Logistics remains one of the most difficult problems for Ukrainian exporters of processed grain products since the beginning of Russia’s full-scale invasion of Ukraine in 2022, said Rodion Rybchynskyi, Director of the PU “Millers of Ukraine” Rodion Rybchynskyi at the Baltic Grains & Oils Conference in Riga on April 16.
“The commonwealth routes, i.e. the open routes provided by European countries to their railways, including here to the Baltic ports and to Polish ports, helped us a lot. But this still does not allow us to fully compensate for the losses we have suffered since the beginning of the war,” APK-Inform news agency quoted him as saying.
According to him, there is a possibility to ship products to the port of Constanta via the Danube, but there are still military risks, insurance companies assess these risks as high, and the cost of logistics remains significant.
“The Baltic ports are interesting, on the one hand, because they have direct container lines and the possibility of shipping to North America, South Asia, and so on. But this is a very large circle for the goods to get there… In fact, we see that compared to 2021, only the port of Ventspils transshipped slightly more Ukrainian products, while all other ports have decreased. For example, the port of Klaipeda actually halved its transshipment volumes in 2023,” Rybczynski said.
At the same time, Polish ports have significantly increased transshipment volumes of Ukrainian products, in particular grain products.
According to Rybczynski, Baltic ports remain important alternative routes for exports from Ukraine. The main advantages include access to Northern and Western Europe, delivery times, climate stability, modern infrastructure, less congestion and, most importantly, safe navigation. The disadvantages include logistics costs that are 2-3 times higher compared to the Danube ports, higher cargo handling costs, and railroad bottlenecks.
The agro-industrial group of companies NOVAAGRO UKRAINE (Kharkiv) has purchased the first 20 hopper cars with an increased body volume of 124.5 m³ from Karpaty, the company’s press service reports on Facebook.
“This is an important step towards the realization of our plans to invest in the development of operational efficiency, namely to reduce logistics costs and ensure the stability of the supply chain of sunflower meal to European countries,” the statement said.
The purchased hoppers will be used to minimize logistics costs for sunflower meal exports.
NOVAAGRO Group has been operating in the Ukrainian and international markets since 2009. It comprises four operating companies specializing in trading, exporting grains and oilseeds, growing, warehousing, as well as production and sale of mixed fodder, wheat flour, granulated bran and chicken meat.
“NOVAAGRO owns five elevators with a total storage capacity of over 310 thousand tons. It has a feed mill in Chkalovske (Kharkiv region) that produces 200-300 tons of products per day.
According to the Unified State Register of Legal Entities and Individual Entrepreneurs, the ultimate beneficiary of Novaagro Limited is Sergiy Polumysnyi.
As reported, in October, NOVAAGRO Group completed the purchase of a 56.9% stake in AgroGeneration S.A.
Karpaty DMZ has been producing chemical and mining equipment, tanks and reservoirs for gas stations for the storage and transportation of petroleum products, hydraulic lifts, and spare parts for chemical and mining equipment for over 40 years. The plant switched to railcar production in 2012. It is one of the top three freight car builders in the grain carrier segment.
The company owns a 20-hectare land plot with 24 buildings and structures. The plant operates its own 35 kW power substation and a 5.7 km network of access railways. Production facilities process about 2.5 thousand tons of rolled metal products, castings and components per month. The company employs 800 people. The company’s beneficiaries are Yevhen Pogrebnyak (80% of shares) and Anatoliy Oleksiyenko (20%).
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.
