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The planned increase in freight transportation tariffs by the Ukrainian state railways, Ukrainian Railways (Ukrzaliznytsia), could raise farmers' logistical costs by USD 5 to 7 per metric ton and accelerate the diversion of cargo to trucks, according to the agricultural lobby group UCAB.
The Ministry of Economy of Ukraine reported that it had proposed raising freight transportation tariffs by 30% starting August 1 to help stabilize Ukrzaliznytsia's financial position.
Ukrzaliznytsia has indicated that the higher tariffs would only slightly increase transportation costs, by USD 3.2 per metric ton of ore and USD 3.6 per ton of grain, when shipped along the entire route length of up to 750 km.
Ukrzaliznytsia CEO, Oleksandr Pertsovskyi, told Reuters this month that the company needed to increase its tariffs by at least 45% this year to help improve its finances. The railway remains a vital part of Ukraine's logistics network, transporting both cargo and passengers.
However, increased spending on security and infrastructure maintenance is pressuring the government's cash flow at a time when it is trying to restructure its debt.
Ukraine has traditionally moved its main export cargoes—grain, ore, and metals—to ports by rail, but higher tariffs could prompt companies to switch to truck transport.
"Higher rail logistics costs could make road transport economically viable for many more regions," UCAB noted.
"Although trucks are currently mainly used in areas closer to ports, a tariff increase could expand the area where they are competitive to a distance of 300 to 400 km from maritime terminals," the association stated.
Metallurgical companies have also opposed the planned tariff increase, warning that it could lead to the closure of many key companies and leave 300,000 people unemployed.
Source: Portal Portuario

