Ukrainian industries warn of increased freight transport costs
The Ukrainian metal and mining industry association, Ukrmetallurgprom, has raised alarms about potential production stoppages among industrial enterprises if Ukrzaliznytsia enacts freight tariff increases. According to calculations, transporting a ton of coal over an average distance of 660 kilometers is projected to rise by 143.3 UAH, while the cost of shipping ore over 754 kilometers will increase by 160.4 UAH, and grain shipments over 676 kilometers will see a hike of 169 UAH.
These changes suggest that the transport cost for a ton of ore will reach 604 UAH and for grain, 650.7 UAH. Ukrmetallurgprom’s president, Oleksandr Kalynkov, stated that heightened railway logistics costs would directly reduce the revenues of Ukrainian companies, emphasizing that global market conditions dictate the pricing for exporters.
“Running a business in Ukraine right now is like burning money,” Kalynkov remarked, underscoring the impact of rising railway tariffs compounded by other challenges in the mining and metallurgical sectors, such as high electricity prices, trade restrictions, and the introduction of a carbon tax on imports in the EU.
Several enterprises in Kryvyi Rih, Marhanets, Nikopol, and Zaporizhzhia have either halted operations or cut production volumes. Kalynkov estimates that Ukrzaliznytsia could lose over 10% of freight shipments from the mining and metallurgical complex due to the tariff increase. He noted that companies capable of switching to road transport are doing so; however, alternatives are often not available for metallurgists, miners, and chemical producers.
“All who could escape from Ukrzaliznytsia have done so, and those who cannot will simply cease production. Chemists, metallurgists, and miners have no escape routes,” Kalynkov emphasized.
Context
- In July, Oleksandr Trokhymets, Vice President for Energy at the Ukrainian National Committee of the International Chamber of Commerce (ICC Ukraine), stated that the financial issues facing Ukrzaliznytsia cannot be resolved by merely increasing freight tariffs, as the root cause lies in the chronic losses from passenger services.
