Business сalls for railway tariffs to be based on the shortest routes

22/ 04/ 2025

The European Business Association is urging a revision of Ukrzaliznytsia’s decision to alter tariff distances between transit points towards the seaports “Chornomorsk” and “Odesa Port”, and to base railway tariffs on the shortest available routes. The decision to revise tariff distances to Chornomorsk terminals in January 2025 has already led to a significant increase in transportation costs – reportedly by around USD 2–4.5 per tonne, according to member companies of the Association’s Logistics Committee. The EBA had previously called for this decision to be reversed. Meanwhile, in April, similar changes were introduced for the tariff distance to “Odesa Port”. These new distances do not reflect the shortest transportation routes, leading to higher costs for cargo shippers. The use of longer routes results in unjustified cost increases, puts heavy pressure on exporters, and reduces the competitiveness of Ukrainian goods in international markets. According to the EBA’s experts, Ukrzaliznytsia’s current tariffing approach could negatively impact not only Ukrainian businesses but also the railway company itself in the long term. Rising transportation costs may prompt clients to shift to alternative transport modes, potentially decreasing volumes and revenues. Using the shortest routes also benefits the infrastructure operator. Route optimisation supports a more balanced network load, lowers the risk of congestion on specific sections, and improves the overall efficiency and predictability of the system. As work continues on a new draft law regulating the railway transport market, the business community stresses the importance of including incentives for using the shortest routes. It is also crucial to incorporate mechanisms that prevent inefficient use of infrastructure capacity and allow for the prompt reallocation of unused resources. Ukraine’s EU integration path must also be considered. Within the common European railway area, infrastructure tariffing must be based on principles of transparency, economic justification, and non-discriminatory access, reflecting the actual distance travelled. European experience shows that implementing such approaches boosts the railway system’s efficiency and encourages more active involvement of cargo shippers. In light of the above, the European Business Association considers it necessary to review the current approach to defining tariff distances and calculating freight charges, ensuring they are based on the principle of the shortest route. The business community calls for the cancellation of the revised tariff distances between transit points leading to “Chornomorsk” and “Odesa Port” and for equal transport conditions to be ensured for all ports.

The decision to revise tariff distances to Chornomorsk terminals in January 2025 has already led to a significant increase in transportation costs – reportedly by around USD 2–4.5 per tonne, according to member companies of the Association’s Logistics Committee. The EBA had previously called for this decision to be reversed. Meanwhile, in April, similar changes were introduced for the tariff distance to “Odesa Port”. These new distances do not reflect the shortest transportation routes, leading to higher costs for cargo shippers.

The use of longer routes results in unjustified cost increases, puts heavy pressure on exporters, and reduces the competitiveness of Ukrainian goods in international markets. According to the EBA’s experts, Ukrzaliznytsia’s current tariffing approach could negatively impact not only Ukrainian businesses but also the railway company itself in the long term. Rising transportation costs may prompt clients to shift to alternative transport modes, potentially decreasing volumes and revenues.

Using the shortest routes also benefits the infrastructure operator. Route optimisation supports a more balanced network load, lowers the risk of congestion on specific sections, and improves the overall efficiency and predictability of the system.

As work continues on a new draft law regulating the railway transport market, the business community stresses the importance of including incentives for using the shortest routes. It is also crucial to incorporate mechanisms that prevent inefficient use of infrastructure capacity and allow for the prompt reallocation of unused resources.

Ukraine’s EU integration path must also be considered. Within the common European railway area, infrastructure tariffing must be based on principles of transparency, economic justification, and non-discriminatory access, reflecting the actual distance travelled. European experience shows that implementing such approaches boosts the railway system’s efficiency and encourages more active involvement of cargo shippers.

In light of the above, the European Business Association considers it necessary to review the current approach to defining tariff distances and calculating freight charges, ensuring they are based on the principle of the shortest route. The business community calls for the cancellation of the revised tariff distances between transit points leading to “Chornomorsk” and “Odesa Port” and for equal transport conditions to be ensured for all ports.