Ukrainian companies will sell off their fleet due to falling profitability

Ukrainian companies, in particular the state-owned UDS, began to sell off their fleet due to a significant decrease in profitability.

Last year, the company invested in fleet renewal, and these investments quickly paid off thanks to high freight rates, UDS said.

However, rates have since fallen sharply, and now maintaining a small fleet is becoming unprofitable, especially for a state-owned enterprise.

Among the key reasons for the loss of profitability is the UDS’s forced competition with private companies that minimize taxes through offshore operations, while the UDS officially pays the wages of the Ukrainian crew. Operators with large fleets find it easier to secure stable contracts, while UDS often depends on spot orders, which leads to downtime and reduces the profitability of flights.

In addition, the UDS fleet, in particular vessels with a deadweight of 3.5 thousand tons, was used to deliver agricultural products to Turkey. However, after the introduction of restrictions on grain imports from Ukraine in June of this year, the freight market became oversaturated, and the partial lifting of the ban in October did not completely correct the situation. Unlike private players who have their own cargo base, UDS is forced to compete for cargo without receiving state support.

Private companies solve these difficulties faster by selling off unprofitable assets and investing in new, profitable areas, while a state-owned enterprise is forced to work under restrictions.

USM previously reported that Kernel disclosed the reasons for the sale of the “Eneida” vessel. It will be recalled that the agricultural holding decided to sell the vessel purchased in 2023.