White paper "LOGISTICS AS A DRIVER OF ECONOMIC GROWTH" on the results of the conferencePrepared by the We Build Ukraine Think Tank

The We Build Ukraine think tank develops systemic solutions for the restoration and development of key sectors of the Ukrainian economy, including transport infrastructure and logistics.

In the short and medium term, our goal is to prepare an action plan and recommendations to strengthen cooperation with international partners, as well as to create conditions for attracting large-scale investments in the country's recovery and modernization.

This policy brief outlines the key challenges and opportunities in the field of logistics and transport infrastructure, summarizes relevant analytical data, and draws on the results of a sectoral conference on logistics held by the We Build Ukraine team.

INTRODUCTION

The Economic Growth Strategy of Ukraine, developed jointly by the Boston Consulting Group and the We Build Ukraine think tank, identifies logistics as one of the four key drivers of growth, along with access to finance, labor, and telecom infrastructure. Logistics has become a critical pillar for the resilience of the Ukrainian economy since the start of the full-scale invasion in 2022: it has helped to maintain export channels, ensure defense capabilities, and support critical imports.

However, during the first decades of independence, the transportation system remained chronically underfunded. And the war led to large-scale destruction, further complicating the development of logistics and deepening structural challenges.

In this context, European integration is of key importance. The opening of EU accession negotiations in 2024 means that Ukraine needs to adapt its transport policy and logistics routes to EU standards on a large scale. In particular, Ukraine needs to implement the acquis communautaire directives in the transport sector, modernize its infrastructure in line with TEN-T requirements, and ensure long-term integration into the European transportation market. The development of connectivity through Solidarity Lanes is only the first step in this direction.

To effectively transform the infrastructure sector, Ukraine needs strategic program planning at both the central and local levels. Such programs should be integrated into the overall economic strategy and based on a clear system for evaluating, prioritizing, and monitoring investment projects.

As of March 2025, Ukraine has updated its National Transport Strategy until 2030, is preparing roadmaps as part of the negotiation process with the EU, and is developing strategic projects in the logistics sector under the Ukraine Facility Program. Some communities have already approved mobility plans, including the development and consideration of multimodal hub concepts, but there is currently no unified approach or guidelines for the local level.

Updating the legal framework should be an integral part of the reform. We are talking about:

● the Law on Railway Transport;

● a law on the specifics of privatization of port infrastructure facilities;

● updating legislation on concessions and public-private partnerships;

● reforms in the area of tariff setting (railroad, port, and airline fees);

● strengthening the capacity of regulators.

High-quality preparation of investment projects is impossible without legal certainty and institutional capacity. It is necessary to ensure a link between the scale of an infrastructure project and the real economic prospects of the region. To do this, it is important to assess the match between infrastructure supply and projected demand for logistics services, production clusters, agricultural or industrial activity in the project's area of influence.

According to the EBRD, it is impossible to evaluate a logistics center in isolation from the overall infrastructure. Each logistics facility must be considered in conjunction with the rail, road, sea and air transport network, as well as trade flows, access roads and the geo-economic perspective of the region.

Today, it is not just about physical restoration; the goal should be to create a new quality of logistics: digital, multimodal, EU-oriented, energy efficient, and open to private capital. This requires the simultaneous modernization of assets, updating the regulatory framework, adjusting tariff policy, and launching tools to attract large-scale private investment, including in the form of public-private partnerships.

RAILWAY TRANSPORTATION

Transformation of Ukrzaliznytsia and new regulation

The railway industry remains strategic for Ukraine, both in the defense sector and in the context of European integration and sustainable exports. As part of the Ukraine Facility program, Ukraine's key commitment is to adopt the Law on Railway Transport in the third quarter of 2025. This law should become the basis for gradual liberalization of the market, opening access for private traction, establishing an independent regulator, and introducing fair and transparent rules for access to infrastructure. As of March 2025, the draft law was registered by the Government of Ukraine in the Verkhovna Rada of Ukraine. 

The law sets out the framework for market liberalization, tariff regulation, transport safety guarantees, and conditions for investment in the industry, as well as the separation of passenger and freight transportation into separate legal entities, and the creation of an infrastructure company.

Tariff policy and efficiency

The current tariff model does not encourage the efficient use of rail transport. This is especially true for transportation to ports, where delivery costs are often uncompetitive. A step-by-step adjustment of the tariff policy is needed, which should be based on:

●     the real cost of transportation,

●     the needs of export-oriented industries,

●     competitiveness with alternative logistics routes.

