Ukraine’s advantageous geographical position makes it
inevitable destination for transit of goods and passengers
between Europe, Asia and Middle East. Through the territory
of Ukraine goes a number of international transport
corridors reaching a total length of over 5 thousand km.
Today country’s transportation infrastructure is made of
169.5 thousand km of highways, 21.7 thousand km of
railways, 45 civil airports, 18 seaports and other transport
During the last year some 7 bn passengers, 657 m tons of freight and 151 m tons of freight in transit have been transported. Most of the passengers (89%) were transported by motor vehicles, while most of the freight (71.3%) was transported by rail.
Experts forecast that the amount of traffic and the quality of rendered services will increase during the next three years. Large-scale infrastructure projects, such as reconstruction of the Pivdennyi Port, reconstruction of a number of roads, the reconstruction of major international airports, etc. are planned to be implemented.
The main direction of the industry’s development provided by the development concept approved by the Ministry of Infrastructure of Ukraine is development of the industry, raise of standards and integration of the transport system of Ukraine into the European infrastructure.
Due to geographical position Ukraine has great transit
potential. Ukraine has one of the most extensive rail networks
in Europe, which handles significant part of freight
and passenger traffic. The administration of public railway
transport is the State Administration of Railway Transport
of Ukraine Ukrzaliznytsia, which was established in 1991.
The management sphere of Ukrzaliznytsia covers the railways
of Donetsk, Lviv, Odesa, Pivdenna (Southern), Pivdenno-
Zakhidna (Southwestern), Pridniprovska Railways
and also other enterprises and organizations of integrated
industrial-engineering complex, that enables freight and
Ukraine’s highways network is also quite extensive, it covers all the territory of the country; however, the quality of the road surface and automotive infrastructure is in need of some improvement. Government invests in development of main roads linking country’s major economic centers; however, the level of investment in the regional road network is rather low, which does not allow adequate financing for maintenance of the road network. The level of sea and air transportation routs development is lower. There is a number of port terminal and airport development projects financed by commercial and government entities; however, current investment volumes are insufficient and will not allow for increase of freight and passenger traffic significantly.
In 2011, some 7 bn passengers have been transported by all means of transport in Ukraine, which exceeds figures for 2010, but is still much less than in 2009.
The automotive transport is the most popular mean of transport. In 2011, the share of passengers transported by the automotive transport constituted 89% of the total passenger traffic.
In 2011 656.7 m tons of freight were transported, which exceeds the similar indicator for 2010 by 7.4%. An average annual growth of freight traffic in Ukraine is 8%.
Since 2009, the freight turnover in Ukraine has been constantly increasing, and in 2011 it reached 426.43 m ton-km, which exceeded the similar figures for 2010 by 5.4%.
In Ukraine, major part of freight is transported by rail. In 2011, its share constituted around 60% of the total amount of transported freight. A share of automotive transport is about 22%. The total share of freight transported by water and air transport constitutes 1.23%.
The structure of freight traffic in Ukraine has not changed considerably since 2009.
Commodity exports and imports have been constantly increasing since 2009 and consequently, the cargoturnover of all means of transport has also increased. In 2011, commodity exports amounted to USD 68.4 bn, and commodity imports amounted to USD 82.6 bn.
Ukraine’s advantageous geographical position influences volume of freight in transit. In 2001 151 m tons of freight in transit passed through the customs territory of Ukraine. Major share of the total volume of freight in transit was transported by rail (without taking pipelines into account).
The total length of roads in Ukraine is 169,636.8 km. Share of hard-surface roads (highways) is 97.8%. Seven automotive corridors pass through Ukraine among them are international transport corridors III, V and IX, and national transport corridors linking the Baltic Sea and the Black Sea, Europe and Asia. The total length of the transport routes (across Ukraine) is 5,240 km.
At present, there are 45 operating civil airports (including heliports) in Ukraine. Out of them, 14 airports receive domestic flights from Kyiv the capital of Ukraine on a regular basis and 19 airports have been assigned international status (Boryspil, Dnipropetrovsk, Donetsk, Zaporizhzhia, Ivano-Frankivsk, Izmail, Kyiv, Kryvyi Rih, Lymanske, Luhansk, Lviv, Mariupol, Mykolaiv, Odesa, Rivne, Simferopol, Uzhhorod, Kharkiv and Chernivtsi).
In 2011, ten biggest airports handled about 12.5 m passengers, which exceeded figures for a previous year by 21%.
In addition, 90.3 thsd tons of air freight were handled by Ukrainian civil airports in 2011. This indicator exceeds one from the previous year by 2.7%.
The marine industry of Ukraine comprises of a network of seaports, as well as loading terminals, moorings and complexes of various forms of ownership.
