Ukrainian Steel and Mining Association Urges Government to Reject 37% Rail Tariff Hike

Appeal from Ukrmetalurgprom to the Government

According to Главком: The Ukrmetalurgprom (UMP) industry association has formally requested that Prime Minister Yulia Svyrydenko and Presidential Office Head Kyrylo Budanov prevent a proposed increase in freight rail tariffs for 2026. UMP warns that a tariff rise of either 37% or 45% could trigger severe economic repercussions across Ukraine, including a contraction of gross domestic product (GDP) and significant job losses.

According to UMP data, a 37% hike in freight tariffs could reduce Ukraine's GDP by nearly 100 billion hryvnias and cut foreign currency earnings by approximately $2.4 billion. Budget revenues might fall by more than 36 billion hryvnias, while at least 76,000 jobs could be eliminated. Ukrainian Railways (Ukrzaliznytsia) is also considering a 45% increase, which amplifies industry concerns. The mining and metals sector, which contributes roughly 5.5% of Ukraine's GDP, could suffer heavy losses-especially after posting a combined net loss of 28 billion hryvnias in 2025.

Consequences of Tariff Increases

UMP notes that previous freight tariff hikes in 2021–2022 drove rates for certain cargo categories up by as much as 210%. This has pushed companies into a so-called tariff spiral, where each new price increase shrinks the freight base and forces further rate adjustments.

“The industry is in a difficult financial position. Some production facilities have already shut down, while others operate below capacity. An additional rise in transport costs could lead to the permanent closure of several plants.” - UMP

Ukrzaliznytsia's passenger segment deficit is projected to exceed 25 billion hryvnias in 2026. Meanwhile, the cost of shipping metal products by rail-including wagon fees-is already higher than road transport. UMP urges the government to:

• impose a moratorium on freight tariff increases until martial law ends;
• cover passenger transport losses through state budget subsidies;
• secure international funding to rebuild railway infrastructure;
• create conditions to restart industrial enterprises that form the core of Ukrzaliznytsia's freight base.

The potential fallout from higher tariffs includes plant closures, reduced exports, lower foreign exchange inflows, a shrinking tax base, accelerated deindustrialization, and added pressure on the hryvnia exchange rate.

“Raising tariffs traps the company in a spiral where each new increase reduces the cargo base and demands yet another hike. In the end, fewer shipments move, and financial troubles only deepen.” - Ukrmetalurgprom

The debate over freight rail tariff increases carries serious economic implications for Ukraine, particularly for the mining and metals sector-a cornerstone of the national economy. UMP's call for a moratorium highlights the urgent need to balance railway funding requirements with overall economic stability. Under martial law, policymakers must carefully weigh how such decisions might affect industrial recovery and the broader financial health of the country.

In light of the potential economic fallout from the proposed tariff increases, it's crucial to consider the broader implications for various sectors. Recently, a coalition of business organizations has also called on the government to halt Ukrzaliznytsia's tariff hikes for 2026, highlighting the urgent need for a unified response to safeguard the economy and employment levels across the country.