Increasing railway freight tariffs is irrational, since it will deal a serious blow to industry, says the Ukrainian National Committee of the International Chamber of Commerce (ICC Ukraine) and calls on the government to reconsider the decision on such a possible increase.

"Railway transport is key to ensuring the stability of supplies of raw materials and products on the domestic market, as well as for the export activities of enterprises. The increase in transportation costs will not only complicate the recovery of the economy, but can also lead to the closure of enterprises, which puts thousands of jobs at risk," the organization notes.

In its letter, it predicts that the increase in tariffs will reduce the competitiveness of Ukrainian products in world markets and export revenues.

ICC Ukraine reminds that in August 2021 - January 2022, tariffs for the transportation of such cost-sensitive logistics goods as coal, ore and limestone were increased by 42%, and in June 2022 by another 70% - a total of 2.4 times, and for the transportation of empty wagons from under the first class of goods - 2.6 times.

"Such a sharp and unjustified jump in tariffs in Ukraine creates serious pressure on business and is unacceptable in the current conditions, when enterprises are trying to survive and ensure revenues to the state budget," the committee believes.

According to the organization, in the context of the opening of seaports and the intensification of exports, it is necessary to strive to further increase it to the pre-war level, while an increase in railway tariffs will hinder this.

ICC Ukraine calls on the contrary to reduce the cost of logistics in order to stimulate production, increase transportation volumes and maintain the competitiveness of Ukrainian products.

"This will attract more cargo to the railway, reduce the load on road transport and preserve the road infrastructure, which has already experienced significant damage due to the war and the transfer of some cargo from the railway to the road," the letter states.

According to ICC Ukraine, Ukrzaliznytsia has every opportunity not to raise tariffs, since the company's revenues from freight transportation for the first half of 2024 increased by 17% compared to the same period last year - to UAH 43 billion, which allowed it to receive a profit of UAH 3.1 billion, although the company's expenses are growing faster than its income.

In the letter, the committee expresses the opinion that the problem of Ukrzaliznytsia is significant and constantly growing expenses, as well as the incompetence of management, which cannot properly build a system of management accounting of income and expenses of the railway monopoly, makes erroneous decisions and misleads the government. According to the letter, Ukrzaliznytsia's variable costs make up only about one-fourth of its total costs, therefore, transporting an additional tonne of any cargo, even crushed stone at the lowest rate, brings Ukrzaliznytsia a significant marginal profit.

"That is why the monopolist's statements that the reason for its losses is the transportation of "unprofitable" cargo are complete nonsense - the only reason for the unprofitability can be the significant and constantly growing costs of Ukrzaliznytsia, as well as the blatant incompetence of Ukrzaliznytsia's management," ICC Ukraine believes.