A planned increase in rail freight tariffs in Ukraine has sparked serious concerns among the agricultural and industrial sectors. According to industry organizations, the proposed increase could increase farmers' costs, reduce the competitiveness of Ukrainian exports and lead to a significant shift of freight to road transport.
The Ministry of Economy of Ukraine has proposed that the freight tariffs of the state railway operator “Ukrzaliznytsia“ be increased by 30% from August 1. The measure is aimed at improving the financial condition of the company, which is under serious pressure due to the war, rising costs for security and infrastructure maintenance, as well as ongoing negotiations on debt restructuring.
The Ukrainian Agribusiness Club (UCAB) warns that the increase will increase the logistics costs of farmers by between $5 and $7 per ton of produce. According to their assessment, this will make road transport economically viable for a much wider range of regions, as the competitiveness zone of trucks can be expanded to 300-400 kilometers from Black Sea ports.
The management of “Ukrzaliznytsia“ claims that the effect on business will be more limited. The company estimates that when transporting grain over the entire distance of up to 750 kilometers, the additional cost will be about $3.6 per ton, and for iron ore – about $3.2 per ton.
The dispute over tariffs comes at a time when rail transport remains vital to the Ukrainian economy. Since the start of the war with Russia, the railways have become the main artery for transporting grain, metals, ore and other export goods to ports and European markets. At the same time, Russian attacks on transport infrastructure have significantly increased the operator's costs.
The CEO of “Ukrzaliznytsia“ Oleksandr Pertsovsky recently said that in order to stabilize the company's finances, a tariff increase of at least 45% is actually necessary. According to him, this would cover approximately half of the projected shortfall of funds in the amount of about 26 billion hryvnias.
Not only farmers but also metallurgical enterprises have spoken out against the idea. Industry representatives warn that higher transport costs could lead to the closure of production facilities, a decline in exports and a risk to hundreds of thousands of jobs. According to the Ukrainian Union of Metallurgical Industry, up to 300,000 jobs could be at risk.
The authorities in Kiev define the proposed 30% increase as a compromise option between the needs of the railways and the possibilities of business. The measure is expected to bring in additional revenues of about 8.6 billion hryvnia, but even this will not be enough to fully stabilize the company. Therefore, a new increase in tariffs in 2027 is not ruled out.
The debate over railway tariffs is becoming another clash between the need to maintain critical transport infrastructure and the desire of Ukrainian exporters to maintain their competitiveness in international markets in the face of ongoing war and economic pressure.