/Agencia Reuters
The planned increase in freight transportation tariffs by Ukrainian state railways, Ukrainian Railways (Ukrzaliznytsia), could raise farmers’ logistics costs by between 5 and 7 US dollars per metric ton and accelerate the diversion of cargo to trucks, according to the agricultural lobby group UCAB.
Ukraine’s Ministry of Economy reported that it had proposed raising freight transportation tariffs by 30% from August 1 to help stabilize Ukrzaliznytsia’s financial position.
Ukrzaliznytsia has stated that the higher tariffs would only slightly increase transportation costs, by 3.2 dollars per metric ton of ore and by 3.6 dollars per ton of grain, when shipped along the entire length of the route of up to 750 km.
Ukrzaliznytsia CEO Oleksandr Pertsovskyi told Reuters this month that the company needed to increase its tariffs by at least 45% this year to help straighten out its finances. The railway remains a vital part of Ukraine’s logistics network, transporting both cargo and passengers.
However, increased spending on security and infrastructure maintenance is pressuring the government’s cash flow at a time when it is trying to restructure its debt.
Ukraine has traditionally moved its main export cargoes – grain, ore and metals – to ports by rail, but higher tariffs could prompt companies to switch to truck transport.
“The higher costs of rail logistics could make road transport economically viable for many more regions,” UCAB noted.
“Although trucks are currently used mainly in areas closest to ports, a tariff increase could expand the zone in which they are competitive to a distance of 300 to 400 km from the maritime terminals,” the association stated.
Metallurgical companies have also opposed the planned tariff increase, warning that it could lead to the closure of many key enterprises and leave 300,000 people unemployed.
