An increase in the tariff for freight railway transportation will lead to the closure of enterprises and mass layoffs, – mass media

photo by UNIANThe 40% increase in the tariff for freight transportation, which Ukrzaliznytsia insists on, will have extremely negative consequences for the economy and defense capability, because Ukrainian business is already extremely exhausted from working in war conditions. A new increase in costs threatens with an increase in the cost of production, a decrease in competitiveness on world markets, a reduction in production volumes, a decrease in investments and social support of local communities. In the end, it may even lead to the closure of enterprises, writes GMK Center.

“The next increase in tariffs will lead to a reduction in production and exports by MMC enterprises. Earlier, ArcelorMittal Kryvyi Rih announced a reduction in output due to rising electricity prices and unfavorable market conditions. Now, an increase in tariffs for rail freight transportation may be added to the negative factors. For the most negative scenario, an increase in tariffs may lead to a stoppage of production at individual enterprises and a sharp deterioration in the financial situation of enterprises industry”, – the publication indicates.

Thus, according to the calculations of “ArcelorMittal Kryvyi Rih”, the company’s additional costs for logistics will amount to more than UAH 1.4 billion per year, which will reduce the competitiveness of products along the chain and may lead to a complete shutdown of production, where about 20,000 people work. persons, and the cessation of foreign currency inflows to Ukraine for $800+ million per year.

“The key complaints of the business are that Ukrzaliznytsia, taking advantage of its monopoly position, increases tariffs instead of increasing internal efficiency and improving the quality of freight transportation. In an ideal case, the state-owned company should conduct an audit of the increase in costs and find reserves to reduce its own operating costs. And the need for investments to be covered at the expense of financial aid and loans”, – analysts of the publication indicate.

Another negative of the decision is that UZ will lose part of the freight base formed over the years, and will not receive the expected additional funds. The only source of Ukrzaliznytsia’s income are shippers, who, due to excessive tariff burden, will at best reduce the volume of freight transportation, at worst – face the threat of bankruptcy with all the negative consequences not only for the individual industry, but also for the economy and national security of Ukraine, GMK emphasized Center.

“A simple increase in tariffs will not solve the problems of Ukrzaliznytsia, which have accumulated over many years: inflated prices during procurement, inactive infrastructure that generates only losses and cross-subsidization of loss-making passenger transportation. Instead, with the help of measures to stimulate the expansion of the freight base, UZ could even reduce tariffs by 15-20% without losing profitability,” analysts of the publication emphasized.

Earlier, the head of the Federation of Transport Employers, Orest Klympush, also stated that the increase in tariffs of Ukrzaliznytsia in the conditions of martial law is a step in the wrong direction: because of this, goods will flow to trucks, and we will lose roads, the construction of which billions were spent. In addition, it can lead to a loss of trust among citizens in ministerial decisions.