Ukrmetallurgprom has called for preventing an increase in Ukrainian Railways’ freight rates

The Ukrmetallurgprom Association is calling for action to prevent an increase in Ukrainian Railways’ (UZ) freight rates in 2026. This is stated in a letter addressed to the Prime Minister of Ukraine and the Head of the Office of the President, according to UNIAN.

As noted, a 37% increase in freight rates could lead to a reduction in Ukraine’s GDP by nearly UAH 100 billion, a loss of approximately $2.4 billion in foreign exchange earnings, a decrease in budget revenues by more than UAH 36 billion, and the elimination of at least 76,000 jobs. At the same time, according to the business community, UZ is considering a 45% rate hike, a move that could exacerbate the negative economic impact.

The domestic iron and steel sector, the statement notes, despite the losses caused by the war, remains one of the key sectors of the economy, accounting for about 5.5% of Ukraine’s GDP, $6 billion in foreign exchange earnings, and over 150 billion UAH in tax revenues.

However, the sector is in a difficult financial situation. Last year, companies incurred a combined net loss of 28 billion UAH.

“Part of the production capacity has already been shut down, while the rest is operating at less than full capacity. A further increase in transportation costs could lead to the permanent shutdown of a number of production facilities,” the industry association emphasizes.

Ukrmetallurgprom noted that the problem with Ukrainian Railways lies not in the freight segment, which remains profitable, but in the chronic unprofitability of passenger transport.

In addition, the cost of rail transport in Ukraine already exceeds comparable figures in some EU countries. In particular, the cost of transporting steel products by rail, including the cost of railcars, is already higher than by road. This encourages the shift of cargo to roads and places an additional burden on road infrastructure.

Ukrainian Railways itself will also feel the negative consequences of the tariff increase. Ukrmetallurgprom believes that this pushes the company into a so-called tariff spiral, where each new price hike leads to a reduction in the freight base and necessitates a subsequent increase in tariffs.

The association of enterprises has called on the government to impose a moratorium on freight rate increases until the end of martial law, to provide compensation for passenger transport losses from the state budget, to attract international financing for the restoration of railway infrastructure, and to create conditions for the resumption of operations at industrial enterprises that form the core of UZ’s freight base.

It should be noted that iron and steel cargo (iron ore, ferrous metals, coal, coke, and limestone for fluxing) accounts for an average of 47% of Ukrainian Railways’ total freight volume. The sector’s total freight volume in 2025 decreased by 53% compared to 2021, down to 76.8 million tons.