Business news from Ukraine

UKRZALIZNYTSIA LAUNCHES INTERNATIONAL ROUTE LVIV-BERLIN

JSC Ukrzaliznytsia (Kyiv) and Polish Railways will launch a new international transfer route Lviv-Berlin (Germany) from December 15, 2019, the press service of Ukrzaliznytsia has reported with reference to head of the company Yevhen Kravtsov.
“Together with our Polish colleagues, we agreed to organize the so called Lviv-Berlin interchange route. Therefore, Ukrainians will be able to travel to Germany with only one convenient transfer, and we expect tourists from this country. This trip will take a little more than 18 hours,” Kravtsov said.
According to Ukrzaliznytsia, passengers traveling to Germany will be able to use train No. 89/90 Lviv-Przemysl and at the terminal station make a convenient transfer to train No. EC/EN 456/457 Przemysl-Berlin.
So, train No. 89 will leave Lviv at 16:20 and arrive in Przemysl at 18:19, then transfer to train No. EC/EN 456 Przemysl-Berlin, which leaves Przemysl at 19:57 and arrives in Berlin at 09:48.
On the way back, train No. EC/EN 457 Berlin-Przemysl leaves Berlin at 18:43 and arrives in Przemysl at 08:38. After that transfer to train No. 90 Przemysl-Lviv with departure from Przemysl at 10:18, arrival in Lviv at 13:45.
Train No. EC/EN 456/457 Przemysl-Berlin will also stop in Krakow, Katowice, Opole, Wroclaw (all Poland) and Frankfurt an der Oder (Germany).
In the ten months of 2019, Ukrzaliznytsia transported almost 479,000 passengers to European countries, which is 55,600 more than in the corresponding period last year.

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STATE-RUN UKRZALIZNYTSIA TO REDUCE NET PROFIT IN 2020

JSC Ukrzaliznytsia plans to reach a net profit indicator of UAH 1.3 billion in 2020, which is 71.1% less than the plan for 2019 or 62% less than the expected figure for the current year. This is stated in the draft financial plan of the enterprise for 2020, presented at the American Chamber of Commerce.
“We hope that by the end of the year it will be adopted in parliament,” Ivan Yuryk, a member of the board of Ukrzaliznytsia, said.
In addition, according to the financial plan, Ukrzaliznytsia intends to reduce EBITDA by 24% in 2020 compared to the plan for 2019, to UAH 19.08 billion, EBITDA margin by 5.9 percentage points, to 18.5%.
According to the draft document, the volume of freight traffic will increase by 5.5% compared with the expected freight turnover in 2019, to 192.6 million tonne-kilometers. In particular, it is planned to increase transportation in all directions: transit traffic by 8.8% (up to 16.9 million tonne-kilometers), export by 3.7% (up to 83 million tonne-kilometers), domestic by 9.3% (to 68.4 million tonne-kilometers).
The volume of passenger traffic in 2020 should increase by 1.5% (up to 28.8 million passenger-kilometers) compared with the expected passenger flow in 2019. In particular, the largest increase in passenger traffic is expected in international traffic – by 10.1% (to 1.1 million passenger-km), in domestic traffic by 1.2% (up to 22.5 million passenger-km), suburban by 0.9% (up to 5.1 million passenger-km).

$16 BLN OF INVESTMENT NEEDED FOR STATE-RUN UKRZALIZNYTSIA TO BOOST TRANSPORTATION

The improvement of logistics and development of infrastructure should continue for boosting transportation and export of grain cargos, new effective silos should be built and the handling capacity of near-port stations should be increased. Representatives of JSC Ukrzaliznytsia and the Ukrainian Grain Association (UGA) have come to this conclusion at a meeting devoted to urgent issues of transportation of grain by rail, the press service of Ukrzaliznytsia reported. Ukrzaliznytsia Business Development Director Andriy Riazantsev said that the railway seeks to satisfy the market needs in the transportation of cereals, whose yields are growing annually, as much as possible. For this, in particular, it is necessary to build additional capacities for storing these products, primarily in port areas.
He said that the total shortage of certified storage facilities could be about 40-65 million tonnes. In addition, there is a significant gap in the regional coverage among the regions. Some areas are provided with storage only 20-30% of the crop.
“According to experts, the amount of funds needed to cover this shortage is around $16 billion. According to our estimates, for the rhythmic transportation of grain during the year, additional capacities are needed to store about 13 million tonnes of cargo in port areas, which can then be used during peak season deliver to ports either by rail or by road,” the press service of Ukrzaliznytsia said, citing Riazantsev.
At the same time, representatives of the UGA said that for the efficient transportation of grain cargo, it is necessary not only to develop port stations, but also to improve infrastructure throughout the country. This will allow quickly transporting grain from any region.
According to UGA president Mykola Horbachev, there are currently about a thousand silos that do not meet the modern requirements of Ukrzaliznytsia for transportation, therefore, new silos are needed and they should be arranged uniformly across the regions.
“Business is ready to build silos in the regional context in those places where it will be effective. And today, we want to identify these places together with Ukrzaliznytsia,” Horbachev said.
UGA representatives also drew attention to the need to develop infrastructure on the western borders of Ukraine, through which grain cargo is exported to European countries – Poland, Slovakia, and also to Belarus.
The association said that annually Ukraine is able to export about 5 million tonnes of grain to Europe through the western borders of Ukraine. Therefore, it is necessary to provide capacities for storing this volume at the borders, in particular at stations such as Kovel (Volyn region), Mostyska (Lviv region), Mukachevo (Zakarpattia region), which are located closer to the European gauge.
The meeting participants also said that the increase in the number of grain transport stations will contribute to the growth of grain transportation volumes. In addition, effective schedules for transporting grain cargo from those stations that are not route are required.
After the meeting, Ukrzaliznytsia and UGA plan to prepare a joint appeal to the government and parliament with a proposal to consider the possibility of prioritizing the delivery of agricultural products by rail during peak traffic, as well as to develop programs to stimulate the construction of modern silos in port areas and on the borders of Ukraine with neighboring states.

