Logistical problems are on the front burner in Ukraine and should be solved as soon as possible. Export-oriented companies transport main volumes delivering agricommodities to ports. Yuriy Skichko, head of Hermes-Trading, told us about new challenges and prospects for river transportation.
- Generally, which problems are the most burning now regarding logistics and port infrastructure?
Unfortunately, currently there are a wide number of problems. Low usage of river transportation, lack of fleet and terminals, overloading of road transport, lack and wearout of grain hoppers, high cost of port transshipment and some seasonal logistical problems in peak months are the key problems.
- What are the main obstacles for development of river infrastructure in Ukraine?
Firstly, absence of legislation, operation regulations. Artificial levies (pilotage fee, canal dues, bridge raising, lockage, harbour due etc) that make river transportation uncompetitive. Despite the highest levies and fuel excise tax at 112 USD/t (in US it is lower than 50 USD/t) that should provide funds for the whole infrastructure there are no money for river transportation financing. Lack of fleet is one more problem. Foreign fleet could not work in Ukraine in adequate way, as it is necessary to obtain license each time that is unsuitable. Ukrainian own fleet is flying the flag of other countries and operate out of Ukraine.
Bureaucracy, invalid partnership between state and private sector, poor legislation regarding investments complicate the situation. All these problems slowdown development of river infrastructure.
- How the situation with Dnieper dredging is going?
Last year the plan was announced. However, the process was delayed due to absence of 2 agreements with government. Therefore, in 2016/17 MY transportation companies will bear losses again.
- Tell us about results of Svetlovodsk river terminal activity.
The terminal attracted 3 large clients who transship large volumes on CIF basis directly from the terminal. That helped to increase transshipment volumes from the terminal to water transport to 70 thsd tonnes in 2015/16 MY.
- What real reforms in agricultural sector were done? Which problems should be solved as soon as possible to promote agricultural sector development?
Elimination of certificate of State grain inspection and mandatory execution of quarantine and veterinary certificates are the real reforms. However, as there are no new regulations as to issue of veterinary certificates in ports traders still have to execute it.
Following problems should be solved as soon as possible:
- Sample collection, analysis and issue of veterinary certificates promptly under reasonable tariffs.
- Standardization of customs procedures while obtaining EURO-1 sertificate.
- Negotiations with Egypt and other countries who has strict requirements to content of quarantine objects to implement arbitral procedure while collecting samples and provide a possibility to obtain phytosanitary certificate on security of correction action.
- Improvement of quarantine control.
- Start of pilot project as to the mixing of grain classes at sea terminals.
- Implementation of mechanism of long-term land rent with high occupier's liability regarding land attrition and ecology harm.
- Attract small farmers to cooperative business and entrance to export market.
- How higher railway tariffs and stricter control of road transport overweight can influence agricommodities transportation?
We see interest of large international companies to river transportation as real and economically feasible alternative to road and rail transportation that significantly appreciated this season. Quick resolving of legislative and regulatory problems by government can redistribute flow of cargo in short-term.
On the other hand, strict restriction of road transport overweight turned it to be uncompetitive in comparison to railway transportation. Whole flow of cargo gone to railway. We need to have adequate railway tariffs that should be in balance with road tariffs.
- Tell us about key qualitative parameters required for participation in tenders, current sanitary regulations and restrictions particularly as to ragweed.
Ragweed content is a significant problem in Ukraine. Requirements are strict and even control of quarantine authority during loading here in Ukraine does not guarantee cargo acceptance. It almost impossible to provide 100% guarantee as to the ragweed content, thus we need to have normative tool guaranteeing product augmentation in case of complaint.
- Tell us about your plans for future.
UkrAgroCom and Hermes-Trading plan to increase turnover up to 1 mln tonnes in 2016, particularly by means of higher shipments by river transport. We plan to attract new clients to work on Svetlovodsk terminal. Moreover, we are going to export higher volumes to Asia.
Interviewed by Anna Tanskaya, APK-Inform Agency
