"Grain and Maritime days in Odessa 2021". Ukraine, Odessa
DATE
May 26, 2021

Rail transportation: how we will transport grain in 2021/22 MY

Source

APK-Inform

11990

In Ukraine, the share of grain cargo transportation by rail has been decreasing in recent years. In 2020/21 MY, it will reach 50-60% out of the total volume of grain export supplies. In particular, almost 35 mln tonnes of wheat, barley and corn were exported in July-March. At the same time, the total volume of transportation of these crops by rail amounted to 20.6 mln tonnes or 60% during this period, according to Rail.Insider’s data. This figure was 52% in 2020.

“Unfortunately, there is no ground for higher market share now. There is no improvement as to the shortages and theft on the railway, there is no movement towards optimization of transportation tariffs and reduction (or at least simplification) of charges for additional services”, - the chief analyst at BGS Rail, Vsevolod Velikodny says.

In a letter to customers as of 04/16/2021, Ukrzaliznytsia offered to conclude long-term contracts for transportation by its own rail cars for 2021/22 MY.

“Taking into account the problematic and scandalous nature of the previous long-term contracts, this initiative is unlikely to become a locomotive for attracting of a freight base, but a marker of the price policy. The turnover of rail cars can be the only notable advantage of the railway”, - the expert believes.

V.Velikodny says the lower passenger traffic along with the overall traffic drop makes it possible to make 3-4 runs of grain hopper per month, and the standard delivery times to the ports are fulfilled by more than 95%.

The provision of rail cars to farmers and their surplus/deficit will greatly depend on how the railway workers can cope with the load increase. According to the April estimates of APK-Inform, the production of grain and pulses will reach 73.8 mln tonnes in 2021, up by 13% compared to the previous season. This will lead to higher pressure on railway transport. During the peak time of the season, the railway can transport 3.8-4 mln tonnes of grain per month. With a rail car turnover of 7 days, 14,000 rail cars will be enough, and if the network fails and the turnover halves (as it was in 2019), then there will be a rather tough shortage of "live" grain hoppers in the amount of 1000-1500 rail cars.

“In case of a negative scenario, transportation of grain in containers may become a wild card. In 2019/20 MY, this segment grew by more than 30%. If the positive dynamics retain, more than 1 mln tonnes of grains will be exported in containers this season”, - V.Velikodny noted.

The grain crop of almost 74 mln tonnes may become another challenge for the internal logistics system.

You can get more information about the challenges of the next season for the grain market of Ukraine as well as about the global trends within the largest international event of the grain market Grain&Maritime Days in Odessa 2021, which will take place on May 26-28 in Odessa (Bristol Hotel Odessa). Vsevolod Velikodny, chief analyst at BGS Rail, will present the situation on the market of rail transportation and will talk about how we will transport the grain in 2021/22 MY.

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Contacts

 

IA APK-Inform

+38 (0562) 32-07-95 (multi-channel),

+38 (0562) 32-15-95

Irina Ozip (ext. 110)

[email protected],

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