---
title: "Destructive Spiral: Expert Warns of Ukrzaliznytsia Losses Due to New Tariffs"
description: "Ukrzaliznytsia's freight tariff hikes trigger a destructive tariff spiral, leading to losses for mining enterprises and falling revenues for the carrier."
date: 2026-10-23T12:26:18.715Z
lang: en
url: https://xab.info/en/posts/destructive-spiral-expert-warns-uz-losses
tags: [ukrzaliznytsia, gmk-center, railway-tariffs, economy, ukraine, logistics]
author: "Darya Fomina"
publisher: "XAB.info"
---

# Destructive Spiral: Expert Warns of Ukrzaliznytsia Losses Due to New Tariffs

![Freight rail cars and tank cars on the tracks of a Ukrainian station](https://xab.info/media/2026/10/23/destruktivnaya-spiral-ekspert-predupredil-ob-ubytkah-uz/destruktivnaya-spiral-ekspert-predupredil-ob-ubytkah-uz-1.webp)

## Key Points

- The growth of Ukrzaliznytsia freight tariffs leads to reduced production and lower carrier revenues.
- Ukrzaliznytsia's losses for the first four months of 2026 reached UAH 9.3 billion.
- The mining and metals complex cannot transfer ore and metal to road transport.
- Experts propose creating an international infrastructure support fund instead of raising tariffs.

Ukrzaliznytsia's initiative to cover its financial problems with new freight tariff increases could backfire. As reported by RBC-Ukraine, this was stated by GMK Center Director Stanislav Zinchenko while commenting on Ukrzaliznytsia's 15% tariff increase starting January 1, 2027.

### The Mechanics of the Tariff Spiral and Dropping Volumes

Tariff growth reduces production and shipping volumes of freight senders, which automatically cuts the carrier's revenues and forces it to initiate another round of indexing. This is a destructive tariff spiral, Zinchenko explained. According to his data, in 2025 Ukrzaliznytsia's freight volumes dropped by 7.8% to 161.3 million tons, and in the first half of 2026 the decline continued by another 6.2%. The company's loss for the first four months of 2026 reached UAH 9.3 billion following UAH 7.6 billion for the whole of 2025.

### Blow to the Mining and Metals Complex

About 80% of Ukrzaliznytsia's expenses are semi-fixed, including track maintenance, power grids, and dispatching. When freight volumes decrease, these costs do not disappear, while the cost per transported ton increases. This affects the mining and metals complex the most, because unlike grain or building materials, large volumes of ore and metal products cannot be shifted to road transport. If logistics costs exceed profitability limits, MMC simply halts operations, as happened with Inhulets Mining and Processing Works.

### Cross-Subsidization and Systemic Issues

Another systemic problem, according to the expert, is cross-subsidizing passenger transport at the expense of the freight segment. Industry cannot continue funding the state's social obligations through inflated freight tariffs, while passenger transport losses should be covered from the state budget. In parallel, it is proposed to create a railway infrastructure support fund and attract grant funding to introduce a moratorium on freight tariff hikes until the end of martial law.

### Consequences and Prospects for Exporters

Previously, Ukrzaliznytsia increased freight transportation tariffs by 30%, despite Ukrpromvneshexpertiza warning that such an increase would cut Ukrzaliznytsia's freight base by 27 million tons. This decision leads to massive losses in GDP, export revenue, and budget receipts. GMK Center also suggests introducing preferential tariffs or state subsidization for enterprises located within a 150 km radius of the frontline to support Ukrainian producers.

## Fact-Check & Sources

- ["Деструктивная спираль". Эксперт предупредил о новых убытках из-за повышения тарифов УЗ](https://www.rbc.ua/ukr/news/destruktivna-spiral-ekspert-poperediv-novi-1792758081.html) - The primary source provides comprehensive information regarding Stanislav Zinchenko's commentary on Ukrzaliznytsia's tariff policy and financial figures.

## FAQ

### Why is the Ukrzaliznytsia tariff increase called a destructive spiral?

Because tariff growth reduces freight shipment volumes, lowers carrier revenues, and forces it to raise prices again.

### What losses did Ukrzaliznytsia incur in 2026?

In the first four months of 2026, the company's loss reached UAH 9.3 billion following UAH 7.6 billion for all of 2025.

### What solutions do experts propose to stabilize the situation?

They propose creating a railway infrastructure support fund through grants, imposing a tariff moratorium, and ending cross-subsidization of passenger transport at the expense of business.