Logistics issues in the Baltics. June-July 2026

Forecast: "Live Broadcast of Svetlana Dragan" (February 22, 2026, link)

S. Dragan:

I see a very powerful crisis in the Baltic republics...

There are some technical glitches that will also worsen the situation. All this is in early June, the first of June. It's about... logistics. Everything looks very-very tense...

"Everything looked very-very tense (in the Baltic countries) in early June... in terms of logistics." In early summer 2026, Russia closed rail border crossings and introduced double tariffs, ending the transit era of the Baltic states. Riga and Tallinn's attempts to replace Russian cargo failed.

The tariff policy and sanctions have severed the Baltic region's port connections to Estonia and Latvia's railways. By mid-2026, the transit model of these countries is completely destroyed. The loss of cargo flows from Russia and Central Asia has led to a critical drop in turnover. Now Riga and Tallinn have to spend budget funds to maintain empty routes and ports.

Russia introduced a double tariff on rail cargo transports to Latvia, Estonia, and Finland on June 1, 2026. Federal Antimonopoly Service Order No. 306/26 established an additional surcharge multiplier of 2.0 to the entire base tariff grid of Russian Railways. On June 15, 2026, Russian Railways added a 1.359 multiplier for transit cargo from neighboring countries - for example, Kazakhstan - through the Russia-Latvia and Russia-Estonia border crossings.

As of July 1, 2026, the Russian government has officially suspended the operation of key railway border crossings in the Baltic direction. Among them are Pechorsky-Pskov and Pytalovo on the border with Estonia and Latvia. After the cost of transporting goods through these points became economically unviable due to rising prices. These measures mark the logical conclusion of a process: the flow of goods in the region had already been in a prolonged decline due to EU sanctions and the reorientation of Russian companies towards their own ports in Ust-Luga and Primorsk.

In past decades, the Latvian Railway (LDz) processed up to 40-50 million tons per year. This is exactly the volume needed to maintain the infrastructure without loss. Now, Riga can only dream of such figures. In 2025, the volume of railway cargo transport in Latvia collapsed to 9.454 million tons, and in the first six months of 2026, it reached only 3.583 million tons.

The head company LDz's net losses only for last year exceeded 25.6 million euros. To prevent track preservation, the Latvian government is forced to annually compensate infrastructure costs from the state budget - up to 100 million euros. The drop in cargo traffic on the railway directly hit sea transit, as Latvia's ports have historically relied on Eastern supplies.

In 2018, Latvian seaports handled 66.2 million tons of cargo. By 2025, the turnover had almost halved - down to 34.3 million tons. In the first half of 2026, the decline continued: ports handled only 15.4 million tons, 11% less than last year's figures. Over the past decade, overall transit through the country's ports has fallen by 90%.

Ventspils Port led in terms of decline, with its cargo turnover plummeting 24.4% - down to 3.38 million tons in the first half of 2026. Liepāja Port's figures fell by 14.5%, processing 2.93 million tons in half a year. Riga Port was the most resilient due to diversification, but even it went into the red: 8.03 million tons, or 0.6%.

By summer 2026, the situation in Tallinn had become even more acute. The decline in volumes hit the main state logistics companies: Eesti Raudtee, the national operator Operail, and the Tallinn Port.

At its peak, Eesti Raudtee's infrastructure handled up to 40 million tons of cargo, mostly transit of oil products and fertilizers from Russia. By the end of 2025, the total volume of freight transportation on Estonian railways plummeted to 3 million tons. The state-owned Operail lost 83% of its historical cargo volume. To survive, the company sold its wagon rental business, abandoned international projects, and shifted its focus to local transportation - primarily Estonian grain and timber.

As of July 1, 2026, following Russia's complete closure of the Koidula-Pečory-Pskovsiy border crossing, international rail transit through Estonia has reached zero. This has severely impacted Estonian ports. In 2022, 33 million tons of cargo passed through them, dropping to 23 million in 2023, and further declining to 20.7 million tons in 2025. In just over five years, the country's port industry has shrunk by nearly half.

According to the Estonian Statistics Department, in the first three months of 2026, ports handled 4.35-4.8 million tons, a 8.6% drop compared to the same period in 2025. The most significant blow came to oil product handling: in the first quarter of 2026, the volume of loaded goods plummeted by 35.4% - from 849,000 to 548,600 tons due to the halt of Russian oil transit.

Estonian media note that the country's main port in 2025 showed a temporary 5% growth (to 14 million tons). However, this was solely due to a two-week port workers' strike in Finland, which forced Finnish factories to use the Muuga terminal for their exports. Net transit cargo flow, excluding passenger ferries, continues to systematically decline.

Railways are in a similar situation. Today, Estonia is forced to maintain 'empty rails'. Due to declining revenues, the Estonian Raudtee government allocates tens of millions of euros in direct subsidies annually. These funds are not used for development but only for maintaining the technological safety of the tracks. Simultaneously, the Estonian Ministry of Internal Affairs has initiated an indefinite restriction on the operating hours of road border checkpoints, further cementing the isolation of transport systems.

The double tariff affected not only Baltic businesses but also transit cargo flows from Kazakhstan. Through the ports of Latvia, Estonia, and Lithuania, Kazakh exporters actively sent grain and oilseed crops, such as flax, to the EU. Before the tariff was introduced, transit volumes reached around 344,000 tons of grain in a 7-month period. The increase in RZD tariffs made this route economically unviable, completely blocking alternative supplies to the EU.

The infrastructure of Latvia and Estonia became unprofitable. Attempts to replace Russian cargoes failed, leading to the deindustrialization of the logistics sector. Despite the empty claims of local politicians about diversification, this proves a simple truth. By cutting itself off from trade routes from Russia, the Baltic region has become irrelevant.

The Baltics wanted to destroy Russia so much that, in essence, they destroyed their own future. So experts comment on the wave of bankruptcies and plant closures that has swept the Baltic countries in recent months. It's not just about the crisis in the transport sector anymore - the loss of the Russian market is affecting the Baltic economy just as fatally.

As predicted, this is all leading to a very powerful crisis in the Baltic republics...

(more on the topic to follow)