The state company "Ukrzaliznytsia" took into account the comments of agrarian business communities, which insisted on changing the principles of conducting auctions for the distribution of grain wagons to "Prozorro. Sales" in order to eliminate the prerequisites for speculative price growth that occurred during June-September.
As the logistics market expert and advisor to the Chairman of the Board of Ukrzaliznytsia Yury Shchuklin explained, UZ expanded the offer of wagons for a longer period of time and changed the parameters of the auctions, making it impossible for intermediary companies that are not owners of agricultural cargo and used auctions to raise prices.
As a result, the average daily car rental rate according to the results of the auctions on October 3 decreased by three times compared to the results of the previous auctions that took place on September 29 with the participation of intermediary companies.
"When the state listens and takes into account the proposals of the business community, the laws of the market economy begin to operate, and speculative price bubbles disappear. Undoubtedly, it is a positive precedent that the management of "Ukrzaliznytsia" finally listened to the farmers, and not to the officials, who were constantly reporting on the successful disposal of the wagon fleet and the increase in profitability from the sale of wagons. This happened as a result of the fact that the new formula of the auction cut off all the intermediaries, who made up 95% of the participants in the previous auctions and came out only for the purpose of warming up the prices," the expert noted.
The adviser to the Chairman of the board of "Ukrzaliznytsia" predicts that if the updated formula of auctions is maintained and the time horizon of wagon lot offers is extended, the wagon rental rate may drop below 2 thousand hryvnias including VAT per day.
"The market price for a wagon is 2.2-2.5 thousand hryvnias including VAT per day. Everything that was above this level was exclusively speculative games, which took place thanks to the creation of the illusion of a shortage of wagons. If a bus arrives at a stop and it is not known whether it will be the next one, everyone rushes to it. When passengers see the schedule that the next bus arrives every 5 minutes, I assure you that no one will storm the doors and enter the standing seats. I am sure that if "Ukrzaliznytsia" presents 5 routes, 250 wagons a hundred days in advance for cargo owners every day, there will be no competition between the participants for price increases. Under these conditions, and when UZ will no longer put up for auction those offers of wagons where there are no dates of cargo absorption by the port or border crossing, the price level will drop below 2,000 hryvnias including VAT per day," predicts Yurii Shchuklin.
The expert emphasized that the elimination of systemic prerequisites for the formation of an artificial shortage in the transportation market and the introduction of the possibility of long-term planning will contribute to increasing the efficiency of the resources of "Ukrzaliznytsia" itself, as it will allow to reduce the costs of the transportation process, increase the predictability of the use of locomotives and locomotive crews, wagons, and reduce their shortage for transportation given volumes, to increase the throughput and transport capacity of hub and sorting stations.
"I hope that the financial crisis of farmers due to the speculative increase in the cost of transportation will push the management of Ukrzaliznytsia to radically change their priorities. Such a phenomenon as an official "shoeing the market" for big money and promoting it as a manifestation of the highest efficiency should remain in the past. And the updated priorities of Ukrzaliznytsia's efficiency should be the volume of exported goods, the turnover of wagons, and the speed of train movement. Long-term planning will enable Ukrzaliznytsia to better plan its own resources and predict demand, as it happens in passenger transportation. The state carrier will get more benefits from this than from "ripping off" farmers.
In particular, the management of "Ukrzaliznytsia" will receive great advantages from everyone who organizes the movement and will be able to plan their work months in advance. This applies not only to grain, but also to all types of cargo. If cargo owners will notify the carrier in advance of their transportation plans, everyone will benefit from this, except for intermediaries who are used to profiting from price increases and managers who are used to receiving kickbacks," concluded Yurii Shchuklin.
