The military activities in the Donbass industrial region have virtually blocked the operations of the country's largest industrial complexes. The Ministry of Infrastructure has even introduced regular coastal shipping service between the ports of Mariupol and the other part of mainland Ukraine to facilitate delivery of the products necessary for production and thus prevent emergency shutdowns of plants in the region. The Donetsk Railway is currently unable to dispatch freight cars from more than 50 major freight stations because of destruction of infrastructure (bridges, overpasses, tracks, catenary networks, and others). Enterprises such as Rovenkiantratsit, the Komsomolets Donbasa coal mine, Sverdlovantratsit, Krasnodonugol, the Kolosnykivska central processing plant, the Alchevsk iron and steel works, the Nagolchanskaya central processing plant, the Luganskugol coal mine, and the Chervona Zirka central processing plant are located at these stations.
According to the latest data, the average number of railcars loaded per day fell by 59 percent (from 5,767 to 2,378 railcars) in the first 11 days of August, including 13 percent on the Pridneprovskaya Railway. Assuming that the revenues of railways (railway tariff, the fee for use of railcars, and other services) fell proportionally to the fall in the number of railcars loaded, the monthly losses of Ukrzaliznytsia are estimated at more than UAH 600 million.
The losses of shippers are even greater. Based on the geographical locations of the destroyed infrastructure, the worst affected are enterprises of DTEK, Metinvest, and ISD, where the fall in loading volume in August constituted 50-80 percent of the cargo traffic. For a number of enterprises, particularly Rovenkiantratsit and the Komsomolets Donbasa coal mine, loading of railcars did not take place at all in the period from August 1 to 11 while it reduced by more than 90 percent at Sverdlovantratsit and the Alchevsk iron and steel works.
Losses in terms of goods...
The biggest reduction was in the loading of coal because many mines have stopped operation because of the fighting in the region. Commenting on the situation involving rail links in the region, the head of the anti-crisis headquarters of DTEK, Dmytro Sakharuk, said that the Komsomolets Donbasa coal mine was currently idling "because we are unable to take out coal." "Trolleys and power lines for locomotives have been destroyed. Tracks and infrastructure at key stations have been destroyed. There are no personnel because of fighting. It still needs to be understood that there are now many armed groups that are not controlled centrally. It is very difficult to predict the situation. Even if one organ of the Donetsk People’s Republic permits a train to pass, there is no guarantee that another group will not stop it," said Sakharuk.
The worst affected are enterprises of DTEK, Metinvest, and ISD, where the fall in cargo loading volume in August constituted 50-80 percent of the cargo traffic
The loading of railcars at steel plants has reduced by a smaller margin, but some plants have also stopped operation. A few days ago, the press service of Metinvest reported that shelling had damaged the main production shops of the Yenakievo iron and steel works during fighting in the city of Yenakievo. "In order to prevent a man-made catastrophe and preserve the lives of city residents, a decision was made to temporarily stop the operation of the Yenakievo iron and steel works’ main production facility," the press service said.
...and in terms of money
The revenue of the Donetsk Railway has reduced significantly because of the reduction in the number of railcars loaded. "The third quarter is one of the key for the railway in terms of revenue generation,” said Dmytro Yahello, an analyst with the CFTS. The revenues of the Donetsk Railway amounted to UAH 2.2 billion in the third quarter of 2013. During this period, 37.4 million tons of cargo was loaded into railcars, and the average daily loading volume was 373,700 tons. In June 2014, the average daily volume of cargo loaded onto railcars on the Donetsk Railway was 372,000 tons of various types of cargoes per day. In July, this figure fell to 315,000 tons (a 16 percent reduction compared with the daily average for the third quarter of 2013). In August, the average daily volume of cargo loaded into freight cars further reduced by half to only 153,000 tons (a 59 percent reduction compared with the third quarter of 2013).
"If the average daily loading remains at the previous levels, the loading on the Donetsk Railway in the third quarter of 2014, taking account of the breakdown by month, could reduce by 44 percent. In turn, such a reduction in loading will reduce the revenue of the Donetsk Railway to UAH 968 million in the third quarter of 2014," said Yahello.
