UZ's freight traffic finances passenger traffic

Ukrzaliznytsia's freight traffic keeps the passenger segment alive - the industry warns of risks

Freight rail transport in Ukraine remains profitable, but in fact finances the loss-making passenger segment. This was stated by Elena Kolesnikova, Chairman of the Industry Council of the Federation of Metallurgists of Ukraine.

According to her, the freight direction annually generates up to UAH 20 billion of operating profit, However, these funds are systematically used to cover passenger traffic losses.

Details of the case

Kolesnikova noted that the passenger segment is showing a steady increase in losses and can no longer be compensated for by freight traffic without harming the entire system.

In fact, we are talking about a situation where resources that should be invested in the development of railway logistics are used to close chronic financial gaps.

Among the areas that are underfunded:

• infrastructure modernisation;

• renewal of traction rolling stock;

• reducing logistics costs for businesses.

Context.

The practice of cross-subsidisation at Ukrzaliznytsia has existed for years, but amid the war, falling freight base and rising costs, it is becoming increasingly risky.

Industry representatives warn that such a model:

• reduces the competitiveness of Ukrainian enterprises;

• is holding back investment in transport infrastructure;

• is creating a delayed crisis for the entire railway system.

Industry experts emphasise the need for structural reform of tariff policy and transparent financing of socially important passenger transportation separately from the freight business.