When we speak of the European path, we hope it’s not just loud statements by politicians but real actions aimed at strengthening the country’s economy, improving the well-being of the population, and building a reliable future for our children.
There are many pressing issues in the country that require immediate resolution. Being an expert in railway transportation and car-building, I will focus on the necessary actions specifically in the transport sector, as it is the economy’s circulatory system.
Without effective logistics, we cannot compete in international markets, and our producers risk remaining in the shadow of global giants. This was pointed out in the European Commission’s report on Ukraine’s readiness and that of other candidate countries for EU accession in 2023. Therefore, the rating of “2” out of 5 for our transport sector, particularly the railways, was unpleasant but expected.
The reasons are clear: reforms are still far from complete, the infrastructure needs significant renovation, the Strategy for the Development and Expansion of Border Infrastructure with EU Member States and Moldova has not been adopted and implemented, there is no progress in multimodal transportation, an independent transport regulator – the National Commission for Transport Regulation of Ukraine – has not been created.
These remarks and shortcomings arise against the background of constant disagreements between the departments of Ukrzaliznytsia.
An ineffective industry management system, ongoing bureaucratic wars only complicate these processes, creating additional barriers to change. Added to this is the personnel problem that we observe both in management positions and in the labor segment.
Without qualified personnel focused on results, not on personal enrichment, progress is obviously impossible. Thus, this “deuce” became a reminder that serious work on all components of the transport system lies ahead. Ukraine still has a lot of work ahead of it to bring its transport closer to European standards and become a reliable partner of the EU.
Ukrzaliznytsia: A Giant with a Tangled Soul
The Ukrainian railway is not just a means of transportation. It is the economic backbone of the country, connecting cities, ensuring the delivery of goods for export, and linking Ukraine with the rest of the world. But its efficiency is often limited by the very structure of “UZ.”
“Ukrzaliznytsia” is one of the largest companies in the country, employing over 184,000 people in numerous branches covering various areas of activity: passenger transportation, freight transportation, infrastructure management, car repairs, and more. Such unification could have provided synergy, but today we observe more chaos than harmony. It’s like a huge orchestra without a conductor: everyone plays their part but mostly not in unison.
And here’s the question: why do we expect results in the absence of synergy between segments—passenger transportation, freight, infrastructure management, repairs? Instead of the effect of scale, we get the opposite result—obstacles to development.
For example, subsidizing losses from passenger transportation with high revenues from freight transportation directly affects the cost of Ukrainian products in the international market. It seems like a forced step, but in reality, there’s a serious problem: passenger transportation not only loses money but also effectively makes Ukrainian products more expensive.
Reporting also creates the illusion that everything is fine since financial indicators are often combined, allowing the shortcomings of some divisions to be hidden behind the profits of others. This system, which should work as a single organism, today hinders itself.
Can the state control this? Yes, but it requires revising strategies, clear plans, and transparent mechanisms to avoid situations where the railway effectively deprives itself of resources by covering the losses of one business direction at the expense of another.
A positive signal is that specialists are currently working on structural changes, separating certain areas of activity into individual divisions. This will allow for better assessment of their efficiency, avoidance of cross-subsidization, and creation of a more transparent management system. But it’s important that these changes don’t remain only on paper but become the basis for real transformations that correspond to European approaches.
Arrested wagons: from potential to problem
The lion’s share of more than 21 thousand Russian and Belarusian wagons arrested in Ukraine in response to Russian aggression have been idle and deteriorating for 2.5 years. But they could have become an important resource for the economy and improved the operational and financial indicators of Ukrzaliznytsia. This leads to significant financial losses for the state due to the lack of income from their operation.
The data is open, so it is no secret to anyone that over these 2.5 years the Agency for Investigation and Asset Management has not been able to select a manager for the arrested wagons. I do not believe that there are no competent freight transportation specialists left in Ukraine.
At the same time, we see that Ukrzaliznytsia has also failed to effectively use the arrested property. Some of them are used on the principle of “use until wear and tear and throw away”, that is, when the time comes for scheduled repairs, the cars are simply left on the side of the road, where they rot, and they are also looted. And, most disappointingly, some of the ones ready for operation are also standing and wearing out.
Instead, it was possible to conduct a technical inspection from the very beginning, scrap those whose repairs will never pay off, divide the economic zones into smaller parts, oblige the managers to make repairs, set the desired fee and let the property work at 100%.
Wartime Budget Expenditures: Priorities in Focus
At the same time, in the draft budget for 2025, approved for the second reading by the Verkhovna Rada, the government is tasked with finding UAH 4.8 billion for new passenger cars. Of course, currently rail transport is the most convenient and necessary option for transporting people, but the question of the effectiveness of such costs in today’s conditions still raises doubts.
It may be necessary to first conduct a full audit of the state of passenger rolling stock, assess the possibilities of its repair (which can be many times cheaper). And then consider the option of purchasing new wagons?
In addition, it is worth paying attention to the need for more efficient use of existing capacities, which are currently idle and require financing. These assets, even when idle, generate costs for maintaining staff, security and basic infrastructure.
This irrational use of resources creates an additional financial burden on the state budget, which is already limited in wartime conditions. Instead of keeping these assets unused and continuing to spend money on them, it makes sense to consider leasing or leasing them to private companies.
Currently, Ukraine is in the midst of a raging crisis – and now is the time to change management approaches and introduce new economic models. You need to get rid of a suitcase without a handle in time, or find specialists who can fix the handle and breathe new life into unprofitable assets.
We hear about the budget deficit every day, yet on the other hand, we do little to patch it up.
In recent months, there have been tentative moves toward transferring these railcars under management, but from what we see in the media, there are currently more questions than answers.
Why these reforms are important
For Ukrainians, the priority is the construction of a reliable transport system that meets European standards. But the final goal of the reforms is not just to get a “passing score” from the European Commission. This is the creation of a transport system that will stimulate economic growth.
Ukraine depends on efficient railway transport not only for exports, but also for general infrastructure. Transparent governance, coordinated actions of state authorities and effective use of available resources are the key to success both at the national level and in the European integration process.
These reforms are necessary – and for us they are extremely important. European standards are a guide, but the future of Ukraine depends on its ability to independently adapt its transport infrastructure to new challenges and opportunities.
