{"id":2100,"date":"2019-08-29T11:24:37","date_gmt":"2019-08-29T08:24:37","guid":{"rendered":"http:\/\/media.aurumgroup.ua\/?post_type=news&#038;p=2100"},"modified":"2019-09-26T11:28:11","modified_gmt":"2019-09-26T08:28:11","slug":"private-fleet-what-makes-business-buy-more-cars","status":"publish","type":"news","link":"https:\/\/media.aurumgroup.ua\/?news=private-fleet-what-makes-business-buy-more-cars&lang=en","title":{"rendered":"Private fleet: what makes business buy more cars"},"content":{"rendered":"<p><strong>The number of private owners of gondola cars has increased from 274 to 340 for seven months<\/strong><\/p>\n<p>As of 1 August, the total fleet of freight cars in Ukraine amounted to 192.3 thousand units. 105.9 thousand (55.1%) of which are owned by \u201cUkrzaliznytsia\u201d, and 86.45 thousand (44.9%) \u2013 by private owners. Besides, at the beginning of July 69 out of 102 thousand gondola cars and 15 out of 24 thousand grain carriers were in working order.<\/p>\n<p>According to <strong>Volodymyr<\/strong> <strong>Ivashchuk<\/strong>, the chairman of the board of the \u201cUkrainian Logistics Alliance\u201d Association, over just seven months of 2019, the railway fleet was replenished with 6,009 cars. Almost all of them are gondola cars and grain carriers of private owners. As a result, the fleet of private grain carriers, for example, already exceeds railway facilities of \u201cUkrzaliznytsia\u201d in quantity.<\/p>\n<p><strong>Individual cases<\/strong><\/p>\n<p>In general, car fleet data often refers to confidential. Among known facts of the purchase of cars by private owners in the first half of the year the purchase of 340 grain carriers by the \u201cFirst Logistics Company\u201d, 200 cars by Yeristovo Mining (Ferrexpo), and 20 grain carriers by \u201cNibulon\u201d can be named. It should be noted that the agrarian company did not plan to have its own rolling stock, but was forced to do this to solve its logistics problems.<\/p>\n<p><strong><em>\u201cAs of 1 July 2019, the Aurum Group\u2019s own freight car fleet amounts to 582 units. Thus, during the first half of the year it grew by 56 cars,\u201d adds Andrii Zharii, CEO of Aurum Group.<\/em><\/strong><\/p>\n<p>An approximate list of the largest private railcar owners as of the end of the first half of the year is as follows:<\/p>\n<ol>\n<li>\u201cLemtrans\u201d &#8211; more than 20 thousand cars are under control;<\/li>\n<li>\u201cKernel\u201d &#8211; 3.5 thousand grain carriers and tanks;<\/li>\n<li>&#8220;IRC&#8221; (\u201cInvestment Railcar Company\u201d) &#8211; more than 2.5 thousand cars;<\/li>\n<li>Ferrexpo &#8211; 2.45 thousand cars;<\/li>\n<li>EBRD (through Crea company) &#8211; more than 2 thousand cars.<\/li>\n<\/ol>\n<p>It was not possible to find out the size of the car fleet of \u201cMetinvest\u201d. However, there is evidence that it amounts approximately to 3 thousand units. Therefore, the company is eligible to be ranked among the conditional top five.<\/p>\n<p>Only 13 private car owners have a fleet of more than 1,000 units, and only two owners have more than 1,000 grain carriers.<\/p>\n<p>According to Volodymyr Ivashchuk, non-systemic actions of \u201cUkrzaliznytsia\u201d lead to the fact that the number of private car owners-freight forwarders is growing disproportionately in the country. Since the beginning of the year, their number in terms of gondola cars has grown from 274 as of 1 January to 340 as of the end of July, and in terms of grain carriers &#8211; from 73 to 110, respectively. Most of them do not intend to become logistics operators and deal with cargo transportation of other freighters. This greatly complicates the process of cargo transportation in terms of the formation and movement of trains and the return of empty cars.<\/p>\n<p>Since the beginning of the year, the fleet of \u201cUkrzaliznytsia\u201d has not been replenished with new cars. Besides, only in July the state operator wrote off 22 cars, while private owners added 936 units over the same period.