Russia transit could get more costly as RZD considers 22,7% tariff hike

Russian Railways (RZD) wants to raise rail tariffs significantly next year. It has put two options on the table: a 17,2 per cent increase in two stages, or a 22,7 per cent increase in one go. It is unclear exactly which so-called coefficients will be changed, so a price hike for transiting transporters is not excluded.

The first variation of the tariff increase would entail a 3,6 indexation from 1 November 2024 and a second indexation of 13 per cent on 1 January 2025, for a total of 17,2 per cent, according to a RailFreight.com source.

Experts tell Russian publication Kommersant that it is almost a certainty that RZD’s request will be granted. At the same time, it remains unclear who will bear the brunt of the costs, according to a RailFreight.com source.

Typically, domestic Russian tariffs only affect market parties within the Eurasian Economic Union (EAEU). However, RZD may also look to boost its income from international transits beyond the EAEU, which could ultimately affect European shippers as well.

Acceptance among Russian rail freight market parties

The new tariff hike is reportedly necessary to finance RZD’s near-future investment plans. A 22,7 per cent increase would cover all of its projected investment expenses for 2025 at 1,8 trillion rubles (17 billion euros).

Russian rail freight market parties have come to accept the tariff hike, but are pushing for RZD’s projected investments to be lower than currently planned, and for the tariffs to subsequently also be kept more affordable, writes Kommersant. They could bear the costs of the tariff hike, provided that the ruble weakens no more than 10 per cent on a half-year basis.