Continental Farmers Group is expanding its logistics capacities by forming its own fleet of grain carriers, which has already received the first 50 of 250 planned 116 cubic meter hopper cars, the company’s press service reports.
According to the report, the large-cube cars will allow the agricultural holding to maximize their carrying capacity (up to 70.5 tons) when transporting all major crops grown on Continental’s fields. According to the contract, the agricultural holding plans to receive the remaining railcars in several batches over the coming months.
According to Georg von Nolken, CEO of Continental Farmers Group, the decision to purchase its own grain wagons is the next logical step for the agricultural holding after the acquisition of two new elevators. Continental acquired the storage facilities in Ivano-Frankivsk and Lviv regions in 2021 and 2024, respectively, he reminded.
“We continue to confidently implement our strategy to develop our own supply chain despite all the difficulties caused by the current situation in the country. After Continental solved the problem of elevator capacity shortage and even created the opportunity to provide services for third parties, the acquisition of the railcar fleet allows us to continue to provide logistics for our own trading and develop this area of work properly,” explained Georg von Nolken.
Continental expects that after delivery of all 250 ordered grain wagons, it will be able to cover a significant part of its annual demand for rail freight transportation with its own rolling stock. The rest, as before, will be met by outsourcing freight forwarding services.
The decision to further expand the Continental railcar fleet will depend on the level of efficiency of the chosen management model and market conditions in the coming seasons, the agricultural holding said.
Mriya Agro Holding and CFG, united under the name Continental Farmers Group, have been operating as a single business since November 2018, when Mriya entered into an agreement with international investor Salic UK to sell its assets.
Salic was founded in 2012. Its sole shareholder is the Saudi Arabian Public Investment Fund, which invests in agricultural and livestock production.
In the 2023-2024 marketing year (MY, July 2023 – June 2024), Agro-Region Agricultural Group refused to use freight forwarders, which allowed it to save 15% of the cost of railroad logistics, said Mykola Muravyov, Deputy Director of Logistics.
“Refusing to use freight forwarders and organizing rail transportation professionally on our own is a strategically sound decision. Of course, there are contracts on a “today-tomorrow” basis that are profitable to fulfill with freight forwarders when our own railcars are fully utilized, but these are isolated cases that we try to avoid,” the company’s press service quoted him as saying.
According to Muravyov, Agro-Region currently operates 100 railcars, of which 25 hopper cars were received by the company as part of the USAID Economic Support for Ukraine grant program.
At the peak of the 2023/2024 MY season, Agro-Region had up to 500 wagons under its operational control, as large volumes of corn harvest and uncertainty about whether the grain corridor and Black Sea logistics would work stably forced the company to make sales more concentrated in certain months to minimize risks, the deputy director explained.
He added that in the 2024/2025 season, the plan is more balanced and sales are planned in equal parts throughout the year, which significantly reduces the need for the number of wagons.
“The main indicator of the economic efficiency of railcar use is railcar turnover. It is important to organize the work so that the cars stand as little as possible and move as much as possible, i.e. make the maximum possible number of turns during the reporting period. The more turns a railcar makes, the more grain will be transported,” said the Deputy Director for Logistics.
Regarding railcar rental, he clarified that its cost is charged on a daily basis and does not depend on whether the railcar is idle or in constant motion.
Agro-Region is a group of agricultural companies that cultivate 40 thousand hectares of agricultural land in Chernihiv, Khmelnytsky, Kyiv and Zhytomyr regions. It has three elevators in Boryspil, Myropil and Zavorychi with a total storage capacity of about 160 thousand tons. The agricultural holding grows corn, wheat, rapeseed, soybeans, barley, sunflower and oats. In 2022, Agro-Region exported an average of 250-300 thousand tons of grain per year and is trying to increase its exports through its own and farmers’ grain.
This year, the EVA chain of perfume and cosmetics stores plans to expand its product range from 120 thousand items to 180 thousand in 2024, and will invest from UAH 1 to 1.3 billion in logistics development, the EVA press service reports.
According to Sergiy Zinchenko, Director of the Logistics Department, to implement such large-scale tasks, the company is implementing new logistics projects, including automatic personnel management using data science.
“That is, the system understands which specialists have come to work, what their productivity is, and selects the most optimal places to work in the warehouse. We plan to implement it at all our distribution centers,” says Zinchenko.