<\/p>\n<p><strong>Impact factors<\/strong><\/p>\n<p>The need for own car fleet follows from the current state of the railway industry. According to Andrii Zharii, 64 thousand cars out of about 147 thousand cars of the working car fleet have already exhausted their statutory service life. It is necessary to add here another 12 thousand cars with a previously extended service life, which, as applied by their owners, prolong their life again.<\/p>\n<p>The point is that annually the statutory service life of about 6 thous. freight cars is about to run out in Ukraine. The service life of some of them has been extended for 6 years several times. The age of the vehicle usually exceeds the statutory service life by 1.5-2 times.<\/p>\n<p><strong><em>\u201cHere one can add the unpredictable tariff policy of UZ, the constant increase in the size of the car component in the tariff. In this regard, transportation costs increase; taking other unreasonable decisions also leads to freighters\u2019 cost increases,\u201d<\/em><\/strong><strong> Andrii Zharii adds<em>.<\/em><\/strong><\/p>\n<p>According to <strong>Volodymyr Mezentsev<\/strong>, CEO of \u201cLemtrans\u201d, the need to purchase one\u2019s own cars is influenced by:<\/p>\n<ul>\n<li>market conditions \u2013 fleet deficit\/surplus;<\/li>\n<li>shortage of locomotives. Due to problems with traction rolling stock and infrastructure, the turnover of cars has increased. For example, the turnover of \u201cLemtrans\u201d cars in the first half of 2018 was 7.8 days, and in the first half of 2019 &#8211; 8.9 days. The indicator increased by 1.1 days or 14%;<\/li>\n<li>existence\/absence of long-term freight contracts;<\/li>\n<li>forecast for the fleet decommissioning.<\/li>\n<\/ul>\n<p>In addition, experts note such problems as the shortage of locomotives and downtime. This also increases the turnover time of cars and prevents the rhythmic replenishment of the car fleet. For example, since the beginning of this year, the average turnover time for grain carriers has increased from 13 days to 16-17, and for gondola cars (as can be seen from their surplus) this indicator decreased from 14 to 12 days for the cars of \u201cUkrzaliznytsia\u201d and from 11 to 10 for private vehicle units.<\/p>\n<p><strong>Railcar<\/strong><strong> plans<\/strong><\/p>\n<p>At the beginning of the year, \u201cUkrzaliznytsia\u201d planned to modernize approximately 4.2-4.3 thousand cars in 2019, 4 thousand of which are gondola cars, by taking a loan from the European Bank for Reconstruction and Development (EBRD). However, since the beginning of the year, almost nothing has been heard about the purchase or the construction of new freight cars by the state operator. Obviously, the financial situation of \u201cUkrzaliznytsia\u201d does not give a chance to actively modernize the fleet. It is hoped that by the end of the year UZ will have purchased 2\u20132.5 thousand gondola cars at tenders though.<\/p>\n<p><strong><em>\u201cAs far as we have heard from UZ, they wish to modernize at least 1.5 thousand freight cars per year (mainly gondola cars), 200 grain carriers, dozens of fitting platforms, etc. by 2025. All this is not enough, using only UZ efforts, to transfer already declared cargoes and radically modernize the car fleet,\u201d Volodymyr Ivashchuk adds.<\/em><\/strong><\/p>\n<p>GMK Center was not able to get the comments of everyone involved in the increase in the private car fleet. However, it is clear that their motives depend on the situation with rail transportation, and there are no objective proportions in the replenishment dynamics itself.<\/p>\n<p><strong><em>\u201cOne can talk about plans to increase the car fleet of private owners based on demand. There is no main criterion for its assessment &#8211; the balance of the car fleet proceeds from the needs for transportation. At the same time, the current car fleet growth is disproportionate to the increase in railway freight volume. Most often the cars are purchased but the freight volume reduces,\u201d Volodymyr Ivashchuk explains.<\/em><\/strong><\/p>\n<p>Given the surplus of cars and the uncertainty of the situation in terms of many other parameters of cargo transportation, private car owners prefer not to talk clearly about specific plans for expanding the car fleet.