Ukrainian Railways simplifies tariffs and makes them ‘fair for everyone’

Photo: Pixabay. Игорь

Ukrzaliznytsia will reassess and probably change its rail freight tariff system by simplifying it significantly. The goal is to “completely abandon the current tariffs scheme for cargo transportation and make tariffs fair for all market participants,” said Ukrzaliznytsia’s CEO Oleksandr Kamyshin.

“After adopting the new scheme, the existing discrimination will completely disappear. In fact, all this is part of the movement of both the company and the entire country towards European integration,” Kamyshin added.

Reapproaching tariffs

Kamyshin disclosed some of the basic steps that Ukrzaliznytsia will take to create a more fair environment for participants in Ukraine’s rail freight industry. Specifically, step number one will be to cut down on the base rate schemes and reduce them from twenty-nine to just one. From now on, the base rates for rail freight transport will calculate only the transport distance, cargo weight, special transport features and routing.

Moreover, Ukrzaliznytsia will reduce the number of coefficients when calculating charges from fifteen to one. At the same time, it will also significantly cut down on the additional fees, which, from thirty-eight, will now be six. A fee for special transportation or security services will remain in place. Lastly, Ukrzaliznytsia also proposed a complete alignment of freight transport classes and a single tariff for empty wagon transport.

Why is this a crucial move?

Kamyshin insisted that the new tariffs approach is a decisive move against discrimination. “For decades, the issue of the fairness of the tariff system has been a sensitive topic in the relations between carriers and shippers. We understood this, which is why we have been gradually changing it since the middle of last year,” he said.

With increased tariffs, shippers needed to pay higher prices for rail transport, which was a signal of a reverse modal shift in the case of Ukraine. The Ukrainian state-owned company has proceeded with tariff increases during the last two years that were not received well by the rail freight industry and its customers. The main issue was, of course, the skyrocketing prices themselves but also the fragmented and complex classification of cargo types and services that led to uneven pricing. Simply put, not all shippers paid the same fees for certain services, and the price difference between different classes was sometimes immense.

The latest development on a tariff level concerned a 70 per cent increase for all cargo types. The move responded to the financial difficulties that Ukrzaliznytsia faced due to the war. Still, prices for ferrous metals and grain did not experience the same increase, maybe for obvious reasons, leading yet, to another market discrimination.

Fresh perspective

Besides Ukraine’s rail freight tariff model becoming more democratic, less discriminatory and simpler, the key takeaway of Kamyshin’s proposals is something else. Especially in the context of war, a state-owned company listening to and comprehending the concerns of its customers and addressing them accordingly is a great success.

Hopefully, the new Ukrainian tariff system will prove its efficiency in practice and bring more customers on rail now and in the future.

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Author: Nikos Papatolios

Nikos Papatolios is editor of RailFreight.com, the online magazine for rail freight professionals.

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