Ukrzaliznytsia’s proposal to establish a single average tariff for all carriers will lead to the destruction of the economic potential of industries that are key to the Ukrainian economy, industrialists believe.
Ukrzaliznytsia’s intentions to once again raise tariffs for cargo transportation create a serious threat to both the economy and defense capabilities of Ukraine. This was stated in an open letter to President Vladimir Zelensky from OP Ukrmetallurgprom, the association of UkrFA, as well as associations of chemists, manufacturers of building materials and miners, TSN reported on Monday, October 14.
Industrialists recalled that in Ukraine the railway is the main means of cargo transportation. Rail transport provides about 82% of freight and 36% of passenger traffic.
“And, obviously, realizing its monopoly position, Ukrzaliznytsia JSC has been trying to solve its own financial problems at the expense of shippers throughout its life,” the letter said.
According to the signatories, after a series of increases in freight tariffs in 2021 and 2022, tariffs for the transportation of coal, ore and limestone increased by 140%, metal – by 70%, fertilizers – by 70%, grain – by 96% , and empty cars from coal – by 158%, industrialists indicate. Now Ukrzaliznytsia is introducing another tariff increase, “without sufficient justification for it.”
“The main argument for the need to increase freight tariffs is Ukrzaliznytsia’s own unprofitability, because the company has every chance to remain profitable: even in 2023, which is very difficult for the Ukrainian economy, Ukrzaliznytsia will earn UAH 5. billion,” the letter stressed.
It is argued that high logistics costs due to the rapid growth of Ukrzaliznytsia’s freight tariffs make Ukrainian products uncompetitive on the international market. This occurs at a time when iron ore enterprises are operating at 55% of pre-war levels, and metallurgical enterprises at 65%. The ferroalloy businesses are now almost bankrupt. In the chemical industry, almost all major export sectors have declined or “reset to zero,” industrialists said.
They believe that in war conditions, Ukrzaliznytsia, instead of maintaining cargo and increasing the cargo base, “is uncontrolled and rapidly expanding its cost base, increasing costs and showing no interest in further you.”
“After all, since September 2023, UZ has not sold a single piece of scrap metal – even though the sale of scrap metal means billions of hryvnias of additional income. Even in such conditions, the financial UZ results in the first half of 2023 cost UAH 4.8 billion But UZ plans until the end of 2024 year, the costs have been inflated to cause damage in the amount of UAH 2.7 billion At the same time, Ukrzaliznytsia continues to hide the real increase in tariffs in the term “merger. ” and “harmonization,” which actually removes all incentives for optimization of logistics processes, rhythmic shipping and consolidation of cargo, – industrialists emphasized.
In their opinion, the proposal of Ukrzaliznytsia to establish a single average tariff for all carriers will lead to the destruction of the economic potential of industries that generate the budget for Ukrzaliznytsia and mainly for the entire economy of Ukraine (agriculture, mining and metallurgy, construction) . On the other hand, it will make UZ “chronically uncompetitive compared to road transport and other forms of transport.”
“The short-sighted tariff policy of Ukrzaliznytsia will have a critical impact on the entire economy of Ukraine and, accordingly, on its defense capabilities and national security. Therefore, today we ask you to initiate measures to improve the financial situation of Ukrzaliznytsia, fix. work to support and develop the company’s cargo base, ensure cost optimization and ensure the introduction of a moratorium on the increase of railway freight tariffs until martial law is lifted and in for at least two years after the end of the conflict,” said the industrialists.
Remind us that Ukrzaliznytsia said they earned more than 3 billion hryvnias in six months, but in July and August the company faced a loss of 600-700 million hryvnias per month. Therefore, Ukrzaliznytsia decided to initiate a revision of tariffs for cargo transportation.
Earlier, the Federation of Transport Employers of Ukraine appealed to Prime Minister Denis Shmygal about the tariffs of Ukrzaliznytsia. They believe that by optimizing UZ costs, it is possible to reduce freight tariffs by 20% from the current level.
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Source: korrespondent
I’m Liza Grey, an experienced news writer and author at the Buna Times. I specialize in writing about economic issues, with a focus on uncovering stories that have a positive impact on society. With over seven years of experience in the news industry, I am highly knowledgeable about current events and the ways in which they affect our daily lives.