After more than four years without any adjustment to rail freight charges, the Ukrainian authorities have approved the first indexation of Ukrzaliznytsia (UZ) freight tariffs, a move regarded as essential to safeguarding the financial stability of the national railway operator.
The decision was published on 31 July and entered into force on 1 August 2026, at a time when the company continues to operate under wartime conditions, with infrastructure damaged by attacks and operating costs at record levels.
The order issued by the Ministry for Communities, Territories and Infrastructure Development provides for a 30% increase in rail freight tariffs and introduces a unified charging system for empty wagon movements, replacing the previous mechanism under which charges depended on the type of cargo previously transported rather than the actual cost of operation.
This is the first revision of freight tariffs since 2022. Ukrzaliznytsia had initially proposed a 45% increase, but following consultations with major freight customers, industry associations and market stakeholders, a compromise was reached. The tariff adjustment will therefore be introduced in two stages: 30% from 1 August 2026 and a further 15% from 1 January 2027.
Ukrzaliznytsia’s costs have surged during the war
According to Ukrzaliznytsia, the tariff adjustment has become unavoidable as operating costs have risen far faster than revenues. Since the last tariff revision, industrial inflation in Ukraine has more than doubled, while additional electricity costs alone have increased by more than UAH 15 billion (EUR 311 million) compared with 2023.
The railway has also faced substantial increases in the cost of fuel, materials, spare parts, equipment and maintenance works. At the same time, employees’ salaries have not been indexed for the past two and a half years, leaving railway workers among the lowest-paid employees in Ukraine’s industrial sector.
Financial pressure has been further intensified by the consequences of the war. Since the start of Russia’s full-scale invasion, more than 460 locomotives have been damaged, while Ukrzaliznytsia has been carrying out continuous repairs and reconstruction of railway infrastructure affected by missile and drone attacks. Despite these conditions, the operator continues to provide vital transport services for the Ukrainian economy, exports and defence sector.
The company estimates that postponing tariff indexation over recent years has generated an economic benefit of more than UAH 100 billion (EUR 2 billion) for freight customers. Even the tariff adjustment originally planned for 1 January 2026 was postponed to reduce the impact on businesses.
At the same time as the freight tariff increase, the Ukrainian government has, for the first time, introduced direct public funding for domestic passenger rail services. Up to UAH 16 billion (EUR 333 million) has been allocated to this public service obligation, allowing the gradual elimination of the long-standing practice whereby losses from passenger services were cross-subsidised by freight operations.
Government and Ukrzaliznytsia seek to limit market impact
Ukrzaliznytsia is also implementing one of its largest cost optimisation programmes in recent years, expected to generate savings of UAH 10.2 billion (EUR 212 million). The programme includes the accelerated disposal of accumulated scrap metal, tighter control of internal expenditure and measures aimed at improving operational efficiency.
The operator warns that without the tariff adjustment, its freight business would continue to operate at a significant loss. According to Ukrzaliznytsia, these financial projections have been confirmed by both the State Audit Service of Ukraine and international auditors. In addition, international financial institutions assessing future funding for the company have also highlighted the need for tariff indexation to ensure its long-term financial sustainability.
Through this decision, the Ukrainian authorities are seeking to balance the need to support the country’s economy during wartime with the necessity of maintaining the financial viability of its national railway operator. For Ukrzaliznytsia, the tariff increase is not merely a financial measure but a strategic step designed to safeguard the country’s most important logistics corridor and secure the investment required to maintain railway infrastructure and rolling stock under unprecedented circumstances.
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