Rail freight transportation may become unprofitable for the first time this year, – UZ

Ukrzaliznytsia emphasized that because of this, the issue of increasing freight transportation tariffs remains relevant.

This was stated by Oleg Yakovenko, Director of the Strategy and Transformation Department of JSC Ukrzaliznytsia, during the VIII International Conference “Ukrainian Railways: Development and Investments”, writes RAIL.insider.

“This year, freight transportation, which is the basis of our cross-financing model, may be unprofitable for the first time, which actually makes the cross-financing model impossible,” Oleg Yakovenko emphasized.

Ukrzaliznytsia notes that if UZ previously had a model of cross-financing of freight with passenger traffic, now these opportunities have actually been exhausted. This, of course, will also affect the financial condition of the company, which is currently very difficult.

The recent introduction of a state order for passenger transportation reduces the gap, but does not completely eliminate it. Therefore, the issue of increasing freight transportation tariffs is relevant.

The head of the department recalled that the last increase in tariffs for freight transportation by rail was carried out in 2022.

“The application for a significant tariff increase is a signal of the pressure accumulated over 3.5 years, primarily inflationary. But closing these gaps only at the expense of tariffs will be a shock to the economy,” Oleg Yakovenko emphasized.

He added that in addition to forming a tariff increase scheme with a projected indexation formula, there is a need to use other instruments. In particular, we are talking about involving the state in the maintenance and development of railway infrastructure.