Ukrainian business does not use the existing potential to transport goods for export by rail
I propose to analyze the impact of military aggression on the transportation of Ukrainian goods for export and the impact on Ukraine's transport system in general. Exports of metallurgical and agricultural products were the main items of filling the state budget of Ukraine with foreign exchange earnings.
How have the routes of export cargo transportation changed? What was the impact of Ukraine's transport system after the start of hostilities?
In the pre-war period, almost 160 million tons of cargo were exported from Ukraine through the seaports of the Azov and Black Seas. With the beginning of the Russian military aggression, all ports of the Black and Azov Seas were blocked by the aggressor. Currently, there are only three Ukrainian trading ports in the Danube Delta - Ust-Danube, Izmail and Reni ports. Potentially, through these ports it is possible to transport cargo to EU countries and through the Danube-Black Sea canal to Romanian Black Sea ports. But the capacity of these ports is only a tenth of the pre-war potential of the port industry of Ukraine.
In addition, Ukraine remains a powerful railway transport, which plays a key role in Ukraine's transport system. In the pre-war period, JSC Ukrzaliznytsia transported approximately 315 million tons of cargo annually and has the potential to transport approximately 500 million tons of cargo annually.
Currently, the railway infrastructure of JSC "Ukrzaliznytsia" has 13 working railway border crossings with Western countries:
- with the Republic of Poland - 4 crossings (Jagodyn-Dorokhusk; Izov-Hrubieszów; Rawa-Ruska - Verkhrata; Mostyska-2 - Medica);
- with Romania - 3 crossings (Vadul-Siret - Dornesti; Dyakovo-Halmeu; Reni-Giurgiu);
- with the Slovak Republic - 2 crossings (Chop - Cierna on the Tisza; Uzhhorod-Matevci);
- with Hungary - 2 crossings (Chop-Zahon; Batyovo-Epereske);
- with the Republic of Moldova - 2 crossings (Sokyryany-Oknytsia; Mohyliv-Podilskyi - Velchynets).
The potential capacity for transportation of goods for export by rail today is about 220 thousand tons per day (3422 cars per day), including grain cargo - about 47.5 thousand tons (approximately 731 cars).
In total, the potential capacity for transportation of goods for export by rail per month is about 6.6 million tons (102,660 cars), including grain cargo - about 1.4 million tons (approximately 21,930 cars).
But today Ukrainian business does not fully use the existing potential of transporting goods for export through railway border crossings.
Today, the actual average daily delivery of goods for export is 1833 cars (approximately 119 thousand tons), or 53.6% of potential capacity. Including grain cargo - 235 cars (approximately 15 thousand tons), or 32.1% of capacity.
Why doesn't the business use its full potential? What are the main problems hindering the increase in export traffic by rail?
From the beginning, it should be understood that Ukraine's infrastructure is radically different from the railway infrastructure of Poland, Hungary, Slovakia and Romania. The width of the railway track of Ukraine is 1520 mm, the track of the neighboring western states (except Moldova) is 1435 mm. That is, cars and locomotives of Ukraine can not run freely on the network of western neighbors. At the same time, it should be noted that we have sections of track 1520 mm wide, which enter the territory of neighboring states, and sections of track 1435 mm wide, which enter our territory. There are reloading terminals at these sections, which allow reloading cargo from a 1520 mm track car to European-sized cars (1435 mm).
We currently have two ways of crossing freight between two railway systems (1520/1435):
- reloading of goods from 1520 mm track cars to 1435 mm track cars on sections with both types of track;
- change of 1520 mm trolleys to 1435 mm trolleys on Ukrainian freight cars; but this method has significant limitations. The dimensions of Ukrainian cars always meet the requirements of neighboring countries, and the couplings of freight cars have a different design. Therefore, when plying Ukrainian cars on neighboring railways (after changing carts) requires the presence of cover cars that have on the one hand European, and on the other hand Ukrainian couplings.
