Nibulon assessed the impact of UZ tariff increases on grain logistics

A 30% increase in Ukrzaliznytsia’s freight rates could increase the cost of delivering grain from the elevator to the port by $3–4 per ton.

This was stated by Nibulon Logistics Director Serhiy Kalkutin, writes Elevatorist.

According to him, for companies that work with large volumes, such an increase will mean a significant increase in overall logistics costs.

Nibulon believes that the main financial burden from the tariff increase will ultimately fall on farmers. Additional transportation costs will be taken into account when forming purchase prices, which may reduce the price that the producer will receive for the grain.

Also, a change in transportation costs may affect the logistics decisions of companies. Market participants will review routes and look for opportunities to optimize costs where it is economically feasible.

At the same time, Nibulon notes that to assess the feasibility of raising tariffs, complete information is needed about the financial condition of Ukrzaliznytsia, the structure of its costs, and the economic justification for such a decision.

“Without this data, it is difficult to say unequivocally how economically inevitable this step is. At the same time, for the agricultural sector, any significant increase in transportation costs means additional pressure on the production economy,” Kalkutin added.

We will remind, several associations previously also opposed the tariff increase, in particular, UCAB and EBA.