Russian Railways (RZD) plans to obtain government approval for an additional indexation of rail freight tariffs by 1% in 2024. The funds will be used to ensure transportation security.
However, market participants are concerned with further hikes in transportation costs, assuming that such expenses should be compensated by the state, given the already rapid growth of tariffs.
In 2022, RZD’s expenditures on transportation security exceeded 0.5 billion USD. In this regard, RZD is seeking the approval for an additional 1% surcharge to the freight tariff. Nevertheless, the basic indexation of the freight tariff for 2024 is already planned at 7.1%. In addition, the tariff may grow by another 2% due to an additional surcharge on major repairs (from 5% to 7%).
In recent years, there has been a sharp increase in rail tariffs, that is noticeably higher than the figures stipulated in the long-term development program of RZD (inflation minus 0.1%). In 2022, the indexation amounted to 18.6% compared to the level of 2021. Also, there were occasional hikes, as well as the withdrawal of benefits for coal exports.
In 2023, the tariffs jumped 8% plus an additional 1% for overhaul, with the suspension of downward adjustment rates for coal export transportation extended further while the tariff for long-distance transportation of iron ore for export through border crossings increased.