Asset optimization

UZ needs a systemic transformation of its asset management model. It should focus on the development of key operating segments (infrastructure, traction, freight rolling stock, logistics hubs) and gradually withdraw non-core assets from the balance sheet. This will allow the company to focus financial and management resources on modernization and improving the quality of services.

1435 mm projects: interoperability with the EU

The development of 1435 mm railway infrastructure is a prerequisite for Ukraine's integration into the European transportation market. Projects of this type help to reduce border crossing time, minimize transshipment costs and ensure the continuity of logistics chains.

Example: Mostyska II - Nyzhankovychi - State Border - Khyriv project. As part of this pilot project, preparations are already underway for the construction of infrastructure for a 1435 mm gauge, including the modernization of border sections. This will directly connect Ukraine with the TEN-T corridors of Poland, which will have a significant effect on agricultural exports, container transportation, and freight transit.

SEAPORTS

Challenges and reserves

Ukraine's seaports remain the main channel for exports of agricultural, metallurgical, and other products, but their capacity has been significantly reduced due to the hostilities and security risks. RDNA4 estimates that direct losses of port infrastructure amount to about $0.6 billion. Due to the blockade of the Greater Odesa ports, part of the cargo flows were redirected to alternative routes, in particular to the ports of the Danube cluster.

The Danube ports of Izmail, Reni, and Ust-Dunaisk have become a critical reserve for exports, including grain, oil, containers, and steel products. In 2023, transshipment through the Danube exceeded 14 million tons, almost twice the pre-war volume. At the same time, the cluster's capacity is almost exhausted, requiring intensive investment in expansion, dredging, logistics, and railway infrastructure.

Support for the Danube Cluster

In order to ensure the functioning of the Danube cluster ports in the event of partial or full opening of the Black Sea ports in the territories controlled by the Government of Ukraine, it is necessary to take urgent measures to stimulate the competitiveness of the Danube ports, which can always serve as a kind of plan B for access to the Black Sea, to maintain their financial and operational stability, it is proposed to introduce a program to support these ports, including:

●     optimization of the level of port dues by amending the regulatory documents of the body that forms the policy in this area, which will allow for the creation of incentive conditions for transshipment;

●     introducing separate tariff regulation for rail transportation for the directions serving the cluster's ports.

Financial autonomy for ports

State-owned enterprises that manage port infrastructure should be given the financial flexibility to invest in rehabilitation. After years of underfunding and significant war damage, the Black Sea ports' infrastructure is in critical condition: worn-out berths, insufficient capacity, need for dredging and upgrading of access logistics.

To return the ports to pre-war levels of operational efficiency, it is necessary to implement a set of capital projects, ranging from the reconstruction of hydraulic structures to the modernization of logistics approaches. Approximately, in the ports of Mykolaiv, Kherson, Odesa, and Chornomorsk, the total investment needs could reach $200 million.

In this context, it is advisable to provide a mechanism for releasing the internal resources of state-owned enterprises by exempting USPA and other water companies from the obligation to pay part of their net profit to the state budget for 5 years after the end of the war, or limiting this amount to 20%. Provided that the freed-up funds are used exclusively for capital investments in strategic facilities, this will create an effective model for the restoration and development of port infrastructure.

Institutional steps

To ensure long-term attraction of private investment, the legal framework needs to be updated.

●     The law on the peculiarities of privatization of port infrastructure facilities should regulate the procedures for transferring hydraulic structures, berths and terminals to private use on transparent and predictable terms.

●     The Cabinet of Ministers should approve a unified procedure for allocating water fund land for the reconstruction and construction of port and hydraulic structures. This will accelerate the implementation of projects in the Danube and Black Sea clusters, as well as increase the confidence of donors and private investors.

AVIATION

Role in the logistics system

Ukraine's aviation sector is of strategic importance for both population mobility and high-value logistics. We are talking about critical cargo: medicines, electronics, spare parts for high-tech production, and defense products. 

As of the end of 2024, some airports are completely destroyed, while others are mothballed or in need of major repairs. This requires careful assessment, prioritization, and coordination with the post-war civilian airport network to avoid a fragmented approach to recovery.

Given the possible conclusion of peace agreements and a ceasefire in 2025, the opening of some airports to civil aviation may become a reality. Priority will be given to Boryspil, Lviv, Kyiv (Zhuliany), and Odesa airports. At the same time, full recovery of the industry is impossible without a comprehensive vision of its role in the country's new logistics system.

