Transport

The route network of Ukraine is well-developed transportation structure, which consists of relatively dense network of railway and motor roads, a number of airports, seaports and river transport system.

The key transport hubs in the territory of Ukraine are as given below:
•    railway and road-transport junction (Lviv, Kharkiv);
•    railway, marine and road junction (Odesa, Kyiv, Mykolayiv, Kherson);
•    marine and road-transport junction (Yalta, Alushta, Kaniv).

In Ukraine, railway transportation is carried out by the railway system, which includes six main railways: Donetska, Lvivska, Odeska, Pivdenna, Pivdenno-Zakhidna and Prydniprovska, managed by Ukrzaliznytsya. Ukraine borders 7 countries with 56 border-crossing stations and 13 major seaports of the Black Sea, the Sea of Azov and the Danube River.

The major part of passenger (60%) and freight transportation (90%, without pipelines) falls on railway in Ukraine. The main reason of such choice is rational price for tickets. In 2008, about 70 mln tons of in-transit freight was transported via Ukrainian railway, while the freight turnover was more than 69 mlrd tonne-kilometre, being more by 1.8% compared to 2007. The analysis of transit traffic by the countries shows that 90% of freights were delivered from the Russian Federation, Kazakhstan, Belarus and Moldova. At that, moderate increase of transportation volumes at average by 3-5% per year in forecasted since 2010.

The problem issues for railway sector are technical condition of railway network and rolling stock, their obsolescence and noncompetitiveness against the western railways and modern trains. As for financing of the Ukrainian railway for 2009, the capital investments into railway transport development were envisaged at the amount of UAH 7.9 mlrd.  The main target of investing still is renewal of rolling stock and UAH 4.0 mlrd will be allocated for this purpose, while UAH 3.1 mlrd will be assigned for purchasing new rolling stock.

The rate of return of motor transportation in Ukraine is from 2% to 15%, depending on the area of activity. In Ukraine, the following factors influence over the rate of return of motor transportation: prices for fuel and automobiles, spare parts, VAT for inside freight traffic, preparation of documentation, certification, internal and external competition. The negative factor is also the absence of the domestic manufacturer of vehicles for motor transportation (haulers, automobile carriers, container carriers, refrigerator trucks), which influences over the self-cost of services. All above-mentioned factors force the Ukrainian consumer to use more attractive and cheaper services of western transporters.

The leaders on the Ukrainian market of motor transportation are 4 enterprises (the total number of truck and trailers is about 800, including specialized vehicles: tankers, container carriers, automobile carriers, refrigerator trucks and megatrailers). These enterprises occupy about 6% of the market. The other almost 2 th international transporters (85%) have vehicle fleet up to five truck and trailers. In the conditions of transportation volumes decrease, 15-20% of small companies are expected to leave the market till the end of 2009. The other market players will either invest in construction of warehouses, logistic complexes and customs terminals, or direct capital inflows into certain segments of transportation business.

In Ukraine, air passenger transportation is carried out by 32 domestic airlines. The leaders are domestic Aerosvit Airlines, Ukraine International Airlines, Dniproavia National Air Company, Donbassaero Airlines, Windrose and international companies: Wizz Air, Air Arabia and Germanwings. For the 1st half of 2009, 1.7 mln passengers were transported by international airlines and 0.5 mln passengers – by domestic airlines, which is by 19.5% and 14% less than the last year indices. The index of average passenger loading on the regular international flights of domestic airlines decreased to 61% in comparison with the 1st half of 2008, when it was almost 70%. The index of average passenger loading on the regular domestic flights did not exceed 56% as well as in 2008. The main reasons of air transportation market conditions worsening in Ukraine are as follows: declined purchasing power; outflow of clients; deflation of UAH to USD and EUR due to financial crisis; visa barriers.

The Ukrainian marine transport includes Black Sea, Azov and Ukrainian-Danube Shipping Companies, which own the carrier fleet with the total deadweight of 5.2 mln tons and passenger fleet for 9.9 th places. Besides, the largest river ports of the country are situated over the Dnieper River and are connected with the seaports of Ukraine via well-developed coastal traffic. The main river ports are  Odesa, Illichivsk and Pivdennyi. At that, cargo transportation by marine transport in January - May 2009 decreased by 62.5% to 2.9 mln tons; cargo transportation by river transport - dropped by 73.8%, by marine transport - by 47.4%. International cargo transportation by marine transport declined by 53.8%, by river - by 62.9%. In turn, the number of processed vehicles – foreign and in-freight – decreased by 26.0% and reached 6.7 th items.

The perspective areas for transportation development in Ukraine in the nearest future are investments into facilities, related to EURO-2012. A range of projects on modernization and reconstruction of transport facilities has been created. In the sphere of aviation these projects are connected with renewal of airline fleet, construction and reconstruction of airports (construction of parking lots, new terminals, access roads). As for railway sector – reconstruction of railroad stations, repair and construction of depots for excursion trains, purchasing high-speed trains and rolling-stock. In automotive industry – construction of new highways and improvement of current motorways condition with respect to use for traffic (Kyiv-Yagotyn, Kyiv-Chop, Kipti-Bachivsk), construction of new freight terminals, reconstruction of current and construction of new service stations. As for marine transport, the construction of container terminals, transshipment and processing complexes is planned as well as foundation of new estuary port.

The sources for investments are both transport sector operators (companies, the Ministry of Transport of Ukraine) and foreign investors (the EBRD, the EIB and the World Bank). Taking into consideration the deficit of transport capacities, the development of transport sector is also facilitated by investments and projects from the other industries. The lack of carriages, absence of rolling stock for cargo traffic volumes increase, unprofitability, also unbalanced workload of seaports force the industrial enterprises to invest into development of transport infrastructure, thereby increasing the cost of production and the rate of return for investment projects.