Russian Railways (RZD) managed to secure the approval of almost all of its proposals on tariff indexation for 2025, leading to a 13.8% increase in freight transportation tariffs from December 01, 2024. Moreover, tariffs for empty running of open-top railcars will be raised by 10%. Also, lowering coefficients for export transportation of coal will be canceled permanently, despite heavy losses of coal companies and almost record high profit of RZD.
According to the plan, tariffs will be adjusted in a single step from December 01, although a two-step increase from November 01 or a one-step increase from January 01, 2025, had been considered earlier.
The new hike includes targeted surcharges, including 7% for overhaul and 1% for transportation safety. Earlier it was assumed that the surcharges could be abandoned.
The lowering coefficients of 0.4 and 0.895 for long-distance export coal transportation tariffs (which were temporarily suspended from June 2022) have been finally abolished despite the dramatic situation in the market and requests from exporters and authorities of coal producing regions.
Tariffs for empty mileage of open-top railcars, platforms and covered railcars will grow by 10%. There is also a provision for targeted indexation of certain tariffs.
RZD also managed to switch from consumer to industrial inflation in its tariff indexation policy. The new principles, replacing the formula “inflation minus 0.1%”, suggest the use of a composite index, taking into account the monopoly’s costs growth rates, while being less transparent and predictable.
Meanwhile, RZD’s profit in H1 2024 reached 2.6 billion USD, while coal miners made a loss estimated at 72 mio USD for the same period.
Furthermore, RZD proposed not to extend agreements with mining regions on coal transportation in the eastern direction for 2025 in order to refocus on higher-margin cargoes. However, in 2024, the reduction in coal shipments and measures to relieve the network are having no proper effect, as RZD has not managed to replace the lost volumes of coal with other cargoes.
In January-September 2024, export rail transportation of coal dropped by 14.5 mio t to 140.8 mio t (-9.3% y-o-y), out of which the eastern direction accounted for 85.5 mio t, or 61%.
Source: CCA Analysis
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