UGA’S 10 PROPOSALS TO RAILWAY COMPANY “UKRZALIZNYTSIA”

Ukrainian Grain Association has addressed 10 proposals to “Ukrzaliznytsia”, which can improve the process of transportation of grain by railway, as well as enhance conditions of doing business for the companies, which exercise export of grain and provide inflow of foreign currency into Ukraine.

In particular, grain industry complains that “Ukrzaliznytsia” as a monopoly, which transports about 70% of all Ukrainian grain, underperforms and by doing so effects negatively exporters and state budget. All Ukrainian export of grain, which is estimated about 40 – 45 million tones or 6-8 billion US Dollars, is under a big threat due to further disregard by “Ukrzaliznytsia” of proposals from business society.

It is commonly known, that agribusiness provides 30% of inflow of foreign currency into Ukraine and export of grain amounts 50% of that number. The stake of agriproducts in the structure of export of Ukraine constituted 42.2% in the first half of 2017. 

According to the UGA members, recently appeared a problem with provision by “Ukrzaliznytsia” of wagons for the loading of shipments for export to Ukrainian ports.  According to available data, the majority of wagons of inventory fleet of “Ukrzaliznytsia” became operational in the 70-80th years of last century and lifecycle has already finished long time ago.

The president of UGA Nikolay Gorbachov stated during press conference in March 2018 that it is not clear for business when the export capacities of grain by Ukrainian exporters have increased and “Ukrzaliznytsia” does not invest money obtained from the increased tariffs into building of new wagons and construction of new locomotives.

Please be reminded that “Ukrzaliznytsia” increased tariffs twice during last marketing year for transportation of goods. The first raise of tariffs for 15% took place in November 2017 and second raise of tariffs for 100-200 hryvnas per tonne of grain took place in February 2018.

President of UGA also added that for the moment “Ukrzaliznytsia” is the most problematic link of chain of export of Ukrainian grain to the foreign markets. 

Ukrainian Grain Association appeals to “Ukrzaliznytsia” with request to fulfil the grain export, by organizing the effective process of cargos transportation and to consider the remarks and propositions of society.

1.To publicize the algorithm of distribution of grain carriers and locomotives, including the foreign park which returns empty to the country of registration, to consider the distribution of carriage routes

throughout the whole country, not only regions and particular companies. In addition, to publish the results and archive of the distribution of grain carriers in the past year;

2.To enlarge the investments for the construction of grain carriers and locomotives, by providing changes to the company’s financial plan;

3.To intensify the issue of implementation of private traction, which is stipulated by the agreement on the Association of Ukraine with the EU;

4.To review the procedure for conducting deregulation in the field of rail transport and tariffs increase for rail freight transportation for grain carriages and to introduce a new cost of services for the use of UZ rail cars not from February 19, 2018, but from July 1, 2018, so companies that ensure the grain export industry and the receipt of foreign exchange earnings in the country, work within the marketing year, but not calendar year. In addition, to predict the projected changes in the cost of transportation of grain in the future;

5.To increase the turnover of wagons, which decreased by 20-40% compared to last year, as well as to increase the load factor of grain carriers, which decreased by half to 800 cars per day, with the satisfaction of customers’ requests for empty wagons only up to 20%;

6.To consider the process of distribution of carriage routes in the section of stations and elevators, their ability to work round-the-clock annually, without taking the owner or forwarder to account;

7.To bring the elevator as the only participant of the approval of the Automatical Workplase (ARM) and the only responsible party for the implementation of the norm of loading / processing the grain carriers, and the introduction of a system of fines for non-compliance;

8.Provide information on railway stations, which will optimize the delivery of grain carriages and locomotive thrust. The initiative of PJSC “Ukrzaliznytsia” regarding the closure of inefficient stations complicates the predicted business, as companies cannot predict which concrete stations are considered ineffective by “Ukrzaliznytsia” and intends to close;

9.To provide the responsibility for dirty and technically defective presented wagons, untimely delivery and inconsistency of the agreed number of empty cars and locomotive draft, as well as for exceeding the time of transportation of grain from the elevator to the destination with the fault of the UZ;

10.Bring the loading point port’s throughput system in line with the amount of daily grain trains being processed.

Briefing:

Ukrainian Grain Association (UGA) is an association of producers, refiners and exporters of grain and was established in 1998 with the aim to protect the legitimate interests of its members, to promote the formation and development of the grain market in Ukraine and to create necessary conditions for the cooperation between its members.

UGA is a member of International Grain Trade Coalition, a partner of European Business Association and American Chamber of Commerce.

There are widely known Ukrainian and transnational companies among its members, as well as biggest national exporters and producers of grain, which export nearly 90% of all Ukrainian export of grain.

“Ukrzaliznytsia” is a biggest national carrier of passengers and goods. The objective of the “Ukrzaliznytsia” activity is to satisfy the requirements of safe and high – quality railway carriages, provision of effective functioning and development of railway transport, formation of conditions for competitive recovery of the industry, etc. “Ukrzaliznytsia” is a monopoly at the market of utilizing of railways, operation control centers, train stations and other subjects of infrastructure, which provides the daily work of railway transport, as well as internal carriage of passengers by railway. 

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