photo: Ukrzaliznytsia on Facebook/Illustrative photo
A proposed increase in rail freight tariffs in Ukraine could lead to a significant drop in cargo volumes and wider economic costs, according to industry studies and business groups. The debate comes as Ukrzaliznytsia seeks higher revenues to stabilise its finances during wartime.
Study Shows Tariff Hikes Risk Cutting Freight Volumes
According to UNIAN, Ukrzaliznytsia has conducted an internal analysis on the impact of tariff indexation, which indicates that a 20% increase in freight tariffs could result in a 19% decline in cargo volumes. The findings were pointed out by Anatolii Amelin, a member of the railway company’s supervisory board.
Amelin said Ukrzaliznytsia is under heavy financial pressure, with total debt exceeding USD 1bn, and argued that structural reforms are needed alongside any tariff decisions. "We have a very high debt burden. We need tough debt restructuring, changes in state policy on funding passenger services, and we must accelerate the unbundling process," he said.
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He added that raising freight tariffs without addressing underlying issues risks reducing demand, as higher prices push cargo volumes down almost proportionally. "Until we resolve the issue of real compensation for passenger services and make strategic decisions on inefficient infrastructure and loss-making routes, the company will continue to struggle," Amelin said.
Ukrzaliznytsia has proposed a 40% increase in freight tariffs. The Ministry of Economy has opposed the move, arguing that the tariff framework, unchanged since 2009, needs comprehensive reform rather than across-the-board increases. The ministry warned that higher tariffs could divert freight to roads or force some enterprises to halt operations.
Construction Sector Warns of Higher Rebuilding Costs
Concerns extend beyond the rail sector itself. RBC-Ukraine reports that the planned tariff increase could significantly raise the cost of rebuilding war-damaged cities in northern and eastern Ukraine.
Kostiantyn Salii, head of the Union of Building Materials Producers, said many suppliers are located in frontline regions such as Chernihiv and Sumy, where facilities have been damaged or relocated. As a result, construction materials increasingly need to be transported over long distances. "If tariffs rise, all these costs will inevitably be passed on to the final consumer," Salii said, warning that the government could struggle to accurately budget for reconstruction projects in cities such as Sumy and Okhtyrka.
He also noted a growing shift toward road transport as rail freight becomes less competitive. Salii suggested that local authorities could help support rail infrastructure, while calling for temporary tax relief for Ukrzaliznytsia, including exemptions from land and environmental charges during wartime.
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Employers Warn of Wider Economic and Export Impact
The issue has been under discussion for several months. In October, RBC-Ukraine reported that Ukrzaliznytsia was preparing a two-stage tariff increase — 27% in 2025 and a further 11% from January 2026. The Federation of Transport Employers of Ukraine (FRTU) said the plan had already been approved by the company’s management and supervisory board.
While acknowledging the railway’s financial difficulties, FRTU warned that raising tariffs in the profitable freight segment to cover losses in passenger transport could damage the wider economy. "Increasing tariffs in the profitable freight segment to compensate for passenger losses is a strategically flawed decision," the federation said, arguing that it could reduce production, shift cargo to road transport and weaken Ukraine’s export potential.
According to economists cited by RBC-Ukraine, a tariff increase could cut the freight base by up to 15%, generating only about UAH 12bn in additional revenue for Ukrzaliznytsia while costing the economy UAH 96bn in GDP and UAH 36bn in tax revenues.
Business groups, including the European Business Association, have called on the government to compensate passenger transport losses directly from the state budget, saying the current cross-subsidisation model contradicts European practice and undermines freight competitiveness.