Simola on May 3. ‘Some customers want to continue traffic until the end of the notice period, but we are still continuing negotiations on stopping traffic faster than this. In any case, all Russian freight traffic operated by VR will end by the end of the year at the latest.’

Should new sanctions enter into force, the timetable for halting traffic will be accelerated accordingly.

VR Group has initiated negotiations for the sale or liquidation of ContainerTrans Scandinavia, a 50:50 joint venture with Russia’s TransContainer which provides container transport and forwarding services between Finland, CIS countries and Asia, and the Freight One Scandinavia 50:50 joint venture with Freight One which specialises in wagonload and full train shipments between Finland and CIS countries.

VR has also started negotiations to sell its Russian subsidiary Finnlog, which has leased wagons to VR Transpoint customers in Finland and operates wagons for import wood traffic.