Another area of focus is the expansion and automation of storage systems. According to Zinchenko, the company plans to introduce two automated systems: AGV (Automated Guided Vehicle) and Automated Storage and Retrieval Systems (AS/RS).
AGV is a system with robots that can automatically move racks. They will move towards a person, not vice versa. EVA wants to buy 20 such robots.
AS/RS are cranes that automatically collect the boxes of products necessary for order fulfillment and transfer them to the order processing area. Plans to purchase a Mini-load system
Zinchenko said that the company plans to expand its logistics real estate. Construction of another stage of 8 thousand square meters has begun in Lviv. In Odesa, the company plans to build a new facility for several phases, with the first phase covering 20 thousand square meters.
“The land plot was acquired before the start of the full-scale Russian invasion and now we have decided to unfreeze this project,” Zinchenko said.
They are also looking for a land plot or warehouses near Kyiv, not far from the existing facility in Brovary.
In general, he said, investments in the development of the logistics sector next year will amount to UAH 1 to 1.3 billion.
RUSH LLC, which manages the EVA network, was founded in 2002. It has 52 own trademarks (OTMs), which are represented by household goods, perfumes, cosmetics, jewelry, personal care products, accessories, underwear and children’s products. In 2022, the share of FMCG sales in physical terms was 30.6%. The company employs about 13.4 thousand people.
According to Opendatabot, the owner of RUSH LLC is Insetra Holdings Limited (Cyprus, 100%), and the company’s ultimate beneficiaries are Ukrainian businessmen Ruslan Shostak and Valeriy Kiptyk.
According to RUSH’s financial results, its net profit in 2022 increased by 16.7% to UAH 973.8 million, while the value of its assets decreased by 2.5% to UAH 10.3 billion. The EVA network’s turnover in 2022 decreased by 7% year-on-year to UAH 15.7 billion.
Industrial park “Mostyskiy Dry Port” (Lviv region) is planning to invest EUR3 mln in logistics and communications development by the end of the year. For these purposes it has leased 35 ha of land near the junction of railway tracks near the railway station “Mostyska-1”, project manager Viktor Dovgan said.
“We understand that the economic integration of Ukraine and the European Union will deepen. (…) As it does not sound cynical given the recent restrictions on imports from Ukraine to Poland, but we believe that Poland is a strategic partner. Trade, logistical disputes will arise. But, for this reason they are partners, to solve them quickly, as it happened with transit, “- Dovgan explained the choice of the location of the hub at the conference organized by UkraineInvest.
According to him, “Mostyskiy dry port” will be a combination of dry port and industrial park. Its potential residents should be relocated enterprises from the eastern and southern regions of Ukraine, focused on exports to the EU.
“The newly built logistics hub will allow them to produce, pack, bottle and export their goods”, – said Dovgan.
Two major residents have already expressed their interest in the project. The first of them – a major oil trader – will soon begin building tanks for the transshipment of petroleum products. The second resident, according to the signed preliminary agreement, will be an agricultural holding, which will export agricultural products. Accordingly, it will build storage silos.
Currently, the company is looking for a third resident, for the needs of which it is ready to build both production and open storage of coal and ore. The third cluster will focus on the needs of the client, the project manager explained.
According to Dougan, the industrial park has drawn up a long-term lease for 35 hectares of industrial land. The company plans to purchase it from the local community next year, subject to the loading capacity of 50%.
By the end of 2023, EUR3 million will be invested in the construction of the hub, which will be used to lengthen the broad and narrow branches of the railroad tracks.
“The land is suitable for the station, but we understand that we need to separate the branches of the wide and narrow track. From the highway M11 (it is planned) to take the road, level it, conduct excavation work; to bring in at the first stage 5 MW of electricity, as well as provide more necessary communications for the residents, “- said Dovgan.
He added that the hub will prepare the site for construction with all the communications, and residents themselves will build tanks for diesel, silos for grain or warehouses for containers.
Problems with logistics and electricity in the export of agricultural products from Ukraine during the war make it unprofitable to grow crops, so in 2023, the total yield in the country will reduce three times compared to the record prewar level – to 40 million tons from almost 120 million tons.
Reducing the harvest to such low levels is already inevitable due to the current economic situation in the country, but by financing the agricultural sector, Ukraine can achieve by 2024 to increase the harvest up to 70 million tons, said the owner of the grain trading holding Prometheus Rafael Goroyan in an interview with Interfax-Ukraine agency.
