Businesses Face New Costs: Ukrzaliznytsia Wants to Raise Freight Rates
23 June 11:48
The Ministry of Community and Territorial Development of Ukraine proposes to increase rail freight rates by 30% effective August 1, 2026. The corresponding draft order has been published for public comment, according to "Komersant Ukrainian"
Separately, the draft provides for the standardization of tariffs for the transportation of empty railcars. For railcars after unloading cargo in the first and second tariff classes, the cost of transportation may increase by approximately 60%.
The Ministry of Development and Ukrzaliznytsia attribute the initiative to the state carrier’s critical financial situation, a decline in freight volumes, rising electricity costs, and a lack of funds for infrastructure repairs.
When Freight Rates May Increase
The draft order provides for a 30% indexation of state-regulated tariffs for freight transportation within Ukraine and related services.
The proposed effective date for the new rates is August 1, 2026.
The indexation is planned to apply equally to the transportation of all types of cargo. The ministry explains that this approach is intended to prevent accusations of discrimination against certain tariff classes.
However, this is currently only a draft regulatory act. The rates will not change until the public consultation is completed and the draft is officially approved.
Transportation of some empty railcars will become 60% more expensive
A separate set of changes concerns empty railcars.
Currently, two different coefficients apply to their transportation:
- 3.205 — for railcars after unloading first- and second-class cargo and unclassified cargo;
- 5.139 — for railcars after third-class cargo, as well as railcars bound for repair, washing, steaming, or disinfection.
The Ministry of Development believes that such transport operations do not differ technically or technologically and entail the same costs.
Therefore, they propose setting a single coefficient of 5.139 for all empty railcars.
As a result, the cost of transporting empty railcars following first- and second-class cargoes and unclassified cargoes will increase by approximately 60%. For railcars following third-class cargoes, current rates will remain unchanged.
There are no plans to apply an additional 30% indexation to the tariffs for empty railcars.
Why Ukrzaliznytsia Is Requesting a Tariff Increase
The main reason cited for the tariff revision is that Ukrzaliznytsia’s revenues no longer cover its current expenses.
The last general increase in freight rates took place in June 2022, when they were raised by 70%.
According to the explanatory note, between July 2022 and April 2026, the industrial producer price index rose to 252.1% of its initial level.
Prices for industrial products, electricity, fuel, materials, and services consumed by the railway rose faster than freight rates.
Electricity prices rose by nearly 50%
One of the biggest factors driving up costs was the rise in electricity prices.
In May–June 2024, the company’s electricity costs rose by nearly 50%. This was due to the destruction of Ukrainian power generation facilities and changes in the electricity market.
The forecasts for 2026 also take into account the new price caps established by a decision of the NEURC.
Since a significant portion of freight is transported using electric traction, the rise in electricity prices directly affects the cost of freight transportation.
Freight traffic declined by 12.5%
The financial situation is further complicated by a decline in freight volumes.
By the end of 2025, Ukrzaliznytsia’s freight volumes had declined by 12.5% compared to 2024.
At the same time, the company’s expenses continued to rise due to the war, infrastructure damage, and rising costs of energy and materials.
Lower freight volumes mean reduced revenue, while a significant portion of the costs for maintaining tracks, stations, locomotives, and personnel remains constant.
Ukrzaliznytsia’s losses reached billions
At the end of 2025, JSC Ukrzaliznytsia’s net loss amounted to 7.6 billion hryvnias.
In the first four months of 2026, the company incurred an additional 9.3 billion hryvnia in losses.
If the situation does not change, the following is projected for 2026:
- a net loss of over 13 billion hryvnias;
- a cash shortfall of over 26 billion hryvnia;
- a revenue shortfall of 14.1 billion hryvnia to cover current expenses.
The company warns that the liquidity shortfall threatens its ability to meet operational obligations, repair its rolling stock, and service its loans.
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How Much Money Could Indexation Bring In
According to the project developers’ calculations, indexing fares and standardizing the cost of transporting empty railcars will help partially reduce the financial deficit.
The expected additional financial benefit for Ukrzaliznytsia in 2026 is estimated at approximately 8.6 billion hryvnia.
However, even after that, the company will remain unprofitable, and it will not be possible to completely eliminate the deficit.
On an annualized basis, the tariff increase in 2026 will amount to about 13.9%, as the new coefficients are proposed to be introduced only starting in August.
How the Additional Revenue Will Be Allocated
The explanatory note states that the additional funds are planned to be allocated to ongoing operations and the maintenance of railway infrastructure.
Key needs include:
- purchasing electricity and fuel;
- repair of locomotives and railcars;
- maintenance of tracks and other facilities;
- loan servicing;
- ensuring the operation of repair facilities;
- payment of wages;
- carrying out military and humanitarian transport operations.
The ministry does not expect that indexation will increase income tax or VAT revenues to the state budget in 2026. The additional revenue is expected to be used primarily to cover the company’s expenses.
What cost-saving measures has Ukrzaliznytsia already implemented?
Ukrzaliznytsia states that it has already used a significant portion of its internal reserves.
In 2025, optimization measures resulted in savings of 7.5 billion UAH, compared to the planned 6 billion UAH.
The company cut costs, shut down certain production units, closed railcar repair depots, reduced capital investments, and worked to divest non-core assets.
Additional measures are planned for 2026, with an expected impact of approximately 10.2 billion UAH.
However, the company believes that even these savings will not be enough to stabilize its financial situation without a revision of fares.
The government allocates funds for passenger transportation
In 2025, Ukrzaliznytsia received 11.2 billion UAH from the state budget’s reserve fund to maintain liquidity.
In 2026, a pilot mechanism for government procurement of domestic passenger transportation was introduced.
The total amount of funding is expected to be 16 billion hryvnias, of which 8 billion hryvnias were provided in March.
These funds are intended to cover the difference between the economically justified cost of passenger transportation and the regulated passenger fares.
However, the Ministry of Development emphasizes that state support for the passenger segment does not solve the problem of unprofitability in freight transportation.
What Will Happen to Fares in 2027
The documents state that decisions regarding a possible next phase of indexation starting January 1, 2027, must be made separately.
In other words, the current draft directly provides only for:
- a 30% increase in freight rates effective August 1, 2026;
- the standardization of tariffs for the transportation of empty railcars.
This draft does not provide for an automatic second increase starting in early 2027.
Businesses may submit their comments
The draft order is currently undergoing public consultation.
Comments and suggestions from citizens, businesses, organizations, and their associations will be accepted for one month from the date the document is published.
They may be sent by mail to the Ministry of Development at:
14 Beresteisky Avenue, Kyiv, 01135.
Suggestions may also be submitted via email to:
After the consultation period ends, the project may be amended, approved, or postponed.
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