It has been a long back-and-forth discussion between Ukrainian Railways (UZ) and the business community: the price of rail freight services. UZ wants to raise its tariffs, whereas businesses want to keep them low. It now seems that a cautious consensus is shaping up for a new pricing model, but rail customers still face the possibility of significantly higher tariffs.
A possible increase in rail freight tariffs charged by UZ has been of great concern to many businesses in Ukraine. The important agricultural sector heavily relies on rail freight services for its transportation needs, for example. It has been particularly alarmist on the topic of growing rail tariffs. Associations have warned of bankruptcies if UZ went ahead with a planned 37% increase in freight tariffs.
The steel industry has also spoken out against UZ’s plans, warning of a modal shift to the road. Even the European Business Association stepped into the discussion – imploring UZ not to raise their freight charges and pointing to passenger services as the real financial “drain”. By contrast, UZ insists that a tariff increase is necessary. It refers to higher prices for electricity, diesel, spare parts and more.
The long and heated public discussion may now end in a new consensus. “We understand that the tariff increase is inevitable, it will happen”, said Deputy Chairman of the All-Ukrainian Agrarian Council Mykhailo Sokolov recently. Rather than slapping an additional 37% on existing rates, UZ is floating another model that is being met with cautious optimism by the agricultural sector.
To illustrate: for agricultural businesses in Ukraine, the cost of transporting grain over an average distance of 700 kilometres was around 17 US dollars, according to Deputy Director of the Department of Transportation Technology and Commercial Work of Ukrainian Railways, Valeriy Tkachev.
The transportation tariff for 700 kilometres is around 12 US dollars, whereas station services cost up to two US dollars. Wagon rental has fluctuated between 1 and 94 US dollars, with peaks during the harvesting season. The average rate throughout the year then comes down to the equivalent of 17 US dollars.
Cautiously positive
“We are open to dialogue on the model”, commented UZ CEO Oleksandr Pertsovsky during the ‘Doing Agribusiness in Ukraine 2025’ event according to publication Latifundist. “But strategically we seek to move to unified tariffs that depend exclusively on transportation technology, not on the class of cargo, to introduce a transparent formulaic mechanism of annual indexation to ensure predictability for the market.” In other words, UZ no longer wants to differentiate between freight types and charge a single tariff across the board.
“The agricultural community understands that the tariff revision is expected, but the market needs clear rules of the game”, reacts Oleg Khomenko, general director of the Ukrainian Club of Agricultural Business. “It is necessary to transform the tariff formation system into a transparent and productive model, where the cost of services will be based on real cost, and disparities between industries and cross-subsidisation will be eliminated.”
Cross-subsidisation here refers to UZ’s practice of transporting some freight below the cost price. According to Mykhailo Sokolov, the company moves construction materials while making a loss on it, which is then compensated for by profits in other areas, such as agricultural transports. A unified tariff for all freight types would eliminate that disparity.
A careful positive change of tone among the agriculture representatives could signal that there could be a breakthrough in the near future. Deputy Minister of Economy, Environment and Agriculture Taras Vysotsky has also expressed his support for the unified tariff system: “It seems to us that an approach to, albeit gradual, convergence of tariffs and indexation according to the cost structure, rather than proportionally, is a logically correct long-term solution.”
Nevertheless, prices will go up
That is all when it comes to the pricing model – generally met with positivity, at least by UZ, agriculture and the government. However, Reuters reports that UZ is planning to increase the overall freight rate by 27% starting 1 January. It seems that this is not yet set in stone, but a significant increase seems inevitable as the operator’s budget gap would grow to some 728 million US dollars without pricing changes.