UCAB asks the Antimonopoly Committee to examine the practice of Ukrzaliznytsia regarding grain trucks

The practice of Ukrzaliznytsia to combine services for the use of grain carriers and the conversion of wagons to 1435 mm European gauge bogies creates additional barriers for agricultural exports and significantly increases logistics costs.

This was stated by the Ukrainian Agrarian Business Club (UСAB) association.

The association appealed to the Prime Minister, the Ministry of Reconstruction, Infrastructure and Transport, and the Antimonopoly Committee with a request to ensure transparent and non-discriminatory access to the railway border infrastructure.

This concerns, in particular, the Vadul-Siret – Romania direction. At the end of September, the UZH branch “Center for Transport Logistics” sold through “Prozorro.Prodazhi” the right to use grain carriers together with the service of converting wagons to 1435 mm gauge bogies. It was impossible to obtain access to the conversion service separately.

On September 22, 450 grain trucks with adjustable carts were put up for auction. At a starting price of UAH 3,371 per day per wagon, the weighted average cost increased to UAH 10,600, or 3.14 times. All 450 wagons were awarded to Vadul-Siretsky Terminal LLC.

On September 25, at a similar auction for 90 wagons, the final price reached UAH 13,044 per day per wagon — 3.87 times higher than the starting price. Vadul-Siretsky Terminal LLC also became the winner.

According to the calculations of the Ukrainian Agricultural Association, based on the results of these two auctions alone, the excess of the cost of services over the starting price is about UAH 4.1 million per day, or over UAH 120 million per month.

The association believes that these costs are ultimately passed on to agricultural producers through more expensive logistics and lower grain purchase prices. UСAB also states that combining a scarce infrastructure service with the provision of wagons limits the access of private rolling stock owners to re-routing to the European track.

In addition, the association sees in such a practice signs of a possible violation of competition law and calls on the Antimonopoly Committee to inspect the relevant markets.

Among the UСAB proposals are to separate the service of re-routing wagons to the 1435 mm track from the use of UZ wagons, to introduce public monitoring of the available resource at border crossings and to distribute it only if the cargo and the receiving infrastructure are confirmed to be ready.

The association also proposes to create an interdepartmental working group and launch a pilot project of a new mechanism for distributing the re-routing resource at one of the border crossings.

Earlier, USM reported that the western border takes 94% of rail grain exports.