Ukrzaliznytsia has the opportunity to reduce the tariff for cargo transportation, and not increase it, noted ICC Ukraine.
The Ukrainian National Committee of the International Chamber of Commerce (ICC Ukraine) called on the Cabinet of Ministers to reconsider the decision on a possible increase in rail freight tariffs. This was stated in the organization’s letter to Prime Minister Denis Shmygal.
It is noted that in August 2021 – January 2022, monopoly tariffs for cargo increased 2.4 times the level at the beginning of 2021. For comparison, in Canada, tariffs for rail cargo transportation for the period from 1988 to 2021 increased by a total of +43%, and in the USA – by 72%.
ICC Ukraine emphasizes that the increase in rail freight tariffs will affect the industry, reduce the competitiveness of Ukrainian products in world markets and reduce export earnings.
“Rail transportation is key to ensuring the stability of supplies of raw materials and products in the domestic market, as well as for the export activities of enterprises will not only complicate economic recovery, but can also lead to the closure of businesses, putting thousands of jobs at risk,” they told the organization.
It is noted that, from an economic point of view, it is necessary not to increase the cost of logistics, but, on the contrary, to reduce it to stimulate production.
“This will attract more rail freight, reduce the load on road transport and preserve the road infrastructure, which has already undergone significant destruction due to the war and the transfer of some cargo from rail to road,” ICC Ukraine emphasized .
They emphasized that Ukrzaliznytsia now has every chance not to raise tariffs: the company’s revenue from cargo transportation for the first half of 2024 reached UAH 43 billion, which is 17% more than the same period in 2023. At the same time, UZ’s variable costs account for only about a quarter of total costs, so transporting an additional ton of any cargo brings the company an impressive marginal profit.
ICC Ukraine believes that instead of increasing UZ tariffs, it is necessary to focus on increasing the freight base, and also consider the possibility of optimizing Ukrzaliznytsia’s fixed costs.
“We ask you to extend a discount of 30% for the established tariffs for export transportation of all types of cargo (currently the discount is applied to agricultural products – ed.) and set the task of Uzbekistan to implement large-scale programs to optimize costs and increase transport volumes, due to which to reduce freight railway tariffs by 15-20% during 2024-2025, thereby supporting Ukraine’s economic recovery and exports and strengthening the competitiveness of Ukrzaliznytsia itself compared to road transport,” ICC Ukraine summarized.
Remind us that in the first half of the year, Ukrzaliznytsia reported a record volume of transportation and received UAH 3.1 billion in revenue. At the same time, by the end of the year the company plans losses in the amount of UAH 2.7 billion, so it plans to increase tariffs for cargo transportation.
Source: korrespondent
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