Ukraine Transport and Logistics

Sector outlook

Crossed by four out of the ten Pan-European transport corridors (III, V, VII, IX) and by other major transit routes (Gdansk-Odessa, Europe-Caucasus-Asia, Europe-Asia), Ukraine has a very dynamic transport and logistics sector. Both freight and passenger transportations have been growing since 2001.

The main transport networks are:

  • Road: 169,400 km of roads to be further developed to absorb the growing demand for road transportation (vehicle fleet +5% per year, traffic volume on highways +20% per year);
  • Rail: 2nd biggest system in Europe after Russia (over 20,000 km of railways), accounting for around 80% of freight traffic and 60% of long-distance passenger traffic;
  • Maritime: 20 state-owned seaports along the Black Sea (passenger and roro vessels operated mainly in Odessa and Yalta regions) and Azov Sea coast as well as a number of river ports on Dnieper and Danube;
  • Air: 31 airports (Boryspil airport in Kyiv handling almost 70% of all passengers in Ukraine) and 7 helicopter pads.

The country offers significant potential for transit operations due to the insufficient investment in infrastructure maintenance and development after the fall of the Soviet Union.

Strategic direction/ Specific schemes and incentives

With a view to attracting investment in the transport sector and to improving export competitiveness through the development of logistics, the Ukrainian government adopted several measures:

  • Law on PPP: possibility of financing highways, roads, railways and bridges with public funds, provision of sovereign guarantees and other means of state support;
  • Amendment of the laws on concessions: increase of concessionaries' profit sources and introduction of a procedure for the alienation of privately-owned land plots for social needs;
  • “Programme of Economic Reforms” 2010-2014: realisation of nationwide infrastructure projects, restructuring of rail transport, development and planned privatisation of sea ports and air terminals, etc.;
  • Preparation of UEFA Euro 2012: EUR 5.5 billion investment in transport infrastructure.

Additional projects are developed with the support of European institutions:

  • TRACECA: major regional programme for developing the Europe-Caucasus-Asia transport corridor, which includes the LOGMOS project (feasibility studies of logistic investment opportunities);
  • EBRD: EUR 690 million investments in railway (above 50%) and road projects (almost 40%) over the 1998-2008 period.

Business opportunities

Development and upgrading of the transport infrastructure (roads, highways, railways, ports, airports):

  • National project “Air Express”: development of a high-speed railway service between Kyiv and Boryspil International Airport;
  • National project “Danube Corridor”: development of transport communication and navigation in the Danube region;
  • Multimodal Terminal in Illichivsk: development of a 850,000 TEU capacity container terminal for an estimated investment of EUR 250 million investment;
  • Channel and Harbour Deepening Port of Yuzhiny: deepening of the channels and some berths to the potential depth of 19 m for an estimated investment of EUR 250 million.

Development of modern facilities and integrated services for outsourced logistics (warehousing, transport and value added services):

  • Construction and management of logistics centres such as the Western Ukrainian Logistics Park (EUR 140 million investment project in Ternopil, co-financed by the State);
  • Supply of high-quality integrated logistics solutions (international forwarding, export-import operations management, customs brokerage, storage, warehousing, value-added services, ‘door-to-door’ cargo delivery, parcel delivery) to companies, especially in the retail, consumer goods, ICT, automotive, electronics, pharmaceutical and cosmetics sectors;
  • Establishment of 25 wholesale markets and development of a modern distribution network for fresh agricultural products within the national project “Green markets”: optimal locations identified by USAID in Southern Ukraine (Kamenko-Dneprovsky district in Zaporizhzhya region, Dzhankoy city in Crimea).

Some success stories

Raben (Poland) has been present on the Ukrainian market since 2003. Currently it provides employment to over 600 people in 8 branches and totals a warehousing capacity of 50,000 sqm. In December 2008, it won a 3-year contract for METRO’s warehousing and logistics operations in Ukraine.

Schenker, the international forwarding and logistics arm of Deutsche Bahn (Germany), established its Ukrainian subsidiary in 1996 and developed a multi-purpose warehouse complex in Kiev. DHL uses Schenker as service provider for Ukraine.

Hyundai Heavy Industries (Korea), the world’s leader in shipbuilding, heavy equipment and emerging technologies, signed a contract with the State Administration of Railway Transport Ukrzaliznytsia in 2010 for the supply of 10 high-speed electric trains. The first ones will start operating on the Kyiv-Dnipropetrovsk route no later than in September 2012.

 

Useful links and contacts

Ukrainian Chamber of Commerce and Industry

Invest Ukraine

European Business Association

 

This publication has been produced with the financial assistance of the European Union. The contents of this publication are the sole responsibility of EUROCHAMBRES and can in no way be taken to reflect the views of the European Union.

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