The Antimonopoly Committee of Ukraine has determined that the Ukrainian Railway joint-stock company’s railcar lease rates are market-based and that anticompetitive actions were not involved in the determination of the lease rates. At the same time, according to the Antimonopoly Committee, private locomotive operators’ lack of access to public railways hampers the development of competition on the market of freight transportation.

This was reported by the Interfax Ukraine news agency, which cited a report by the Antimonopoly Committee of Ukraine dated December 5.

According to the report, the same formula is used to calculate payment for use of Ukrzaliznytsia’s wagons for all business entities, and the cost of leasing Ukrzaliznytsia’s wagons is comparable to the cost of leasing similar wagons from private operators.

The Antimonopoly Committee also confirmed that Ukrzaliznytsia is a natural monopoly on the wagon lease market and that the company has almost a 100% share of the market for lease of locomotives on public railways (due to the lack of the necessary regulatory framework). However, according to the Antimonopoly Committee, there is competition between Ukrzaliznytsia and private operators on the market of rail freight services, but further development of this competition is hampered by the inability of private locomotive operators to access public railways.

The Antimonopoly Committee’s report provides the average lease rates for freight wagons (including VAT) from the Ukrainian Logistic Alliance association. The lease rates are based on a survey of 70% of operators of private rolling stock.

As of 1 September 2018, private operators’ average wagon lease rate was UAH 753.6 while Ukrzaliznytsia’s lease rate was UAH 817.2; the gondola lease rates were UAH 1,102.8 from private operators and UAH 720 from Ukrzaliznytsia; the lease rates for grain carriers were UAH 991.2 from private operators and UAH 855.6 from Ukrzaliznytsia; the lease rates for pellet carriers were UAH 883.2 from private operators and UAH 907.2 from Ukrzaliznytsia; the lease rates for container flatcars were UAH 399.6 from private operators and UAH 547.2 from Ukrzaliznytsia; the lease rates for tank cars were UAH 300 from private operators and UAH 684 from Ukrzaliznytsia.

According to the Antimonopoly Committee, the total number of freight wagons on the Ukrainian market was 181,000 as of 1 September 2018, of which 105,300 (58%) belonged to Ukrzaliznytsia and 75,700 to private operators. At the same time, the number of railcars in operation was only 132,500, of which 68,500 (52%) belonged to Ukrzaliznytsia and 64,000 to private operators.

For example, Ukrzaliznytsia has a fleet of 50,000 gondola cars, of which 33,500 are operational.

According to the Antimonopoly Committee, Ukrzaliznytsia has the following shares of the wagon lease market (relative to the operational fleet): a 43% share of the of the gondola car market, 56% of the grain carrier market, 78% of the boxcar market, 64% of the cement carrier market, 21% of the tank car market, and 54% of the pellet carrier market.

"Development of competition on the rail freight transport market is hampered by the inability of private locomotive operators to access public railways as a result of the lack of a proper regulatory framework," the Antimonopoly Committee said in the report.

To resolve the current situation, the committee made the following proposals: grant private locomotive operators access to public railways (requires development of the relevant regulatory framework) and adopt a new version of the Ukrainian Law on Rail Transport and create an independent transport regulator.