The Ministry of Infrastructure of Ukraine agreed with the proposal of Ukrzaliznytsia (UZ) to increase tariffs for the transportation of goods by 70%.
Minister Oleksandr Kubrakov signed the corresponding order No. 441 “On amendments to the coefficients applied to the tariffs of the Collection of tariffs for the carriage of goods by rail within Ukraine and related services” on June 22, and it was registered with the Ministry of Justice on June 24.
Unlike several previous increases last year, this time the coefficients have been increased equally – by 70% – for all 20 types of cargo.
“From July 1, 2022, the Ministry of Infrastructure will carry out a planned indexation of tariffs for freight transportation,” Oleksandr Kamyshin, the head of the board of Ukrzaliznytsia, announced in the announcement of a press conference scheduled for June 29.
According to the explanatory note to the draft order, which Interfax-Ukraine got acquainted with, UZ plans to receive an additional over UAH 11 billion by the end of 2022 thanks to this increase in tariffs.
The company indicated that in the first five months of this year, due to the war, cargo transportation fell by 2.9 times – to 27.1 million tons, including in domestic traffic by 2.7 times – to 14.5 million tons, for export – 2.5 times, up to 10.8 million tons, for import – 6.4 times, up to 1.6 million tons, while transit fell almost 10 times – up to 0.3 million tons.
Ukrzaliznytsia also indicated that its estimated cost of restoring war damage would exceed UAH 100 billion.
As reported with reference to the order of the Ministry of Infrastructure of October 29, 2021, since the beginning of 2022, tariffs for the transportation of a group of goods of the 1st tariff class by rail have increased by 9%.
This was preceded by a decision to increase tariffs from August 17, 2021 for cargo transportation of a group of goods of the 1st and 2nd tariff classes by 8%, and from January 2022 – by 20.4% and 6.5%, respectively.
At that time, UZ estimated additional revenues from tariff increases at UAH 2 billion in 2021 and UAH 12.3 billion in 2022.
Ukrzaliznytsia in 2021, according to preliminary data, received UAH 457 million in net profit against a loss of UAH 11.9 billion a year earlier.
Tariffs for sea freight and air cargo have increased, while the cost of international road haulage has stabilized, but there may be queues at the key automobile checkpoints, Viktor Shevchenko, the co-owner of Zammler logistics group, has told Interfax-Ukraine. “Compared to the beginning of the year, now due to coronavirus [COVID-19] epidemic spread, tariffs for sea freight have risen by an average of $150-200 per TEU. A jump in prices occurred in March, as China began to recover production activity, demand for cargo departures increased, there was a shortage of places, respectively, the cost increased,” he said.
According to Shevchenko, due to the following sanitary and hygienic safety rules, procedures for processing goods in ports are delayed.
According to him, in connection with the epidemic, there is no air traffic now, thus, cargo carried earlier by passenger flights is delivered by cargo planes.
“Accordingly, there are not enough places for cargo departures. Airlines that continue to fly to Ukraine with cargo planes have increased tariffs. Now a place for departure should be booked a few days before departure, tariffs are provided in the mode for today,” the co-owner of Zammler said.
Shevchenko also said that over the past week, the situation with international trucking has changed dramatically.
“If last week tariffs on imported freight were 40-50% higher than pre-quarantined, to date the price situation has stabilized. Last week there was a shortage of transport in Europe due to high demand (recipients tried to replenish stocks of goods). But now we see a shortage of goods, namely enterprises are suspending operations, the volume of exports and imports is declining,” he said.
According to Zammler’s forecasts, the queues at key automobile checkpoints will soon resume again due to the closure of the Hrebenne-Rava-Ruska checkpoint.
Shevchenko said that the cost of freight traffic in the territory of Ukraine due to the epidemic has not yet changed.
“There is a slight decline in volumes, to 10%. It is difficult to predict the further value, since it directly depends on the stability of the exchange rate,” he said.
Zammler Group is a Ukrainian group of logistics companies with offices in Europe and Asia. The group companies provide all types of logistics services for the B2B segment.
In January-June 2019, the transport and forwarding company Lemtrans transported 24.85 million tonnes of various types of freight, which is 3.94% down on the same period of 2018.
In the six months of 2019, coal and iron ore accounted for the bulk of loading, totalling 10.44 million tonnes (9.93 million tonnes in January-June 2018) and 8.15 million tonnes (8.68 million tonnes in January-June 2018), respectively, the company’s press service said.
Volumes of transportation of ferrous metals in the first half amounted to 3.83 million tonnes (3.62 million tonnes in January-June 2018), shipments of fluxing materials totaled 1.12 million tonnes (1.60 million tonnes in January-June 2018), and those of coke 0.99 million tonnes (1.54 million tonnes in January-June 2018).
The company notes that the observed decline is due primarily to an increase in the turn-around of railway cars and a fall in the average speed of trains (Lemtrans’s turn-around period in the first half of 2018 was 7.8 days, it grew to 8.9 days in the first six months of 2019, which is an increase by 1.1 days, or 14%).
“The surplus of the railway car fleet, associated with excessive purchases of cars by market participants in 2018-2019, which were related to problems with railway equipment, is coupled with the lack of locomotives. In general, the approach to solving problems should be comprehensive. And the first step is the adoption of a new law on railway transport,” the press service quoted Lemtrans CEO Volodymyr Mezentsev as saying.
The SCM Group owns 100% of Lemtrans’s charter capital.