Business asks Zelensky not to limit service life of freight cars

KYIV. Nov 8 (Interfax-Ukraine) – A number of business associations and unions appealed to President of Ukraine Volodymyr Zelensky with a request to prevent the implementation of the procedure for diagnostics and repair of wagons adopted by the Ministry of Infrastructure, since this will lead to the simultaneous decommissioning of about 43% of the working fleet by 2028 and force businesses to spend UAH 107 billion for the purchase of new railcars instead of investments in other important projects.

The corresponding open letter was published on the website of the Ukrainian Agrarian Council on Monday.

The associations in their address to the President stated that they strongly disagree with the initiative of the Ministry of Infrastructure to limit the service life of freight cars, adopted in October this year. So, according to the information in the text of the order, for grain carriers with a standard service life of 30 years in 2022, it is planned to set a maximum service life at the level of 43 years. Until 2028, it is planned to reduce it annually to 30 years.

According to business representatives, such a reduction in the service life of wagons will lead to the simultaneous decommissioning of about 75,000 wagons (including 40,000 gondola cars), or 43% of the working fleet by 2028.

"The remaining fleet will not be enough to ensure transportation by rail. The deficit of gondola cars alone will amount to about 38,000 units, given that the operating indicators of Ukrzaliznytsia are deteriorating [gondola car turnover is already 7.3 days], the deficit will grow to 48,000 units. The existing car-building capacities will not be able to compensate for such a deficit within the allotted period of time," the appeal says.

The associations clarified that in order to replace 75,000 cars by 2028, businesses will need to spend UAH 107 billion, which will interfere with financing other important investment and social projects. In the agro-industrial complex, these are, in particular, irrigation networks that require billions of dollars in capital investments.

In addition, the artificial long-term shortage of freight cars will lead to higher prices for railcars, a reduction in industrial production and exports, a catastrophic disruption in the shipment of raw materials and finished products, loss of jobs and deductions to the state budget.

"This initiative is planned to be implemented without any evidence and calculations, backed up by official statistics and proving that the operation of cars beyond the standard period is unreasonable for the economy as a whole. If you look at the world experience, in particular the USA and the EU countries, they are guided by the maximum possible extension of the useful life of railcars, while controlling their technical condition," business representatives say.

The associations called on the President to instruct the Cabinet of Ministers to assess the possible negative consequences of this decision for the Ukrainian economy and to develop alternative effective proposals to improve the situation on the freight car market.

The appeal to the President was signed by: the Ukrmetalurgprom association, the Federation of Ukrainian Transportation Employers, the Ukrainian Lime Industry Association, the Ukrkoks association, the Association of Enterprises of Owners of Departmental Transport and Operators of Freight Rail Transportation, the Ukrainian Grain Association, the All-Ukrainian Congress of Farmers, the Agro-Food Council, the Agrarian Union of Ukraine, the Ukrainian Agrarian Council, the Union of Poultry Breeders of Ukraine, the Ukrainian Agribusiness Club, the Ukrainian Association of Direct Sales, the Taxpayers Association of Ukraine, the Ukrainian Security Industry Federation, and the Association of Producers of Ukraine.