Logistics is one of the four key drivers of Ukraine’s economic growth across vital sectors such as agriculture, natural resource extraction, construction, mechanical engineering, energy, defense production, and IT. Alongside access to financing, workforce availability, and telecommunications infrastructure, logistics has the potential to accelerate reforms and attract investment in these sectors.
At the same time, it is crucial to reform the logistics sector itself and improve the overall investment climate. This was emphasized by participants at the conference "Logistics as a Driver of Economic Growth," organized by the We Build Ukraine analytical center.
According to the Chairman of the Supervisory Board of the We Build Ukraine Fund, Oleksandr Kubrakov, economic growth today can be viewed as a matter of survival.
“The problems we are discussing today are more or less the same across all economic sectors. The question now is whether we can ultimately minimize these problems and achieve the necessary growth rates in key industries. Without this, we will not be able to maintain a strong army and produce the required amount of weaponry to defend ourselves,” Kubrakov emphasized.
Effective Logistics as a Component of the Economic Growth Strategy
In the Economic Growth Strategy developed by We Build Ukraine in collaboration with the Boston Consulting Group, logistics plays a key role. According to Laszlo Juhasz, Managing Director of BCG in Central and Eastern Europe, logistics services and transportation are among the most important factors for a country’s long-term economic strategy.
“We expect that by 2040, freight volumes in Ukraine will exceed pre-pandemic levels. However, there is a strong need to modernize transport infrastructure not only to remain competitive and sustain growth in domestic markets but also to significantly support Ukraine’s export growth in the future,” he noted.
The Development of Rail Transport and the Need for High-Speed Roads
According to DG MOVE policy officer Alan Baron, the EU has high expectations for Ukraine’s transport and logistics systems. However, he emphasized that some border crossing points lack sufficient capacity, particularly road crossings, and require improvements to access routes on both sides of the border.
“In some cases, Ukraine’s access roads are very poor in terms of both quality and capacity. As a result, border control and infrastructure are not yet suited for Ukraine’s future accession to the European Union,” Baron remarked.
He also highlighted that at the start of Russia’s full-scale invasion, insufficient connectivity and interoperability between Ukraine and the EU’s railway infrastructure became a critical issue due to differences in track gauge and network management systems. Addressing this challenge is essential. He stressed the importance of expanding the 1435-mm track system into Ukraine and developing a high-quality multimodal network that would benefit not only the western part of Ukraine’s railway system but the entire country, making it more competitive in terms of economic depth.
Deputy Minister of Finance of Ukraine Oleksandr Kava shares a similar view but noted that simply copying the European model is not suitable for Ukraine. Instead, an optimal balance between European experience and Ukrainian realities must be found. Currently, projects funded by the European Union include the construction of European-gauge railways. This project is co-financed, with 50% of the funding coming from the EU and 50% from Ukraine’s state budget. The first pilot project for the European gauge in Ukraine is expected to be operational this summer.
At the same time, it is crucial to address systemic issues in the rail freight sector. Serhiy Skorbon, Head of External Projects at Metinvest Group’s CEO Office, believes that increasing freight tariffs under current economic conditions is not feasible. Instead, Ukrzaliznytsia, together with the government, must develop solutions to overcome losses.
Ukraine’s rail freight tariffs are already higher than in Europe, despite significantly lower wages. Skorbon noted that freight transport costs in Poland and Slovakia are now lower than in Ukraine. This puts Ukrainian producers at a competitive disadvantage, as they must also bear production and transportation costs. Additionally, Ukrzaliznytsia is losing competitiveness not only to European railways but also to road transport within Ukraine. Many cargo flows, especially in the oil products segment, are shifting from rail to road due to cost advantages, and once this shift occurs, it is unlikely to reverse.
Port Infrastructure Challenges That Hinder Budget Revenue Growth
Co-founder of We Build Ukraine and former Deputy Minister for Communities, Territories, and Infrastructure Development (2022–2024) Yuriy Vaskov agrees that logistics is the key to the successful development of Ukrainian exporters, ultimately leading to a positive trade balance. He pointed out that the war has underscored the importance of an efficient port system, prompting numerous initiatives in this sector during the full-scale invasion.
However, he noted that as the immediate crisis has subsided, so has high-level attention to unresolved port-related issues. While the port sector is currently operating effectively, it is vital to prepare for the future by reducing port logistics costs.
Key issues include port fees. The existing system is inefficient and does not allow for full utilization of funds for infrastructure development. Moreover, it does not align with global best practices and hinders the creation of deeper ports, which would reduce freight costs and increase exporters’ earnings. Businesses have long demanded lower port fees, but structural obstacles prevent their reduction.
Solutions could include establishing a dedicated fund (similar to the Road Fund) or excluding port fees from the tax base. Another challenge is excessive state involvement in port operations, which is significantly less efficient than private sector management. Existing investment mechanisms such as leasing, concessions, and privatization require legislative changes to become more attractive to investors. Additionally, conflicting regulations, such as those governing construction on water fund lands, hinder private investment in port development.
Serhiy Vovk, Director of the Center for Transport Strategies, emphasized that ensuring the capacity of Ukraine’s main deep-water ports is a critical priority. He also noted that the business model of port operations is evolving. While ports previously generated value independently, companies now increasingly purchase terminals to secure their logistics needs. Meanwhile, market-based operators are expanding inland logistics to offer dry terminals within the country, ensuring stable cargo throughput at seaports.
An important trend is the clustering of ports, transforming them from mere cargo transshipment points into production hubs. Without such a shift, ports like those on the Danube will struggle to remain competitive. Therefore, integrating production facilities into port operations should be a strategic goal.
How Aviation Infrastructure Can Support Economic Recovery
International airlines are ready to resume operations in Ukraine. Ryanair CEO Michael O’Leary emphasized that reopening Ukrainian airspace would contribute to the growth of the global low-cost airline market, as demand for passenger travel is expected to rise—many Ukrainians abroad wish to return home or visit their country. Aviation will also play a crucial role in economic recovery by facilitating business operations and tourism.
“We are eagerly awaiting the reopening of Ukrainian airspace as soon as it becomes safe. We are prepared to resume flights to and from Ukraine immediately once conditions allow. Establishing bases in major cities such as Kyiv and Lviv will enhance operational efficiency and customer service quality,” O’Leary stated.
Wizz Air Group CEO József Váradi echoed these sentiments, predicting a surge in air traffic once Ukraine’s airspace reopens. He outlined the company’s plan to launch around 100 routes within the first six months, providing a capacity of five million seats annually.
The restoration of Ukraine’s aviation infrastructure will be instrumental in revitalizing the economy, attracting foreign investment, and reconnecting the country with global markets.