The business community has called for a review of the decision to increase rail freight tariffs

The European Business Association (EBA) has written to the Ministry of Development, calling for a review of the proposed 30 per cent increase in rail freight tariffs.

Member companies of the EBA’s Logistics Committee are concerned about the proposed initiative and believe that the economic justification requires further analysis. According to the business community, the potential negative consequences for the economy may outweigh the additional revenue that JSC Ukrainian Railways (UZ) expects to generate from the tariff increase.

In particular, according to an assessment by the state-owned enterprise ‘Ukrpromzovnishchexpertiza’, a sharp increase in the cost of freight transport could lead to a reduction in the freight base, a decline in the competitiveness of Ukrainian manufacturers, a decrease in production and export volumes, as well as a reduction in state budget revenues. At the same time, this could also worsen Ukrzaliznytsia’s own financial performance due to a further reduction in transport volumes.

The business community is convinced that the carrier’s financial stability issues are systemic and cannot be resolved solely by raising freight tariffs. According to estimates by EBA member companies, in 2023–2024 the freight segment generated around 20 billion UAH in operating profit each year, indicating the presence of other factors affecting the company’s financial position.

Among the key issues which, in the business community’s view, require priority attention are the following:

• chronic unprofitability of passenger transport,
• insufficient state funding for the public social obligations mechanism,
• and the maintenance of a significant portion of economically unprofitable railway infrastructure.

These issues require a comprehensive solution, alongside improving UZ’s operational efficiency and optimising its costs.

The EBA calls for a review of the decision to increase fares by 30 per cent in favour of a moderate, economically justified adjustment following open consultations with the business community. In the view of the association’s member companies, this adjustment should be kept to the minimum necessary and amount to approximately 5–10 per cent.

Furthermore, the business community calls for full state funding of passenger transport under the public service obligation (PSO) mechanism, the continued optimisation of Ukrainian Railways’ costs, and the implementation of measures to stimulate rail freight transport in order to support Ukrainian industry and exports.

‘The business community supports the need to ensure the stable operation of Ukrzaliznytsia as a strategic infrastructure company. At the same time, financial stabilisation must be based primarily on systemic reforms and improving the company’s operational efficiency, rather than on a further increase in the tariff burden on shippers, especially in the context of the war, a decline in industrial production and a complex logistical situation,” reads a recent statement by the EBA.

It should be recalled that in early June, Ukrmetallurgprom called for measures to prevent an increase in Ukrainian Railways’ freight tariffs in 2026. This was outlined in a letter addressed to the Prime Minister of Ukraine and the Head of the President’s Office.