Today, Ukrzaliznytsia is in a critical situation: war, a drop in transportation volumes, damaged infrastructure, and a loss-making passenger sector are creating significant financial pressure. However, the proposed solution to the problem - another increase in freight tariffs - is erroneous, and this mistake could be fatal.
The company's management identifies tariff indexation as almost the only salvation, while the relevant ministry is promoting the idea of "equalizing rates" for deep-sea seaports, which in fact means a further increase in transportation costs. This approach legitimizes a discriminatory policy against the country's key exporters.
Moreover, the problem lies not only in the level of tariffs, which are not market-based, but also in the method of their establishment. The lack of a financial plan, transparent reporting and independent audit of Ukrzaliznytsia leads to the fact that decisions are made manually, without dialogue with business. The profitable cargo segment is used to cover losses in passenger transportation, which actually shifts UZ's problems onto the shoulders of customers. This contradicts the declared state policy of supporting exports and creates strategic risks for the entire economy.
The price of the issue
This is a critical issue for our company. Every month we transport about 500 thousand tons of cargo, more than 90% of which is transported by rail. Any increase in tariffs is instantly reflected in the cost of products and its competitiveness on world markets.
Changing routes to the ports of Odessa and Chornomorsk has already cost us more than UAH 150 million in additional costs over five months. The announced indexation by 37% will mean annual losses of billions of hryvnias for the company. For a company that has been operating at a loss for the third year due to the war, falling world prices, and a high tax burden, this is a disaster.
But the consequences go far beyond the boundaries of one company. The continued operation of large manufacturers, the stability of foreign exchange earnings, tens of thousands of jobs, and investor confidence are at stake. For comparison: in Europe, rail transportation tariffs are no higher than the current Ukrainian ones, but the level of service and efficiency there is much better. Ukrainian business is effectively deprived of the opportunity to compete in foreign markets.
The system needs changes
First of all, tariff formation must be transparent, predictable, and understandable to all market participants. Long-term "rules of the game" must apply. It is necessary to practice multi-year agreements with fixed rates that are not revised manually. Solutions must be developed in joint working groups. This guarantees predictability and consistency of actions, will ensure stability and the ability to plan for business.
The second issue is transparency and auditing of the railway. Financial plans should be public, audits should be mandatory, and reforms of costs and the repair base should be real, not declarative. Instead, the company chooses tariff indexation (after an increase of more than 100% in 2021-2022), while UZ's costs increase by 30-40% every year, and efficiency falls.
Third - network optimization. The freight segment remains profitable (over 20 billion UAH annually in 2023-2024), but 63% of the tracks are unprofitable and generate more than 16 billion UAH of losses per year. Why are external sources of financing not being attracted? Modernization should be financed not only through tariffs, but also through international loans, grants, subsidies and partnership programs, as the entire civilized world does.
Today, a dangerous trend is already observed: h The bulk of cargo is being transferred to motor transport, which is cheaper and more efficient. This not only contradicts the state policy of recent years aimed at unloading roads and developing a civilized transport system, but also indicates the erroneous tariff strategy of "Ukrzaliznytsia".
Simply increasing tariffs is a way to nowhere. A business that continues to operate in conditions of war cannot be a donor to cover the structural inefficiency of the state carrier. If the approaches to tariff formation are not changed, Ukraine risks losing not only income and investor confidence, but also strategic industrial sectors, in particular, metallurgy.