The infrastructure of many key airports is in critical or deteriorated condition and requires significant investment to improve. The reconstruction of runways and other infrastructure at other airports in Ukraine will require a more detailed study and prioritization of projects in accordance with the defined post-war civilian airport network.

The post-war model of aviation infrastructure can be based on the development of regional airports with cargo functions integrated into multimodal chains. The priority is to create logistics hubs with high cargo handling speeds, convenient access to road and rail infrastructure, and modern navigation and security systems.

Support tools

Suggested:

●     create a special fund within the state budget (for a period of 5 years after the end of the war) to finance the war:

○     restoration and development of airport infrastructure,

○     covering sustainable capital (CAPEX) and operational (OPEX) expenditures for operational airports;

●     develop a mechanism for compensating operating costs for selected regional airports (on a competitive basis) that are ready to accept civilian flights or create cargo services;

●     Involve the private sector in the management of passenger and cargo terminals, in particular through concessions, management contracts, and public-private partnerships.

MULTIMODALITY

The development of modern logistics in Ukraine is impossible without a transition to multimodal solutions. This means integrating rail, water, road and air transport into a single transportation system with a focus on efficiency, environmental friendliness and business convenience.

Ukraine should synchronize infrastructure development with the requirements of TEN-T and the EU's DG MOVE strategies, in particular in terms of:

- development of domestic and border logistics hubs;

- connecting ports, airports and railway junctions to the TEN-T network;

- digitalization of logistics routes.

RDNA4 estimates the need to restore multimodal infrastructure at more than $3.6 billion, including hub stations, combined transport terminals, rail approaches to ports, and logistics centers. Some of these facilities are already included in the Ukraine Facility's project portfolio.

Roads

Road transport remains critically important for internal mobility, humanitarian logistics, border crossing services, and connections to multimodal hubs.

Restoring the operation of the State Road Fund (SRF) and ensuring proper financing of road infrastructure are critically important for Ukraine. 

According to the World Bank's RDNA4 report, about $30 billion is needed to restore state roads over the next 10 years. An important part of this will be spent on restoring bridges and municipal roads. 

Stable funding from the State Road Fund, which consists of the excise tax on fuel and other sources, will not only restore the existing road infrastructure but also maintain it in good condition, which, in turn, will stimulate economic development and improve the quality of transportation services in Ukraine.

 The economic impact of road rehabilitation will be manifested in the creation of new jobs, attraction of private investment, and increased competitiveness of transport corridors. Improving the condition of roads and bridges will help reduce transportation costs, increase logistics efficiency, and facilitate market access for local producers.

Green transport and digitalization

New logistics should be energy efficient, digital, and transparent. It is suggested, if possible:

●     stimulate the use of electric traction, the purchase of zero-emission locomotives, and support for green port terminals;

●     to ensure the introduction of electronic consignment notes (e-CN) and unified digital solutions in customs clearance that are compatible with the EU;

●     use analytical platforms to manage cargo flows, monitor congestion, and optimize routes.

Particular attention should be paid to the deployment of digital services at border crossings, including automation of clearance and synchronization with data from foreign customs services.

CONCLUSIONS

A single strategy for recovery

Ukraine needs a consolidated, integrated strategy for the post-war reconstruction of its transportation and logistics infrastructure. Such a strategy should include:

●     railway infrastructure and interoperability projects;

●     restoration of ports, including the Danube cluster;

●     development of multimodal logistics hubs;

●     digital transformation of logistics;

●     rebuilding roads and bridges;

●     resuscitating the aviation industry as part of high-value cargo logistics.

This document should become not just a framework, but a practical tool for programming investments (including for the purposes of the Ukraine Facility), setting priorities for international partners, and synchronizing the actions of all levels of government.

The strategy should not focus on creating new institutions but on strengthening the capacity of existing structures to implement projects. The focus should be on:

●     transparent mechanisms for project selection and implementation;

●     reforming tariff policy;

●     deregulation and legal predictability for investors;

●     creating conditions for long-term attraction of private capital.

All infrastructure decisions should be made on the basis of an assessment of the economic potential of the regions, forecasted cargo flow, realistic models of operation and integration into European transport corridors.

Only such a holistic model will allow not only to restore what has been destroyed, but also to create a competitive, sustainable and strategically oriented new generation of logistics.