Ukrainian Railways (UZ) is a state monopoly on the rail market. That has its benefits, but also brings downsides. For example, the company has received a lot of business criticism for its tariff and rolling stock policies. Now, a big customer – the agrarian sector – is calling for the end of the monopoly.
The Ukrainian Agrarian Confederation (UAC) is calling for the end of UZ’s monopoly status. UAC’s president, Leonid Kozachenko, told Ukrainian publication UNIAN that the rail operator maintains an authoritarian approach to the railways, setting tariffs non-transparently and concealing its cost picture from the public.
“No one can analyse the balance sheet of Ukrainian Railways and look at its expenses. In many cases, the management says: our expenses have increased. But what these expenses are and how they increased is unknown, because no one gives access to the data. We have many other questions about the use of the budget. […] Such an authoritarian approach must be changed,” Kozachenko argues.
UZ rules the market
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UZ maintains an iron grip on Ukraine’s rail market. No private traction is allowed – only UZ has locomotives in Ukraine. Private wagons, on the other hand, are allowed. But that also has its limitations: the rail operator decided to ban foreign wagons for domestic use, sidelining companies from outside of Ukraine and reducing competition.
Moreover, Kozachenko says that UZ unfairly prioritises its own wagons over private wagons. “Private wagons were loaded – and did not move. And when we started contacting Ukrainian Railways, they told us – what did you expect? We will transport our wagons, and let yours wait. And it happened that more than a thousand wagons loaded with agricultural products waited for more than a month, and no one wanted to transport them”, the UAC president said. In other words, UAC argues that Ukraine needs private traction.
Criticism from elsewhere
Ukrainian Railways is looking to increase rail tariffs by 37% in the near future. The operator stated that it needs the money because its expenses have grown in recent years. However, the Ukrainian agricultural sector has not reacted favourably to the idea. The UAC predicts that small and medium-sized farms will cease operations due to unprofitability.
Recently, UZ also faced criticism from the European Business Association in Ukraine and the American Chamber of Commerce over its tariff and foreign wagon policies.