Business does not support the plans of the Ministry of Infrastructure for decommissioning freight cars

06/ 11/ 2020

In October, the Ministry of Infrastructure of Ukraine published a draft Order for public discussion, which proposes to approve the procedure for establishing a ban on the operation of freight cars. It is proposed to limit the service life of cars according to their types. According to the calculations of the EBA experts, most of the company’s car fleet, namely gondola cars, will be written off by 2028 according to the draft Order. According to the experts of the EBA Logistics Committee, in case the Order is adopted, the fleet of freight cars may be reduced by 39% by 2028 and which accordingly amount to approximately 106 thousand cars. Thus, more than 67 thousand freight cars will be written off. Experts of the Association predict that to replace this number of cars, the business will have to spend more than 93 billion UAH. This reduction will mainly affect the gondola cars and will reach 47% by 2028, which is estimated at 53 billion UAH. Also, specialized rolling stock (pellet trucks, coke trucks, chip trucks) is already in short supply, therefore, most of the fleet will be written off if the service life is limited. Upgrading this type of rolling stock will be extremely problematic due to the long payback period and the limited market segment where such cars can be used. Thus, business representatives are wary of significant problems with transportation, as the fleet of freight cars will be in short supply, as a result of which part of the cargo will be carried out to alternative modes of transport, which will negatively affect the activities of Ukrzaliznytsia. Besides, according to the norms of the Order, Ukrzaliznytsia will have to decommission 62% gondola cars and 100% of grain trucks (over 11 thousand units) from its rolling stock over the next eight years. Therefore, the funds that would be appropriate to use for the renewal of infrastructure and locomotive fleet will have to be redirected to the renewal of the freight car fleet. Daria Sichkar. EBA Logistics Committee Manager. Given the world experience, there is no expediency in limiting the service life of cars, it is necessary to focus on their maximum life cycle with the possible further continuation of operation, considering the technical condition. Besides, it is not proved that used overhauled cars fail faster than new cars. At the same time, the company is concerned about the lack of a regulatory framework that would determine the possibility of extending the service life of cars, which could lead to a complete cessation of use of cars with excessive service life. The business has significant concerns about the introduction of restrictions on the service life of freight cars, as this could lead to an acute shortage of cars and rising prices for cars with a further negative impact on the economy of Ukraine. Industrial and agricultural enterprises will be forced to invest in the renewal of the car fleet, rather than focusing on more important areas. Accordingly, the EBA member companies do not support this draft Order and propose to revise the document taking into account the proposals from the business. The EBA experts are ready to provide the necessary expert support in the revision of the draft Order. Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.

According to the experts of the EBA Logistics Committee, in case the Order is adopted, the fleet of freight cars may be reduced by 39% by 2028 and which accordingly amount to approximately 106 thousand cars. Thus, more than 67 thousand freight cars will be written off. Experts of the Association predict that to replace this number of cars, the business will have to spend more than 93 billion UAH.

This reduction will mainly affect the gondola cars and will reach 47% by 2028, which is estimated at 53 billion UAH. Also, specialized rolling stock (pellet trucks, coke trucks, chip trucks) is already in short supply, therefore, most of the fleet will be written off if the service life is limited. Upgrading this type of rolling stock will be extremely problematic due to the long payback period and the limited market segment where such cars can be used.

Thus, business representatives are wary of significant problems with transportation, as the fleet of freight cars will be in short supply, as a result of which part of the cargo will be carried out to alternative modes of transport, which will negatively affect the activities of Ukrzaliznytsia. Besides, according to the norms of the Order, Ukrzaliznytsia will have to decommission 62% gondola cars and 100% of grain trucks (over 11 thousand units) from its rolling stock over the next eight years. Therefore, the funds that would be appropriate to use for the renewal of infrastructure and locomotive fleet will have to be redirected to the renewal of the freight car fleet.

Daria Sichkar EBA Logistics Committee Manager

Given the world experience, there is no expediency in limiting the service life of cars, it is necessary to focus on their maximum life cycle with the possible further continuation of operation, considering the technical condition. Besides, it is not proved that used overhauled cars fail faster than new cars. At the same time, the company is concerned about the lack of a regulatory framework that would determine the possibility of extending the service life of cars, which could lead to a complete cessation of use of cars with excessive service life.

The business has significant concerns about the introduction of restrictions on the service life of freight cars, as this could lead to an acute shortage of cars and rising prices for cars with a further negative impact on the economy of Ukraine. Industrial and agricultural enterprises will be forced to invest in the renewal of the car fleet, rather than focusing on more important areas.

Accordingly, the EBA member companies do not support this draft Order and propose to revise the document taking into account the proposals from the business. The EBA experts are ready to provide the necessary expert support in the revision of the draft Order.

Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.