In Ukraine, there are 18 operating ports, which include 5 deep-water ports, they are: the Pivdennyi Port, the ports in Illichivsk, Odesa, Mykolaiv and Sevastopol. About 60% of handled freight comes through the three largest of them, i.e. Odesa, Illichivsk and Pivdennyi Ports.
Ukraine’s railway system plays a key role in transporting
freight and passengers. Ukrainian railways are managed
by the State Administration of Railway Transport of
Ukraine, which manages the domestic and international
railway transportation and comprises of Donetsk, Lviv,
Odesa, Pivdenna, Pivdenno-Zakhidna and Prydniprovska
Railways. In addition, it includes other organizations
that form single industrial and economic complex such
as Ukrzaliznichpostach, Striy State Carriage Repir Plant,
Kremenchug Concret Sleepers Plant, Ukrainian transport-
logistic centre and others.
The operating length of the railways in Ukraine is about 21.6 thsd km, 45% of which are electrified. About 1.5 thousand stations, 128 major railway stations operate as part of Ukrainian railway system. The car fleet is made up of 139.5 thsd cars, including 7 thsd passenger cars. The staff is comprised of 403 thsd employees. By traffic volumes, Ukraine’s railway ranks fourth in Europe and Asia behind only China, Russia and India. The workload of Ukrainian railways is 3-5 times bigger than that of other European countries.
In 2011, 468.4 m tons of freight and 427 m passengers were transported by rail.
A number of investment projects to reform and develop infrastructure has already been implemented and are being implemented now among them are Kyiv highways reconstruction, High-voltage lines construction, Ukrainian roads quality and safety improvement, Railway high-speed traffic deployment, Ukrainian railways equipment renewal, Development of infrastructure of Illichivsk seaport, Dunaj transportation corridor, Donetsk, Lviv, Kharkiv airports reconstruction, LNG terminal construction, Kyiv-Airport Borispol railway construction. The main directions of reforms are put down in the specific industry development concepts of the Ministry of Infrastructure of Ukraine. Among other things, the automotive industry development program until 2015 stresses for the improvement of the system of public administration and passengers and freight transportation services quality. In addition, it is expected that the system of price regulation and taxation of automotive carriers will be improved, as well as the system of technical regulations for admission of vehicles to operation. The program also contemplates innovative development of the automotive industry and improving transport safety. In the field of development of Ukraine’s seaports a development strategy for a period until 2015 has been approved, which includes improvement of the safety of navigation and environmental protection, participation in port activities by business entities with all types of ownership on the principles of fair competition, efficient use of the transit potential of the country, acceleration the integration of Ukraine’s transport system into the global and European transport systems. Development of river navigation remains one of the priority areas for the development of Ukraine’s infrastructure. A number of investment projects both international (intergovernmental projects) and private are planned to be implemented in the industry. The projects’ scope covers repairs and modernization of locks for railways, creation of a new electronic navigation system, development of a new fee policy and fleet renovation. At present, private investors finance a project for construction of 10 port complexes, launch of more than 60 watercraft (both self-propelled and non-selfpropelled) and 14 new towboats.
In 2011 was built and repaired more then 2000 km of public
roads. Along with that great number of road infrastructure
objects were built or repaired, such as road interchanges,
bridges, country roads, circumferential roads and border
crossing points and many others. Ukraine’s main mode
of freight transportation, i.e. road freight, continued to
recover in 2011, with y-o-y growth of 1.89% following a
9.69% increase in 2010. In 2012, it is expect the growth will
continue with a y-o-y increase of 1.52%. Over the medium
term, it is expected that road freight volumes will increase
by 15.4%, a y-o-y average growth of 2.91%. As a result,
the sector will return to its pre-downturn volumes in 2014
and handle 1.37 bn tons in 2016.
Ukrainian air transport market consists of both Ukrainian and international airlines. Among main Ukrainian airlines should be mentioned: Aerosvit, Ukrainian International Airlines, Dniproavia and Donbassaero; among international airlines – KLM Royal Dutch Airlines, Swiss International Air Lines, Aeroflot Russian Airlines, Windrose, Lufthansa. There were 10 new international airlines that started their flights to Ukraine on a regular basis in 2011, among them are: Avianova, VIM Airlines, Cimber Steling, Onur Air and Flydubai. After two years of recovering volumes in Ukraine’s air freight industry, experts expect 2.4% growth in 2012 to bring the country’s air freight volumes to 92,500 tons. Over the medium term (2012-2016), this growth is projected to continue, with Ukrainian air freight volumes expected increase of 21.6% over the period, and an average) growth of 4% y-o-y. It is expected that volume of freight transported by air in Ukraine will reach 109,797 tons in 2016. It is worth mentioning considerable increase of air passanger transported which became real due to internal and international routes extensions. Average payload range increased to a level of 53.9% for international flights and 52.7% for internal flights. Among the key positive trends of Ukrainian air transport market are: increase of flights numbers and destinations, as well as flight freaquencyand aircraft fleet renewal.
