Ukrainian Railways exceeds financial expectations for 2023
Ukrainian Railways exceeded financial expectations for 2023 by breaking even against all odds. The initial estimation of the company talked about around 20 billion UAH (515 million euros) of losses this year. However, currently, there is even a possibility of making some profit. Simultaneously, the company is working with multiple partners to address connectivity issues with the rest of Europe and efficient rail freight transport.
The year has been successful despite the export challenges that Ukraine has faced, amplified by the ban on grain imports from its neighbouring countries. Yevhen Lyashchenko, chairman of the board of Ukrainian Railways, stated in an interview with the Ukrainian news agency Interfax-Ukraine that his company is now looking for possible solutions on the matter. Synergies with Romania, Moldova and Lithuania are seemingly at the top of the agenda.
A matter of definition
Alternative port gateways for the export of Ukrainian products are far from reaching capacity needs. Lyashchenko said to Interfax-Ukraine that the Polish ports of Gdynia and Gdansk can accommodate 8.5 million tons of cargo per year, while the port of Constanta is facing a number of limitations, also resulting from the fact that it is used for Ukrainian imports. Simultaneously, the fact that Romania and Poland also have grain export needs means that port capacity during peak harvest seasons will be even more restricted.
On the other hand, Baltic ports can accommodate 20 million tons of cargo annually, with ten of them exported only via the Lithuanian port of Klaipeda. However, as Lyashchenko mentioned, considering the Baltic ports solution is a matter of timeframe. That being said, in the long run, Baltic ports can be a great solution in conjunction with railway infrastructure developments delivered by RailBaltica.
In Lithuania, for instance, RailBaltica did not include a rail connection to Klaipeda. This is something that needs to be addressed anew. The same should apply to transport costs since the rail route to Klaipeda will be 50 per cent more expensive than the route to Gdansk, making a special tariff regime imperative for its operation.
Positive developments with Moldova-Romania
Ukraine, Moldova and Romania have held consecutive high-level meetings in the past few weeks to increase Ukrainian cargo transit. One of the plans is to increase cargo transit through Romania from 2.5 million tons to 4.5 million tons annually. For Lyashchenko, this could be possible thanks to some infrastructure upgrades with Moldova–namely the Berezine – Basarabiaska border crossing.
Nevertheless, there are still several restrictions on the Romanian side concerning mainly rail transhipment infrastructure in the port of Galati. This results in long queues of wagons waiting to cross the border. On a positive note, though, it appears that Romania could also follow Moldova’s example and apply tariff discounts for Ukrainian cargo, which Lyashchenko expects to happen soon.
As the new round of CEF funding proposals, including Ukraine, opened on 25 September, Ukrainian railways are also preparing their applications. Lyashchenko underlined that since this is a competition, the company will include as many projects as possible in the application to have a good scoring chance. The Mostyk-Sknyliv 1435 mm rail track between Poland-Ukraine and projects in Lviv for its transformation into a rail hub with infrastructure meeting European standards will be prioritised in the application process.