Ukrzaliznytsia raises transportation tariffs by 70%

The Ministry of Infrastructure of Ukraine has approved a proposal by Ukrzaliznytsia to increase tariffs for cargo transportation, and from June 29 they will increase by 70%.

Unlike previous increases, this time tariffs will increase for all 20 types of cargo equally - by 70%, which will cause significant losses to Ukrainian producers, who already suffer from lower export prices due to blocked ports of the Black and Azov Seas and rising costs of supplies to Romanian ports. , Bulgaria and the Baltics.

The Ukrainian Grain Association appealed to the Prime Minister of Ukraine to cancel the tariff increase and establish a moratorium on their change for the period of martial law and 3-6 months after its end.

Zernovyky understands that the railway is suffering losses due to reduced trade and additional costs for the transportation of military and humanitarian goods, but they themselves are in a similar situation, as Russian aggression has caused catastrophic losses to Ukraine's agricultural sector. Therefore, Ukrzaliznytsia must be compensated for losses and infrastructure restoration not only by business, but also by the authorities.

According to UZA estimates, due to the increase in grain transportation tariffs, additional losses to farmers will reach $ 120 million a year, which will have disastrous consequences. Against the background of the blockade of ports, the cost of logistics has already increased 5-7 times to $ 180 / t, so manufacturers are forced to sell products below cost. Thus, a ton of wheat in the field is forced to sell for $ 90 / t, although the cost of its cultivation is at least $ 160 / t. Therefore, the increase in tariffs will not only reduce the volume of cargo transportation, but may even lead to the abandonment of grain transportation by rail.

Experts believe that by the end of 2022, 50% of grain producers in Ukraine may go bankrupt, and by April 2023 - another 40%. Therefore, UZA calls on the authorities to support farmers and partially reimburse them for logistics costs.

By February 24, 2022, Ukraine exported 95-98% of grain through seaports, and the agricultural sector provided more than 40% of foreign exchange earnings. Currently, grain exports, although significantly limited, remain one of the main sources of foreign exchange earnings of the state and financing the work of producers. Grains have reoriented exports through land and river routes to European countries with subsequent congestion in their ports. However, the capacity of new routes is extremely limited. Previously, seaports exported 6-7 million tons of grain per month, but in May all alternative routes allowed only 1.5 million tons of grain and oilseeds to be exported.