Steelmakers call for refraining from raising railroad tariffs in 2025-2026

Ukrainian Railways JSC (UZ) is once again planning to increase freight tariffs, which will deal a blow to industry and the economy. This warning comes from the Ukrmetprom association of enterprises.

According to Ukrmetprom, based on media reports, Ukrainian Railways plans to raise freight tariffs again – by 27% this year and another 11% in 2026.

The association reminds that iron and steel products are traditionally key items of Ukrainian exports. That is why it is important to preserve the export potential of the industrial sector, jobs, and the economic stability of the state.

Currently, steel and iron ore enterprises located in the territory controlled by Ukraine are operating at only 40-85% of their pre-war capacity. Ukrainian iron and steel products are losing their competitiveness due to the combined pressure of high logistics costs, the energy crisis, staff shortages, and rising tariffs of state monopolies, primarily in the field of rail transport.

Further tariff increases will lead to a decline in iron and steel production, the shutdown of budget-generating enterprises, exports, foreign exchange earnings, and tax payments to the budget. The cost of rail transport (tariff + wagon) for third-class cargo (steel) is already higher than road transport, and the next increase will accelerate the shift of cargo to road transport, leading to further destruction of roads.

Ukrmetprom hopes that the Ministry of Community and Territorial Development will not allow this decision to be adopted. They are calling on the government and the relevant ministry to refrain from increasing freight rail tariffs in 2025-2026.

Instead, they propose the following steps:

• to provide for targeted expenditures in the 2026 state budget to compensate for passenger transport losses and to stop cross-subsidization at the expense of freight transport (EU practice) in the amount of about UAH 25 billion;
• assist UZ in obtaining the necessary regulatory decisions from the government and parliament that will reduce its financial burden and expand its revenue base;
• assist UZ in bringing its network into line with current transport volumes and the needs of the Ukrainian Armed Forces, determine the necessary amount of funding for this, and provide for the necessary funding in the state budget in 2027 and subsequent years.

“The initiative to raise tariffs is not a solution to the problems, but another harmful temporary solution that postpones the resolution of Ukrainian Railways’ systemic problems, reduces the competitiveness of Ukrainian industry, and decreases state revenues,” Ukrmetprom concludes.

It should be noted that the cost of rail transportation of iron ore across Ukraine is higher than on similar routes in European Union countries. This was stated by the president of Ukrmetprom, Oleksandr Kalenkov, during a discussion organized by the Center for Transportation Strategies.