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| Ukrainian Railways |
Metals, mining, and construction sectors brace for heavy losses as Ukrainian Railways raises transport rates by 37%
A planned 37% increase in freight tariffs by Ukrainian Railways (UZ) is expected to deliver a major blow to Ukraine’s industrial economy, slashing GDP by 1.18% or UAH 95.8 billion, and reducing exports by nearly 3% (UAH 97.8 billion), according to a new analysis from Ukrpromvneshexpertiza.
The impact will be widespread, with key sectors such as metallurgy (-6.9%), metal ore mining (-5.38%), and construction materials (-4.2%) suffering significant production losses. Transportation and trade sectors are also expected to shrink by 1.02% and 0.96%, respectively.
Increased Costs and Production Cuts
The 37% tariff hike on UZ’s infrastructure component will drive up total rail transport costs for key commodities by 26–31%. The study projects:
- 27 million tonnes fewer goods transported annually
- 23 million tonnes in lost output across sectors
- A direct hit of UAH 63.6 billion to the steel industry
- A UAH 30.8 billion decline in mining output
While some producers are switching to road transport, the shift is limited by infrastructure capacity and product nature. For high-volume goods like coal, iron ore, cement, and construction materials, rail remains indispensable.
Risks to Competitiveness and Inflation
According to the National Association of Extractive Industries of Ukraine, the new tariffs could raise ore prices by $2–3/ton and coal by $5–7/ton, depending on transport distances. These additional costs will reduce the competitiveness of Ukrainian producers in both domestic and global markets.
Analysts warn that this move could trigger a wave of industrial inflation, raising end-user prices across the supply chain. For instance, a brick priced at UAH 10 could rise to UAH 15 after transport and VAT increases are factored in.
Call for Mitigation Measures
Experts are urging the government to explore offsetting options, such as:
- Subsidies to producers
- Divestiture of non-core UZ assets
- Tax po to ease financial strain
They argue that failing to act could stall industrial recovery and burde
The projections are based on end-2024 data, with full effects expected to ripple into 2025.
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