Ukraine rail car investment offers 2018 relief, but 2017 logistics strained

A major investment in rail cars promises to bring relief to a long-running headache for Ukraine’s grains industry, although the funding is too late to relieve current problems, market sources said Friday.

The European Bank for Reconstruction and Development is reported to be loaning enough money to buy 3,400 new railcars, with further investment hoping to attract a further UAH30 billion to take the total number of new wagons to 8,880, according to local media reports.

Market sources have reported slow logistics as cars are used to store corn rather than move it to the ports.

“There is a lack of railcars,” one source said of the situation, with a second source saying that the problem is not unusual at this time of the year.

“Last year was a disaster, this year they have invested in [new rolling stock] but it is still bad,” the second source said.

Currently CPT prices in Ukraine, effectively a domestic price representing the price of product carried to a location – typically a port, have reached $150/mt, providing a floor to current FOB prices which remain at levels around $160 to $162/mt for spot deliveries.

The EBRD was contacted by Census but no one was available to comment.