<\/p>\n<p><strong><em>\u201cWe pursue a balanced policy on the modernization of the rolling stock. First of all, long-term prospects are important. The development strategy of the company provides for significant investments in the development and technical re-equipment of car repair facilities,\u201d Volodymyr Mezentsev says.<\/em><\/strong><\/p>\n<p>Regarding the increase of the private car fleet in the near future, the following is known:<\/p>\n<ul>\n<li>Ferrexpo group will have purchased 400 gondola cars for Bilansvskyi MPW by the end of 2019;<\/li>\n<li>The EBRD has allocated loans for the purchase of cars &#8211; Louis Dreyfus grain trader (up to 1,000 grain carriers for the amount of up to $35 million) and \u201cUnigran\u201d manufacturer of building materials (up to 70 cars and vehicles for \u20ac8,7 million);<\/li>\n<li>The company \u201cSangrant Plus\u201d has purchased 100 grain carriers for the Polohivskyi MPW;<\/li>\n<li>Aurum Group plans to purchase 80-100 gondola cars by the end of 2019.<\/li>\n<li><\/li>\n<\/ul>\n<p><strong>GMK transportation<\/strong><\/p>\n<p>In the first half of the year, rail transportation of GMK products amounted to 31% of the total cargo turnover. However, due to deteriorating global market conditions for iron ore (prices for metal products have fallen even earlier) and the first signs of recession in the global economy, metallurgists and ore exporters may reduce their production and export plans.<\/p>\n<p>The metal products market is already experiencing a decline in demand and in the volume of rail transportation. In the first half of the year, the freight flow of ferrous metals decreased by 2.9% &#8211; up to 9.9 million tons. For the time being, the situation is much better for ore &#8211; for January-June, the volume of transportation of iron and manganese ore has increased by 5.6% &#8211; up to 35.6 million tons. However, it is hard to tell how long the external market conditions will be favourable for Ukrainian iron ore exporters.<\/p>\n<p>A potential decrease in production and exports will inevitably affect the reduction in the investments of GMK enterprises in updating the rolling stock. Such investments will not break even, as the car fleet is extremely outdated, therefore it is dangerous and costly to carry goods, using such \u201ccapacities\u201d due to constant repairs. Nevertheless, cost minimization will affect plans to purchase new cars.<\/p>\n<p><strong>Yurii<\/strong> <strong>Hryhorenko<\/strong><\/p>\n<p><a href=\"https:\/\/gmk.center\/ua\/posts\/park-privatnogo-periodu-shho-zmushuie-biznes-kupuvati-bilshe-vagoniv\/\">GMK Center<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The number of private owners of gondola cars has increased from 274 to 340 for seven months As of 1 August, the total fleet of freight cars in Ukraine amounted to 192.3 thousand units. 105.9 thousand (55.1%) of which are owned by \u201cUkrzaliznytsia\u201d, and 86.45 thousand (44.9%) \u2013 by private owners. Besides, at the beginning [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":2086,"comment_status":"closed","ping_status":"closed","template":"","tags":[],"news-category":[40],"_links":{"self":[{"href":"https:\/\/media.aurumgroup.ua\/index.php?rest_route=\/wp\/v2\/news\/2100"}],"collection":[{"href":"https:\/\/media.aurumgroup.ua\/index.php?rest_route=\/wp\/v2\/news"}],"about":[{"href":"https:\/\/media.aurumgroup.ua\/index.php?rest_route=\/wp\/v2\/types\/news"}],"author":[{"embeddable":true,"href":"https:\/\/media.aurumgroup.ua\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/media.aurumgroup.ua\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2100"}],"version-history":[{"count":0,"href":"https:\/\/media.aurumgroup.ua\/index.php?rest_route=\/wp\/v2\/news\/2100\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/media.aurumgroup.ua\/index.php?rest_route=\/wp\/v2\/media\/2086"}],"wp:attachment":[{"href":"https:\/\/media.aurumgroup.ua\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2100"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/media.aurumgroup.ua\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2100"},{"taxonomy":"news-category","embeddable":true,"href":"https:\/\/media.aurumgroup.ua\/index.php?rest_route=%2Fwp%2Fv2%2Fnews-category&post=2100"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}