The updated UZ agreement on rail freight needs to be revised

17/ 06/ 2020

Listen to online Stop   From July 1, 2020, Ukrzaliznytsia plans to introduce an updated agreement on the provision of services for the carriage of goods by rail, the wording of which was published on May 31 on the website of the company. The European Business Association is grateful that its important remarks have been considered but at the same time, we would like to draw attention to some issues that need to be improved. The first issue concerns the tariff methodology for the use of Ukrzaliznytsias wagons. Currently, the fee is charged according to the progressive tariff grid for the use of wagons per hour, while the new contract proposes to calculate the fee for the use of wagons per day. According to the estimates of the EBA experts, such new regulation can increase the costs of shippers by more than 6-7 times or by 30-40 UAH / ton. Therefore, the Association proposes to maintain the current tariff policy for the use of Ukrzaliznytsia wagons. Experts of the European Business Association continue to insist on the exclusion of the Tdod coefficient from the time paid for the use of wagons. For the reference, Tdod introduces one extra day to the freight delivery term which is necessary for the formation of a freight train and registration of accompanying documents. In practice, the use of Tdod means two additional days for the use of the carriers wagon (including both freight and empty runs). In our opinion, it is necessary to clearly delineate the area of ​​responsibility for the transportation process. Thus, the customer is responsible for freight operations, Ukrzaliznytsia - for the delivery time. According to the experts of the Logistics Committee, it would be expedient to supplement the contract with provisions establishing the carriers liability for damaging the customers wagons to balance the limits of the customers and the carriers liability. Other business remarks concern the size and conditions of accrual of fines, the possibility to debit funds from the payers accounts, the list of primary documents, etc. The reservations of the EBA experts on the wording of this agreement are reinforced with the conclusion of the Antimonopoly Committee, which recommended Ukrzaliznytsia to refrain from implementing the new agreement until all comments from shippers are submitted. According to the committee, some conditions of the agreement still contain signs of abuse of Ukrzaliznytsias monopoly position and neutralize the interests of other players in the freight market. The business hopes to process the comments as soon as possible together with Ukrzaliznytsias experts and to extend the current agreement until the revised version, which considers the interests of all participants in the freight market, is prepared.

From July 1, 2020, Ukrzaliznytsia plans to introduce an updated agreement on the provision of services for the carriage of goods by rail, the wording of which was published on May 31 on the website of the company. The European Business Association is grateful that its important remarks have been considered but at the same time, we would like to draw attention to some issues that need to be improved.

The first issue concerns the tariff methodology for the use of Ukrzaliznytsia’s wagons. Currently, the fee is charged according to the progressive tariff grid for the use of wagons per hour, while the new contract proposes to calculate the fee for the use of wagons per day. According to the estimates of the EBA experts, such new regulation can increase the costs of shippers by more than 6-7 times or by 30-40 UAH / ton. Therefore, the Association proposes to maintain the current tariff policy for the use of Ukrzaliznytsia wagons.

Experts of the European Business Association continue to insist on the exclusion of the “Tdod” coefficient from the time paid for the use of wagons. For the reference, Tdod introduces one extra day to the freight delivery term which is necessary for the formation of a freight train and registration of accompanying documents. In practice, the use of “Tdod” means two additional days for the use of the carrier’s wagon (including both freight and empty runs). In our opinion, it is necessary to clearly delineate the area of ​​responsibility for the transportation process. Thus, the customer is responsible for freight operations, Ukrzaliznytsia – for the delivery time.

According to the experts of the Logistics Committee, it would be expedient to supplement the contract with provisions establishing the carrier’s liability for damaging the customer’s wagons to balance the limits of the customer’s and the carrier’s liability. Other business remarks concern the size and conditions of accrual of fines, the possibility to debit funds from the payer’s accounts, the list of primary documents, etc.

The reservations of the EBA experts on the wording of this agreement are reinforced with the conclusion of the Antimonopoly Committee, which recommended Ukrzaliznytsia to refrain from implementing the new agreement until all comments from shippers are submitted. According to the committee, some conditions of the agreement still contain signs of abuse of Ukrzaliznytsia’s monopoly position and neutralize the interests of other players in the freight market.

The business hopes to process the comments as soon as possible together with Ukrzaliznytsia’s experts and to extend the current agreement until the revised version, which considers the interests of all participants in the freight market, is prepared.