“Last year we harvested 120 million tons of grain and oilseeds, this year we have already fallen to 60 million tons, and next year, according to my forecast, there will be 40 million tons, that is a fall of 300%! At the same time, the entire infrastructure of Ukraine is sharpened under the harvest of 120 million tons or even more, is what we have achieved for 30 years of independence. The entire infrastructure is designed for 120 million tons – cars, wagons, stations, ports, elevators – and there will be no goods!”, – stressed the head of Prometheus in an interview.
“There will be a very sharp shortage of wheat, barley and corn. Sunflower and soybeans will be enough, these are high-margin crops, and corn will not be sown. Now it is expensive to dry it, this year’s crop cannot be harvested, cannot be exported – and then, when we win the war (and I think this will happen very soon), the ports will open, the light will appear, and we will have a shortage of products,” he added.
According to Goroyan, a reduction in the grain harvest will lead to a collapse in the value of infrastructure assets in Ukraine, such as ports, elevators and vehicles, as well as a sharp increase in world prices of wheat, corn and barley. In this sense, the reduction of the wheat harvest is especially serious because it is a “politicized” crop, linked to global food security, the shortage of which will lead to an increase in its quotations on major world exchanges.
Thus the government has to urgently begin issuing state-guaranteed loans to agrarians in order to prevent stagnation in gross harvest for several years after 2023. This will allow Ukraine, by investing relatively small funds, to avoid a reduction in the harvest and the associated decline of the farming and grain trading industries, as well as the bankruptcy of logistics and infrastructure companies.
“We need to do this so we don’t see a sharp drop in exports in two years, and we’re likely to see one. Then there will be no agribusiness in the country, the country will be without currency, we will face serious unemployment, big inflation and all things will go wrong. I believe that we need urgent subsidies from the state to the agricultural producer, very urgently, literally for yesterday. And this should be done in light, without complicated formalities, because the average and small Ukrainian farmer does not like to formalize anything”, – said Goroyan during the conversation.
As it was reported, Ukrainian agrarians harvested 71.72 million tons of major crops from the total area of 17.05 million hectares by December 23. This figure is given including sugar beet, which was harvested 9 million tons from 179 thousand hectares.
The final yield of wheat in this season amounted to 19.4 million tons from 4.7 million hectares, barley – 5.6 million tons from 1.6 million hectares, rape – 3.2 million tons from 1.1 million hectares, pea – 261 tons from 115 thousand ha. In addition, on December 23, a total of 20.2 million tons of corn from 3.1 million hectares (+0.2 million ha), 10.1 million tons of sunflower from 4.6 million ha, 3.7 million tons of soybeans from 1.5 million ha, 157 tons of buckwheat from 115 thousand ha and about 100 tons of millet from 43.5 thousand ha were collected.
Ukraine in 2021 collected a record harvest of cereals, legumes and oilseeds at 106 million tons: 84 million tons of cereals and legumes and 22.6 million tons of oilseeds.
A total of 32.4 million tons of wheat, 40 million tons of corn, 10 million tons of barley, 581.5 thousand tons of peas, 191 thousand tons of millet and 110 tons of buckwheat were harvested last year. Sunflower harvest amounted to 16.3 million tons, soybeans – 3.4 million tons and rapeseed – 2.9 million tons.
Zaporizhstal metallurgical plant, part of Metinvest, after a partial resumption of production, continues to operate at 50% of its capacity, Oleksandr Myronenko, general director of Zaporizhstal, said in an interview with the Segodnya newspaper.
According to him, there are currently problems with logistics – the supply of raw materials and the shipment of finished products.
At the same time, it is noted that due to significant problems with logistics and overstocking of railway crossings, Zaporizhia metal enterprises are forced to consider options for reducing production.
“Problems with logistics have not been resolved. We have significant problems with the shipment of our products to customers in the EU. Before the war, all our routes passed through ports, but they are not yet available. Now we have significant overstocking at border crossings in western Ukraine. All this forces us to consider the option of reducing production, because our products simply cannot be transported across the border,” Myronenko explained.
He noted that the leaders of the enterprise are doing everything possible to maintain the volume of exports and the inflow of foreign currency into the country, in particular, they provide additional equipment for reloading products at the border with the European Union. In addition, together with the Cabinet of Ministers, they are looking for ways to solve problems with logistics.
Earlier, other enterprises of the country announced problems with logistics.
Zaporizhstal is one of the largest industrial enterprises in Ukraine, whose products are in great demand among consumers both in the domestic market and in many countries of the world.
