Ukrainian Railways tariff increase without compensatory measures may have a negative effect – ULIE

The issue of railroad transportation efficiency remains critically important for the Ukrainian economy amid the war and significant losses in the transportation infrastructure. This was discussed during an expert discussion organized by the Ukrainian League of Industrialists and Entrepreneurs (ULIE).

The meeting, attended by representatives of the government, Ukrainian Railways (UZ), domestic steel, agricultural, and machine-building associations, experts, and analysts, discussed the state of the freight transportation market and the consequences of the planned tariff increase for industry and the economy as a whole.

“Increasing tariffs without compensatory measures can have a negative effect. It is important not only to justify the changes economically, but also to adapt freight transportation standards to international requirements in connection with European integration processes. Another key issue is the search for financial resources, including public-private partnerships and foreign investment. Therefore, there is a need for clear strategies and programs to modernize UZ,” said Anatoliy Kinakh, President of the Ukrainian Chamber of Commerce and Industry.

According to Oleksandr Polupan, Deputy Chairman of the Association of Ukrainian Rail Shippers, the increase in UZ tariffs is one of the reasons for the growth of industrial production costs and prices for such products. For example, in 2022 they increased by 47%, in 2024 – by 18%. The next tariff increase will lead to a reduction in rail freight transportation and a shift to road transport, which will put additional pressure on the roads.

Volodymyr Vlasiuk, director of Ukrpromvneshexpertiza, believes that business in Ukraine will lose UAH 10 billion from the increase in UZ tariffs. A compromise option should include a solution to the problem of cross-subsidizing passenger transportation, exempting the railroad from paying excise taxes and partially paying land fees.

During the meeting, the Roadmap for Reforming the Ukrainian Railways Industry, prepared by the Association of Ukrainian Railways Carriers, was also presented. It envisages successive stages of reform implementation, including organizational measures, development and preparation of the legislative framework, creation of state regulatory bodies to implement state policy in this area, decentralization and demonopolization of the railway industry.

Serhiy Nenko, President of the Association, emphasized that the strategic task for the success of the reform is to attract foreign investment. To this end, the organization, with the assistance of the ULIE, is creating legal structures in the United States that will have contacts with American institutions and agencies. On May 1, the UZ reform concept will be presented in Washington, D.C., and a similar event is planned for London in June. The goal is to launch specific mechanisms for investment and modernization.

The meeting also discussed the launch of the National Transport Regulatory Commission, which is envisaged by draft law No. 12142, the possibility of competition from private carriers, etc.

The participants of the meeting agreed that there should be a comprehensive approach to reforming UZ, a search for compromise solutions between raising tariffs and improving the quality of cargo transportation, and a targeted approach to exporting industries. Ukrainian Railways and the government need to communicate better with business and experts, including transparency and publicity of the financial plan of UZ.

As GMK Center reported earlier, export rail transportation may decline in 2025 if freight tariffs are increased, as Ukrainian Railways wants to index them by 37%. Such a decision will result in an additional UAH 8-10 billion increase in logistics costs for mining and metals companies alone. Last year, iron and steelcargo accounted for more than 45% of export rail transportation.