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Will on-the-spot decisions solve a problem of grain carriers’ shortage?

Ukraine has exported 43,8 million tons of grain, grown in the last marketing year, out of 66 million tons to the foreign markets. Although these are record-breaking figures for our country, agrarians expect that they will grow gradually if existing rates are going to be sustained. According to the Ukrainian Grain Association, the corn yield is expected at 100 million tons by 2022, and thus export may increase to 70 million tons.

“However, these bright prospects may fail unless actions are taken to modernize a logistic infrastructure”, outlined Alona Lebedieva in her opinion column, the founder of Aurum Group.

According to her, Ukrainian logistics is highly inefficient. The expenses of Ukrainian agrarians for transporting grain to ports are 40% higher than similar ones of French and German agrarians and almost are 30% higher than those of the USA agrarians are. Ukrainian agrarians’ losses in logistics of 30-million-ton exported wheat and maize were estimated by the representatives of the World Bank from $600 million to $1,6 billion.

Among the weak spots of agrarian logistics, Alona Lebedieva mentioned an acute shortage of grain carriers: during the peak period from July to December, business lacked about 3 000 railcars for the transportation of grain to elevators and ports.

Alona Lebedieva pointed out that an implemented by PJSC “Ukrzaliznytsia” (UZ) in August 2017 automated distribution system of railcars, including grain carriers, is, in fact, a good idea,  however, in practice it appeared to be one-sided and incomplete, as it has not solved the main problem – a shortage of grain carriers.

“The majority of grain carriers of inventory rolling stock of UZ with a service life limit of nearly 30 years should have been withdrawn from use a long time ago. The stock needs modernizing and new railcars should be manufactured. However, “Ukrzaliznytsia” officials are not interested in the agrarians’ forecasts, judging from the fact that there is no funding provided for manufacturing new grain carriers in 2018. Apparently, UZ will solve a shortage of railcars by continuing a pernicious practice of prolonging the service life of railcars”, states the expert.

As there is no official statistics of UZ about the changes of grain carriers’ rolling stock in the press, the author refers to the statistics of the specialized resource “Promgruz”, where it is indicated that 1266 hoppers-grain carriers are registered and 267 are withdrawn from use in Ukraine during 2017. “The very few are withdrawn, as we can see, the majority of registered grain carriers are not newly manufactured, they are imported by private carriers and withdrawn from use in Russia with a prolonged service life by UZ for 5-7 years in order to be used in the territory of Ukraine”, noted Alona Lebedieva.

Since January of this year, according to the expert, manufacturing companies of AIC started to examine the possibility of creating their own rolling stocks of grain carriers. Also, traders who build their own logistics chain for harvesting, transportation and storage of grain became more active. The motivation is common: there is no time, no strength and no resources to wait.

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