Ukrzaliznytsia, the state-owned railway company of Ukraine, has recently proposed a 37% increase in tariffs for freight transportation. In their statement, the company has provided a number of arguments to support this decision. However, according to analysts, most of these arguments are manipulative and some are even absurd, disregarding the current state of the Ukrainian industry and economy as a whole. This was highlighted in an article by GMK Center.
The proposed tariff increase has caused a stir among businesses and industries that heavily rely on railway transportation for their operations. The argument put forward by Ukrzaliznytsia is that the increase is necessary to cover the rising costs of maintenance, repairs, and modernization of the railway infrastructure. They also claim that the current tariffs are not sufficient to cover these expenses and that the increase is in line with the market rates in neighboring countries.
However, analysts have pointed out that these arguments are misleading and do not take into account the current economic situation in Ukraine. The country is still recovering from the effects of the global pandemic and many businesses are struggling to stay afloat. A sudden increase in transportation costs would only add to their burden and could potentially lead to job losses and closures.
Moreover, the argument about market rates in neighboring countries is not entirely accurate. While it is true that some countries have higher tariffs for freight transportation, they also have a more developed and efficient railway system. In contrast, Ukraine’s railway infrastructure is outdated and in dire need of modernization. Instead of burdening businesses with higher tariffs, the government should focus on improving the efficiency and reliability of the railway system.
Another argument put forward by Ukrzaliznytsia is that the increase in tariffs will encourage businesses to switch to other modes of transportation, such as road or sea. This, they claim, will help reduce the strain on the railway system and improve its performance. However, analysts have pointed out that this argument is flawed. The cost of road transportation is already higher than railway transportation, and the sea route is not always a viable option for many businesses. Furthermore, the increase in tariffs will only lead to an increase in the cost of goods, making them less competitive in the market.
It is also worth noting that Ukrzaliznytsia has a monopoly on freight transportation in Ukraine. This means that businesses have no other option but to use their services, making them vulnerable to such sudden and significant increases in tariffs. This lack of competition also hinders the development and modernization of the railway system, as there is no incentive for Ukrzaliznytsia to improve their services.
In their statement, Ukrzaliznytsia has also mentioned the need to increase tariffs to attract foreign investment and improve the railway infrastructure. However, analysts have pointed out that this argument is baseless. Foreign investors are more likely to be deterred by sudden and significant increases in tariffs, as it creates uncertainty and instability in the market. Instead, the government should focus on creating a favorable business environment and implementing reforms that would attract foreign investment.
In conclusion, the proposed 37% increase in tariffs for freight transportation by Ukrzaliznytsia is not a viable solution. It is based on manipulative and misleading arguments and does not take into account the current economic situation in Ukraine. Instead of burdening businesses with higher tariffs, the government should focus on improving the efficiency and reliability of the railway system. This will not only benefit businesses but also contribute to the overall development of the country’s economy.
