The EBA Logistics Committee discusses tariff increases with Ukrzaliznytsia leadership

17/ 12/ 2024

On December 16, the European Business Association held a meeting with Oleksandr Pertsovskyi, Chairman of the Board, and Viacheslav Yeromin, Member of the Board of Ukrzaliznytsia, to discuss the carriers new tariff initiatives. Earlier, on December 5, Ukrzaliznytsias Supervisory Board approved a 37% indexation of freight tariffs. During the meeting with the EBAs member companies, the Ukrzaliznytsia team presented the proposed changes, calculations, and potential compensatory measures and operational improvements for shippers in light of the tariff increase. According to Ukrzaliznytsia representatives, the indexation of rail freight tariffs has lagged significantly behind the growth in the company’s cost base. Until now, instead of regular annual adjustments, tariff changes have occurred sporadically. Even the latest indexation does not fully offset the rise in the producer price index. The indexation is also driven by forecasted freight dynamics for 2025. Ukrzaliznytsia expects a potential decline in revenue next year due to reduced freight volumes—particularly for coal and grain—the current energy sector situation, declining income from wagon rentals, and other factors. To mitigate the negative impact on the operational activities of companies, Ukrzaliznytsia proposed the following compensatory measures for tariff increases: Route-based shipments (ore, coal, partially grain); Targeted sectoral discounts (all cargo types); Long-term contracts (grain, ore, coal, fuel, construction materials); Revised wagon decommissioning timelines (grain, wagon owners); Reduced average haul distances (ore, grain, other cargo types). The members of the EBA Logistics Committee will review the proposed calculations and compensatory measures and present their assessment of Ukrzaliznytsia’s tariff initiative shortly. We sincerely thank Oleksandr Pertsovskyi, Viacheslav Yeromin, and the Ukrzaliznytsia team for their openness and invitation to engage in dialogue!

Earlier, on December 5, Ukrzaliznytsia’s Supervisory Board approved a 37% indexation of freight tariffs. During the meeting with the EBA’s member companies, the Ukrzaliznytsia team presented the proposed changes, calculations, and potential compensatory measures and operational improvements for shippers in light of the tariff increase.

According to Ukrzaliznytsia representatives, the indexation of rail freight tariffs has lagged significantly behind the growth in the company’s cost base. Until now, instead of regular annual adjustments, tariff changes have occurred sporadically. Even the latest indexation does not fully offset the rise in the producer price index.

The indexation is also driven by forecasted freight dynamics for 2025. Ukrzaliznytsia expects a potential decline in revenue next year due to reduced freight volumes—particularly for coal and grain—the current energy sector situation, declining income from wagon rentals, and other factors.

To mitigate the negative impact on the operational activities of companies, Ukrzaliznytsia proposed the following compensatory measures for tariff increases:

Route-based shipments (ore, coal, partially grain);
Targeted sectoral discounts (all cargo types);
Long-term contracts (grain, ore, coal, fuel, construction materials);
Revised wagon decommissioning timelines (grain, wagon owners);
Reduced average haul distances (ore, grain, other cargo types).

The members of the EBA Logistics Committee will review the proposed calculations and compensatory measures and present their assessment of Ukrzaliznytsia’s tariff initiative shortly.

We sincerely thank Oleksandr Pertsovskyi, Viacheslav Yeromin, and the Ukrzaliznytsia team for their openness and invitation to engage in dialogue!