Business news from Ukraine

STATE MONOPOLY UKRZALIZNYTSIA REPORTS ON FIRST CHINA-EU CONTAINER TRAIN IN NEW YEAR

JSC Ukrzaliznytsia has served the first transit train on the Sanya-Slawkow (China-Poland) route, head of the company Yevhen Kravtsov said on his Facebook page.
“The first container train from China to the European Union traveled 39 hours and 54 minutes through the territory of Ukraine. For the first time, the train traveled on the wide gauge LHS without an overload on the border. Colleagues met it in Poland’s Slawkow. The China-E transit route through Ukraine is reliable, cheap and convenient for all participants in the logistics chain, and this train is a good and first important sign in organizing large-scale projects with China and Central Asia for Ukrzaliznytsia,” Kravtsov said.
He also said that Ukrzaliznytsia has a number of advantages for such routes and their development in the future, as it can be part of the land, sea and TITR routes (Trans-Caspian International Transport Route).
At the same time, he noted a decrease in the volume of transit traffic of the country as a whole.
“Since 2008, the volume of transit traffic of Ukraine has been falling. Transit from China to the EU countries has a number of artificial barriers with political coloring. This is not a business issue, but geopolitics,” Kravtsov explained, adding that Ukrzaliznytsia is the most reliable partner for transit, as it offers alternative and profitable routes.
According to the head of Ukrzaliznytsia, the indicated container train left China’s Xi’an for Slawkow, the travel time was 12 days. According to Kravtsov, for the Ukrainian railway company this is an effective beginning of the year in freight traffic.

, ,

UKRZALIZNYTSIA ARRANGES PURCHASE OF NEXT 40 LOCOMOTIVES FROM GENERAL ELECTRIC

JSC Ukrzaliznytsia jointly with the Infrastructure Ministry of Ukraine have signed a memorandum of intent with General Electric Transportation (the United States) on the acquisition of 40 more locomotives made by the U.S. company.
“We agreed on the next phase of the acquisition of 40 GE locomotives. We plan that we will receive the first of them in 2020,” Head of Ukrzaliznytsia Yevhen Kravtsov wrote on his Facebook page on Monday.
According to Kravtsov, the new rolling stock will significantly improve the operation of the diesel locomotive traction and the overall operations of the company.
The head of Ukrzaliznytsia said that the first batch of 30 GE locomotives is already operating successfully and is demonstrating its effectiveness, performing about 20% of all freight work.
“According to our estimates, in 2019, only thanks to GE locomotives, we saved about UAH 100 million on fuel,” Kravtsov said.
According to him, the localization of production for the first GE locomotives should be 15%.

, ,

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.

, ,

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.

, ,