Ukrainian Railways ships 12% more freight in July, sees growth in low-margin freight

MOSCOW. Aug 7 (Interfax) - Ukrainian Railways carried 13.6 million tonnes of freight in July, 12% more than a year earlier, Ukrainian media reported, citing a company press release.

Domestic shipments fell 22.3% to 6.4 million tonnes, while export shipments surged 90% to 6.4 million tonnes and import shipments jumped 39% to 746,000 tonnes.

Ukrainian Railways said it slipped into the red for the first time this year in July, but it did not report the actual loss figure. Financial performance deteriorated due to growing exchange rate costs and an increase in the share of low-margin freight.

"The 40% increase in fuel expenses was covered by savings on other operating expenses, but the growth of exchange rate expenses and deterioration in the structure of freight shipments led to a negative financial result," the company said.

Revenues from shipping low-margin freight do not cover the costs, the company said. Ukrainian Railways shipped 3.6 million tonnes of iron and manganese ore in July, 65% more than a year earlier. Meanwhile, shipments of grain, a key high-margin cargo, fell 19% from the previous month.

The company also said that in the first seven months of 2024 it reduced fixed costs, not taking into account the growth of electricity prices, as well as labor costs, which are lower than the national average.

Ukrainian Railways called for evening out prices for shipping freight in different rate classes. "There is no economic justification for the existence of a large difference in the price of shipping freight in various tariff classes, as the infrastructure component (infrastructure maintenance costs) is the same for all freight," the company said.

The Restoration Ministry's tariff council earlier approved a draft decision to standardize rates for freight shipments by railway. Public discussions of this document are planned.

Ukrainian Railways shipped 148.4 million tonnes of freight in 2023, 1.5% less than in 2022.

The Ukrainian government has approved a company financial plan for 2024 that projects a net loss of UAH12.6 billion. The official exchange rate was UAH41.20/$1 on August 6.