The increase in Ukrainian Railways tariffs will be a “black flag” for iron and steel industry

Indexing rail freight tariffs effectively means the destruction of the metallurgical industry. If this is ignored, there will be nothing to transport in the future. Ukrainian businesses need predictability and transparency of costs, not decisions that destroy industry.

This was stated by Mauro Longobardo, CEO of ArcelorMittal Kryvyi Rih, during his speech at the online discussion “Railway transportation tariffs in 2025-2026: where is the balance between customer opportunities and carrier needs.” GMK Center presents the main points of his speech.

ArcelorMittal Kryvyi Rih is a major customer of JSC Ukrainian Railways (UZ). We transport over 8 million tons of various cargoes per year. This is a huge amount. At the same time, our plant has been operating at a loss for the fourth year in a row.

The main reason is that we are surrounded by natural monopolies that pass their losses on to us, and Ukrainian Railways is one of them. We absorb these costs, but we cannot pass them on to our customers because we produce goods whose prices are regulated by international markets.

As a result of this unfavorable situation, our net losses during the war have exceeded UAH 70 billion, and the plant survives only thanks to the support of the ArcelorMittal group, which has already invested more than $1 billion in our plant. No business can operate at a loss for an indefinite period. Our plant is in a critical situation. If the losses continue, the Group may reconsider its presence in Ukraine.

I understand that Ukrainian Railways is also operating in difficult wartime conditions, and their infrastructure and equipment often suffer from the aggressor. I express my respect for the heroism of the rank-and-file employees of Ukrainian Railways, who are doing their duty in adverse conditions. But the state, as a shareholder of UZ, must find a sustainable solution to ensure the financial viability of its carrier. It is unacceptable to simply pass these costs on to the business by raising tariffs.

Our position is clear. Our shareholder should not finance the losses of a state-owned company. It has already supported Ukraine through our Ukrainian enterprise with $1 billion. The state-owned carrier must be supported by the state.

But there are several areas where Ukrainian Railways can also improve its financial situation.

• First, tariff setting must be predictable and understandable for all market participants.
• Second, more transparency. Financial plans must be public, audits mandatory, and cost and maintenance reforms real.
• The third issue is optimization. There is significant room for improving the efficiency of Ukrainian Railways’ operations, i.e., UZ should not simply opt for tariff indexation after more than 100% growth in 2021-2022, while its costs are growing by 30-40% annually and efficiency continues to decline.

Another significant increase in tariffs will not even be a red flag for our industry—it will be a black one. If the industry is stifled by tariff increases, Ukrainian Railways will have nothing to transport. This is a future that no one wants. Therefore, we need to continue a transparent and professional dialogue between UZ and market participants in order to increase the predictability of its pricing policy and continue to build an effective partnership.