What is currently preventing a sharp increase in freight traffic across border crossings? I personally divided the answer into four levels of problems:
- problems of adaptation of Ukrainian business to changes in export logistics;
- unpreparedness of foreign railways / port industry for a sharp increase in the volume of transportation / transshipment of Ukrainian goods;
- infrastructural restrictions of border sections, lack of transshipment capacity at border sections;
- availability of bureaucratic procedures for export transportation of goods through railway border crossings.
Regarding the first level of problems, indeed, Ukrainian business urgently needs to adapt to new conditions. Shippers need to establish new logistics chains in other countries. Personally, I recommend starting to rebuild logistics chains from the end. In my opinion, the main limiting factor is logistics in foreign countries.
And you need to start with the conclusion of contracts at the end of the logistics chain (the conclusion of contracts for transshipment of goods in the port or contracts with the final consumer). Next you need to find a carrier of goods in a foreign country, find a rolling stock, agree on certification, customs clearance. That is, first build logistics on the territory of another state, and then agree on logistics in the territory of Ukraine and the issue of crossing cargo across the state border of Ukraine. Today, only half of the capacity of border railway crossings is involved.
The main reason for the low load of border crossings is the uneven distribution of freight traffic between border crossings. Only four crossings are involved at full capacity - Izov-Hrubieszów; Uzhhorod-Matevtsi; Chop-Chiernu on Tisou; Dyakovo-Halmeu. At these crossings, the queue to cross the border reaches 15-20 days. Other border crossings are not fully engaged and have the potential to increase freight turnover.
Regarding the second level of problems, I would like to note that foreign railways and the port industry are not ready for a sharp increase in the volume of Ukrainian cargo transportation. Already now foreign railways (Poland, Romania, Hungary, Slovakia) have faced a shortage of freight cars (tracks 1435 mm). , non-compliance of the dimensions of the rolling stock of the CIS countries with the technical requirements of foreign railways (Romania, Hungary, Slovakia) and others.
Also, it is difficult to resolve the issue of harmonization of quotas for transshipment of Ukrainian grain in the foreign ports of Constanta (Romania) and Gdansk (Poland).
In general, I state that additional transportation of Ukrainian export cargo has become a challenge for the transport systems of neighboring countries and they need time to adapt.
The next level of problems is the shortage of transshipment capacity / terminals at border sections; availability of other infrastructure constraints. This issue is now being actively addressed. JSC Ukrzaliznytsia offered businesses to solve this issue together. The railway is ready to provide its infrastructure for the construction of new terminals and expansion of existing ones. Several projects are currently being agreed upon.
In the context of this issue, JSC "Ukrzaliznytsia" has significantly increased the capacity of its own points for rearranging carts on freight cars; currently the capacity of the points has been increased from 116 cars per day to 248 cars per day.
And finally, bureaucratic procedures that create problems to increase the export of goods by rail. First of all, these are the following questions:
- lack of round-the-clock work of phyto-sanitary, veterinary and customs authorities at some border crossings;
- availability of duplicate care and procedures by border, customs, phyto-sanitary state bodies on the territory of Ukraine and foreign states.
These problems are gradually being resolved. Resolution of the Cabinet of Ministers № 427 of April 9, 2022 established the Coordination Council for Logistics in Agriculture, which coordinates the work of government agencies in the field of transit capacity and logistics. The Council is considering business proposals to speed up these procedures. The heads of the State Food and Consumer Service, the State Customs Service of Ukraine, the Ministry of Economy, and the Ministry of Infrastructure of Ukraine take part in the work of the Coordination Council. I would like to note that before the establishment of the Coordination Council on the basis of the Ministry of Agriculture there was a logistics headquarters, which was also actively involved in solving logistics problems.
In general, I hope that the issues raised in the article will be resolved soon and Ukrainian companies will be able to resume exports of their goods through railway border crossings. JSC Ukrzaliznytsia is able to double the volume of cargo transportation through border crossings. We have all the necessary resources for this.
Glory to Ukraine! We will win!