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Russian Railways BV/E690 steel plans to make structural adjustments to the current freight rate system, aiming to reduce the price differences between different types of goods by increasing the transportation costs of raw materials and lowering the transportation costs of finished steel products, while enhancing the overall economic benefits and market competitiveness of railway transportation.
At present, Russian BV/E690 steel Railways has submitted a proposal to the Russian Ministry of Economic Development, suggesting a significant increase in freight rates for the first category of goods (raw materials and fuel): an increase of 13.5% for iron ore, 14.5% for coke, and 21% for coking coal. At the same time, the freight charges for the third category of goods (steel and scrap steel) are expected to decrease by an average of 15.8%.
The Russian media Kommersant quoted the Russian railway as saying that the core goal of this tariff adjustment is to enhance the transportation attractiveness of the third type of metal products, thereby promoting the growth of the transportation scale of high value-added products, and optimizing the overall freight structure while ensuring resource transportation revenue.
It is worth noting that Russian Railways is also evaluating other options, including the possibility of temporarily excluding coking coal from the scope of this price adjustment. Industry insiders point out that the current Russian coal industry is deeply mired in the dilemma of losses or breakeven, and even under current freight rates, the economic viability of transporting coking coal is extremely limited. Representatives from metallurgical enterprises have called for the postponement of relevant freight rate adjustments until after 2028.
In addition to adjusting the BV/E690 steel prices of raw materials and finished steel, Russian Railways also plans to raise the container transportation surcharge by 15% from 2027 to cover the costs brought by expansion construction. At the same time, it is planned to increase the operating rates of empty vehicles such as open cars, boxcars, and platform cars by 5% in 2026 and 2027, respectively. According to official data, the current empty freight rate only covers about 60% of the actual operating costs. Industry insiders warn that if the relevant adjustments are implemented, they will bring additional pressure to coal companies and exporters.
Overall, this fare adjustment aims to enhance the attractiveness of railway transportation for high value-added products, but it also exposes the structural contradictions in transportation costs and industrial profit margins in Russia's resource industries. The implementation of subsequent policies still needs further clarification from the government and market competition.
