Ukrainian Associations Appeal to the Government
A coalition of Ukrainian industrial, transport, and sectoral associations has sent a formal appeal to Prime Minister Yuliia Svyrydenko and Head of the Presidential Office Kyrylo Budanov, urging them to prevent an unjustified increase in freight tariffs by Ukrainian Railways (Ukrzaliznytsia) in 2026. A draft order from the Ministry of Development proposes indexing these tariffs by 30% starting in August 2026. In response, the business community recommends capping any adjustment at 9.5%, aligning with the projected depreciation of the hryvnia against the U.S. dollar for that year.
Support for this appeal comes from several key organizations, including:
- The Federation of Transport Employers
- The Association of Ferroalloy Producers
- The National Association of the Extractive Industry
- The All-Ukrainian Union of Building Materials Producers
- The Union of Chemists
These groups highlight that in the metallurgy sector, enterprises in government-controlled areas are operating at only 40–85% of their pre-war capacity, while logistics costs account for roughly 40% of production expenses in the extractive industry.
Economic Implications of Tariff Increases
It is worth noting that Ukrainian Railways has already raised freight tariffs in 2021–2022: by 2.4 times for first-class goods, 1.9 times for second-class goods, and 1.7 times for third-class goods. The passenger segment deficit for Ukrainian Railways in 2026 could reach approximately UAH 25 billion, or UAH 38 billion when including investment needs. Meanwhile, the freight segment generated between UAH 13 billion and UAH 20 billion in annual operating profit from 2021 to 2024.
According to calculations by the state enterprise Ukrpromzovnishexpertyza, a 37% tariff indexation could lead to an annual loss of UAH 96 billion in GDP, accompanied by a reduction in Ukrainian Railways' freight base by 27 million tons. Export revenue losses might reach $2.4 billion, with budget revenue shortfalls totaling UAH 36 billion. In this context, agricultural associations have also called on the government to refrain from raising tariffs.
Industrial leaders have put forward several proposals to improve the situation, including:
- Transitioning passenger transport funding to the European PSO (Public Service Obligation) model
- Providing additional budget financing for the passenger segment
- Establishing an interagency task force to restore the locomotive fleet
- Optimizing Ukrainian Railways' operational costs
- Reducing excess infrastructure
- Raising labor productivity to 2021 levels
The associations also propose creating a working group under the Cabinet of Ministers, involving businesses, ministries, and Ukrainian Railways, to develop a sustainable rail transport model. Additional recommendations include establishing an independent transport regulator and structurally separating Ukrainian Railways by business lines.
A sharp increase in freight tariffs could significantly impact Ukraine's economy, particularly its industrial and export sectors, especially given existing financial constraints. Industrial associations emphasize that their sectors have yet to recover to pre-war production volumes, making higher logistics costs an additional burden. Proposals to optimize Ukrainian Railways' operations and adopt European funding models could serve as crucial steps toward ensuring the sustainable development of Ukraine's transport infrastructure.