In Armenia, Without Permission, Please Pay the Road Fee and Enter the Country: Freight Carriers Raise Alarm

Different countries set quotas for freight carriers from other nations, thereby protecting their local transporters, which is not implemented in Armenia. This was stated by Karen Aghdayan, head of the dispatch department of the "Spayka" company, while discussing the protests of Armenian freight carriers.

It was reported that on August 29, representatives from dozens of freight transport companies and individual drivers organized a protest in Yerevan, trying to convey their message to the government. According to them, carriers from other countries have overtaken the market to the extent that Armenian carriers have become marginalized.

Aghdayan pointed out that any country has international agreements with other nations, which stipulate under what conditions freight transports from that country can enter or transit through another country. This is usually done through permits. “Typically, if there is no permit, entry into their country is prohibited. In Armenia’s case, if you don’t have a permit, please pay the road fee and enter the country. Probably only our country is in this situation in the region, meaning any carrier from any country can freely enter Armenia, unload the cargo, reload, and leave," Aghdayan notes.

For example, in Georgia, a Turkish carrier can only enter with a permit. If they do not have one, they cannot enter, no matter how much they are willing to pay.

“This is probably an issue of Armenia’s internal legislation. It should be clearly defined that once the permit has expired, entry should not be allowed to protect your local carriers. Permits also ensure a quota. For example, if you have 100 quotas and you pass it, you can no longer do so. In the case of Latvia, once the quota is exhausted, that’s it. This is done so that your local carriers can transport the cargo,” Aghdayan explains.

The lack of regulation negatively affects Armenian freight carriers, leading to price undercutting and intensified competition. While larger freight companies manage to cope somehow, smaller ones, including individual drivers who purchase trucks with loans, are unable to pay back their loans and are going bankrupt. The industry is in such disarray that there is no licensing; any individual can acquire a relevant class of driver's license, put a house up as collateral (for example), buy a truck and start transporting cargo while often working cash-in-hand, concealing taxes and engaging in price dumping. Discussing the industry’s problems, a representative from one of the freight transportation companies described the current situation as follows.

“I do not object to these people. One must start somewhere, but they do not grasp the nuances of the industry. A market value exists — and that’s not being maintained; they are ruining the market, and then, in the end, they still fall out of the market,” he notes.

For instance, if a hypothetical freight transport from Yerevan to Moscow and back costs $6,000-$7,000, including the company's revenue, the driver’s salary, road expenses, taxes, fuel, etc., individual drivers cut their own salaries and road costs from the overall value, offering about $2,000 less.

“We maintain our drivers, we diligently pay taxes, and each vehicle undergoes technical inspection before every transfer, thoroughly checked, while they do not do any of this; they offer cheaper rates to clients. The importer is not delving deeper into why this is so and chooses the cheaper option,” said the interlocutor.

In addition to individual drivers, there are also individual logisticians who, sitting at home without paying taxes and without registration, find loads from X place and carriers from Y place, earning broker fees.

“If one day the tax authorities focus on this sector, it will be a storm,” he emphasized.

But even those engaged in dumping practices are struggling to compete against Georgian drivers or precisely individual drivers registered in Georgia, among whom many are Turkish carriers. They offer much lower rates for freight transport.

“Our state does not give priority to its own carriers in any way. For example, in Ukraine, due to the war, freight rates have plummeted; there is a bread crisis, and they are willing to transport for a pittance. Poland has banned carrying loads to and from their country. They say, please transit through, but that’s all,” explains our interlocutor.

In this situation, where the government does not support, some Armenian entrepreneurs are still standing by their local freight carriers to prevent their loads from being taken by foreigners. Aghdayan noted that they are not demanding a ban on entry for freight carriers from other countries but that the conditions should be different.