“Ukrzaliznytsia” has taken the right position on the forwarders' demands to terminate contracts for the supply of grain trucks, stating that contracts can not be terminated. UAC Deputy Chairman Mykhailo Sokolov emphasized this commenting on the situation.

Currently, a dispute has arisen between “Ukrzaliznytsia” and freight forwarding companies engaged in grain transportation over the cost of services. In summer, after signing contracts for the use of grain trucks with “Ukrzaliznytsia”, freight forwarders received a wholesale discount of almost twice in exchange for a guaranteed orders volume. At a retail price of UAH 1,136 per day, the wholesale price was UAH 584-682 in the case of signing a contract for 9-12 months. However, due to the lower expected oilseeds crop, grain prices have fallen. Now, freight forwarders demand to terminate contracts and not to apply penalties to them. They argue that they incur losses because they are forced to supply grain trucks at a lower price than the purchase one.

"Any long-term contract is a mutual risk. Freight forwarders received a significant discount from “Ukrzaliznytsia” because they took lower prices risk. This risk has been realized in the current season and freight forwarders experience the damage. In addition, it could not be realized and they would earn well. This is similar to the situation with forward contracts for the supply of agricultural products, under which farmers are obliged to supply products at a pre-fixed price. Now the current prices are much higher than those for which forward contracts were concluded at the beginning of the season. However, a contract is a contract, so farmers have to fulfill it in spite of the harm. Thus in previous years there were situations when, on the contrary, buyers paid under forward contracts above the current market price”, - Mykhailo Sokolov noted.

Mykhailo Sokolov mentioned that “Ukrzaliznytsia” really can not do otherwise: if the company decided to artificially maintain the high cost of renting trucks (based on its dominant position in the market) it would be an abuse of monopoly. And the Antimonopoly Committee should intervene in the situation. If “Ukrzaliznytsia” management goes to the voluntary termination of contracts, it is a deliberate damage to the state enterprise, and criminal liability is provided for it.

"To clarify this issue, let's imagine that “Ukrzaliznytsia” is no longer a monopolist and that freight forwarders have entered similar agreements with private carriers. However, due to the crop failure, the volume of traffic fell and their market value fell too. Will the fact that freight forwarders incur losses in such circumstances be a ground for contracts termination between carriers and freight forwarders? Of course no! This is their commercial relationship. Then why is there a question about a state company?” UAC Deputy Chairman said.

Mykhailo Sokolov also stressed that freight forwarders should better plan their market strategy. In particular, to set aside reserves under the commercial risk of falling trucks rental costs.

"Also, you could insure your commercial risks against falling trucks rental prices. However, apparently no one did it. At the same time, any attempts to keep trucks prices at high level are contrary to the interests of farmers,” UAC Deputy Chairman summed up.

Press service of UAC