Ukraine. Ukrzaliznytsia To Index Freight Rates By 16.6% From February And 2.5% Quarterly

29.11.2018

Freight rates will be indexed automatically if the company’s requirements are met from May 1.

The Ukrainian Railways public joint-stock company (Ukrzaliznytsia) plans to index freight rates by 16.6% from February 1, 2019

Ukrzaliznytsia’s acting Board Chairman Yevhen Kravtsov announced this during “Infrastructure Day” at the Logistics Committee of the European Business Association on Tuesday, the CFTS portal reports.

According to the presentation that Ukrzaliznytsia made during the event, freight rates will be indexed by 2.5% on May 1, August 1, and November 1, 2019.

“Freight rates will be indexed automatically and not once a year but quarterly. On the one hand, this gives Ukrzaliznytsia predictability regarding the funds that we will earn in the long term. On the other hand, it will allow private operators and our private clients to understand what Ukrzaliznytsia’s tariff policy will be not for the next three or six months, but for many years to come based on macroeconomic indicators,” said Kravtsov.

According to him, the company plans to move away from raising rates "via the manual process of negotiations." "We propose introducing a system in which [tariffs will be raised] automatically based on macroeconomic indicators," Kravtsov said.

If the company's proposal is accepted, tariffs will be automatically indexed quarterly in accordance with changes in the industrial producer price index in the preceding quarter.

"The industrial producer price index is objective, it is calculated by the Economy Ministry and the State Statistics Committee, and it depends on the year. For example, it was 16.3% last year and about 16% this year," said Kravtsov.

Ukrzaliznytsia recently said that it considered a threefold increase of freight rates economically justified.

Kravtsov stated in October that Ukrzaliznytsia intended to link freight tariffs to the producer price index. “Our cost price changes over time, and it is directly linked to the PPI. The correlation is direct. We ask one thing: that we have enough funds to cover this cost price. No more and no less,” he said.



CTS

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