Demand for Ukrzaliznytsya railcars falls due to lower cost of road transportation

The increase in the supply of trucks for grain transportation led to a decrease in the cost of road transportation from 2-2.2 UAH/km to 1.6-1.8 UAH/km or 30-40 $/ton (including VAT). As a result, the volume of railway transportation is decreasing, the tariffs for which have increased again since January 1.

Demand for Ukrzaliznytsia's grain wagons is also falling, as carriers and cargo owners actively use their own fleet of grain carriers.

Deputy Director of the Department of commercial work of JSC "Ukrzaliznytsya" Valery Tkachev told on January 20 at a meeting with representatives of the grain market about the auctions held on January 17 and 18 for the supply of grain carriers in February, where activity was very low. So, on January 17, out of 6,750 grain carriers, 1,500 or 22.2% were sold, and on January 18, out of 5,850 wagons, 900 or 15.4% were sold at the average rates of UAH 2030 and 2027, respectively.

At the same time, at the auction on January 19, out of 1,260 cars with delivery on January 24-31, 750 cars or 60% were sold at an average rate of UAH 2,144.

On January 24, Ukrzaliznytsia plans to auction route shipments with submission on February 1-5, and the next day to hold auctions for group shipments during the same period without distributing loads to landfills. Also next week, auctions will be held for the distribution of CTL grain carriers in the period February 1-5. Bids at the auction for Route items will start from 2000 UAH/day for 1 car, and for group items – from 2100 UAH/day, since the percentage of recycling (use) of grain carriers of UZ exceeds 80%.

UZ also reported that it plans to hold several auctions for the same period in the future for this kind of rolling stock. First, monthly routes will be announced (with the deadline for submission next month), then — Route routes with delivery of cars in 7-9 days, and then — group routes with delivery in 7-9 days.

Earlier, not a single lot was sold at 4-month auctions for the distribution of grain carriers.

An increase in the supply of grain wagons will lead to a decrease in the cost of transportation in the second half of the season, which will pull down the rates of road transportation, especially given the increase in the fleet of trucks from manufacturers and carriers due to high profits received during the corn and sunflower harvest, when transportation tariffs reached 2.5-2.7 UAH/km with VAT.