According to the association’s open letter to the company’s management, the declaration of this open information “would allow market participants to correctly assess the current level of railroad loading” and “develop a strategy to stimulate demand for rail transportation.”
The Agrocereale administration notes that annually Moldova produces on average about 4 million tons of cereals and oilseeds, of which about 20% remain on the domestic market, while about 3.2 million tons are sent to foreign markets. Of the total volume of these agricultural products exported by the country, about 40% (about 1.28 million tons) is transported by road, and only 14% (about 450 thousand tons) – by rail. All cargo volumes that are not transported by rail are delivered to customers by road, which is currently the main market competitor to railroads. Moreover, trucking volumes are increasing year after year, and it is these growing flows that represent a potential untapped market for railroads. This is the segment for which Railways of Moldova should objectively compete today.
The increase of tariffs for railroad transportation of grain during the most active period hardly contributes to this. Agrocereale Association understands that the fall tariff increase by 7% compared to the level of 2023 is largely due to inflationary processes, rising costs of fuel, personnel and infrastructure maintenance. We also recognize that the Railroad is a business entity that needs to operate in a stable and profitable manner. However, under current market conditions, the proposed tariffs, unfortunately, look uncompetitive and carry the risk of the opposite effect – redistribution of agricultural products from railroads to road transport.
In this regard, it becomes obvious that the strategic focus should be not only on compensating costs by increasing tariffs, but also on actively attracting new transportation volumes. The members of the Agrocereale Association are sympathetic to the statement of the representatives of the “Railway of Moldova” enterprise that freight transportation by wagons is carried out at or below the cost price. However, economic logic suggests: the greater the volume of transportation – the lower the unit cost and the higher the financial result.
“In this regard, it may be advisable, first of all, to develop a strategy to stimulate demand for railroad transportation, namely, to form conditions under which it will be profitable and predictable for agrarians to return growing volumes to the railroad”, believe in the administration of Agrocereale. The association’s specialists offer advisory support in analyzing the market and calculating objective and competitive tariffs.