UKRZALIZNYTSIA SEEKS TO IMPLEMENT 50% DRAWDOWN AMONG CLERICAL STAFF STARTING FROM 2020

JSC Ukrzaliznytsia (Kyiv) from 2020 seeks to implement the 40-50% drawdown among clerical personnel, a member of the board of Ukrzaliznytsia, Zeljko Marcek, has said.
“No one is going to cut 120,000 employees in one year. Work continues with the relevant ministry, government, and the World Bank on a program to gradually optimize staff over the next three or five years. There is a road map,” he said in an interview for the company’s project “12 Persons of the Ukrzaliznytsia Strategy.”
Marcek said that Ukrzaliznytsia will get rid of non-core assets.
Ukrzaliznytsia pays salaries to lumberjacks, foresters and dancers. On the balance sheet of the company are hundreds of enterprises not related to rail transportation. This Soviet heritage forces us to pay utility bills and land tax at a time when only 10 out of 200 social facilities are profitable. Therefore, we will have to get rid of assets not related to railways, rolling stock and communications facilities,” he said.
At the same time, according to Marcek, with the sale of non-core assets and a decrease in the number of employees, the wages of the main production personnel should increase significantly. In addition, programs will be developed that will attract qualified personnel and make the railway attractive to young people.

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STATE-RUN UKRZALIZNYTSIA WANTS TO BUY CHINESE LOCOMOTIVES

Ukrzaliznytsia has confirmed its interest in cooperation with China’s CRRC Corporation Limited, the rolling stock manufacturer, the Ukrainian company said on Friday.
According to Board Chairman of Ukrzaliznytsia Yevhen Kravtsov, who is quoted in the report, the company is interested in cooperation with the Chinese manufacturer and is ready to work together to develop mechanisms for such cooperation.
“We have a serious need to update the traction rolling stock, and the Chinese partners offer modern locomotives that can significantly improve the situation with the locomotive fleet and bring Ukrzaliznytsia to a higher level of competitiveness,” he said.
The head of Ukrzaliznytsia recalled: given the tendency to reduce the weight of freight trains, CRRC proposes to supply one-unit 6-axle locomotives, the maintenance of which is 33% cheaper, instead of the usual two-unit 8-axle locomotives.
“Once again I emphasize: the main point of our negotiations will be the purchase price, maintenance, the ability to localize the production of components and spare parts. I am sure that together we will come to a consensus and choose the most favorable conditions for cooperation,” Kravtsov said.
According to the report, Kravtsov took part in negotiations with representatives of CRRC, chaired by Minister of Infrastructure of Ukraine Vladyslav Krykliy.

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STATE-RUN UKRZALIZNYTSIA WILL PROVIDE TRANSIT FOR TRAINS THROUGH UKRAINE FROM CHINA TO SLOVAKIA

JSC Ukrzaliznytsia (Kyiv) will provide regular routes of the Metrans transit train in the territory of Ukraine from China to Slovakia. According to the press service of the company, the first container train from the Chinese city of Xi’an to the Slovak city of Dunajska Streda ran through Ukraine on September 27-29. It is formed of 44 forty-foot containers.
It is preliminarily planned that four pairs of container trains will run from China to Slovakia every month. In October 2019 it is planned to send two trains.
Ukrzaliznytsia notes that Metrans reoriented freight traffic along this route from the Polish territory to Ukraine as the route through Ukraine is shorter by 520 km, which saves the sender’s funds.
As reported, in 2018 Ukrzaliznytsia transported 334,963 containers in twenty-foot equivalent (TEU), which is 13% more than in 2017 (295,479 TEU).

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