The port of Odesa, the largest port of Ukraine by its handling
capacity, is set to continue it’s return to pre-downturn
levels in 2012 according to expert’s forecasts. It is projected
that the port will handle 26.1 m tons, a y-o-y increase
of 2.5%. It is estimated that freight volumes have grown
by 3.2% in 2011, after a decrease by 11.8% in 2010. Experts
project a continued growth of freight volumes at the
port during 2012-2016. It is also expected that total tonnage
volumes will increase by 21.2%, an annual average
increase of 3.9% and according to the forecast, the port
will handle 30.9 m tons in 2016.
The port of Illichivsk continued to struggle to maintain its volumes in 2011 and 2012 will see a further workload decline. A y-o-y decrease by 2.6% is expected in 2012, following an estimated fall of 11.8% in 2011, continuing the trend of decline from 2009 and 2010, when the volumes of freight handled by the port fell by 13.9% and 7.6% respectively. The volumes are expected to start growing in 2013. A medium-term average growth is expected to reach 2.4% a year, with an expected increase of 12.2% by 2016, bringing the port’s expected throughput to 14.9 m tons.
Railway transport remains the most popular transport in Ukraine for passenger and freight transportation. In 2011 more then 430 m passengers were transported by railway, which is 3.5 m more then in 2010. This mode of freight transportation has seen over two years of decline in 2008 and 2009. But in 2012, a y-o-y increase of 1.62% is expected after an estimated growth of 2.14% in 2011. Ukraine’s growth of rail freight volume is set to remain steady over the medium term, and according to the forecasts, rail freight handling volumes will increase by 11.3% during a five-year period, with an average annual increase of 2.16%. As a result, the sector will handle 492 m tons in 2016.
The State Administration of Railway Transport of Ukraine (Donetsk, Lviv, Odesa, Pivdenna, Pivdenno-Zakhidna and Prydniprovska Railways), Ukrzalizpostach.
Aerosvit, Donbassaero, MAU, Dniproavia, Ukrainian International Airlines, Anton Airlines, Boryspil Airport, Aviacharter, Lviv Airlines, Kyi Avia.
Pivdennyi Port, Illichivsk Sea Trade Port, Odesa Sea Trade Port, Delta-Lotsman, Ukrrichflot, Ukrtranskonteiner, Nika-Terra Specialized Sea Port, Kherson Sea Trade Port, Berdiansk Sea Trade Port, Commercial Fleet of Donbas, Bilhorod-Dnistrovsyi Sea Trade Port, Kyiv River Port.
Kyivpastrans, Kyivske ATP 2240, Lvivske ATP 14631, Lvivske ATP 14630, Kyitrans-2005, Avtobusnyi Park 13527, Kramatorske ATP 11410, Pivnichtrans, Vinnytske ATP 10554, Avtosvit, Mariupol-Avto.
The basic legislative act in the field of transportation is the
Law of Ukraine “On Transport” dated 10 November 1994
which states the purposes and principles of the state
regulatory policy in the field, imposes the requirements of
licensing for certain types of transport-related activities
as well as outlines general features of Ukrainian transportation
In particular, according to the Law of Ukraine “On licensing of certain types of economic activity” dated 01 June 2000 the activity related to rendering transportation services for passengers, dangerous cargos and luggage by means of river and sea transport, automotive transport and by railway is subject to licensing. The same need for licensing exists for carriers of passengers and cargoes by air transport according to the Air Code of Ukraine from 19 May 2011.
Detailed legislative framework for each type of transport is given in special legislative acts such as the Law of Ukraine “On the Railway Transport” dated 04 July 1996, the Law of Ukraine “On the Automobile transport” dated 05 April 2001, Air Code of Ukraine, Merchant Shipping Code of Ukraine dated 23 May 1995 etc.
The general taxation regime applies to all industry participants.
In respect to corporate income tax (hereinafter referred to as “CIT”) no special treatment for activities connected with transportation takes place. CIT is currently calculated at a flat rate of 21%. The rate of CIT will be reduced to19% from 1 January 2013 until 31 December 2013 and to 16% from 1 January 2014.
Provision of international services of passengers and luggage as well as cargoes transportation by railroad, automotive, sea, river and air transport are currently levied at a zero VAT rate.