The Ukraine freight and logistics market is expected to witness a slow CAGR of less then 3% during the forecasted period of 2020-2025. The share of maritime transportation in the country is expected to increase in the coming years. Additionally, as the railways is currently being utilized to almost full load, it will not be able to grow much because of the limited capacity.
Key Highlights
- Due to COVID-19 the impact on the freight transport is estimated to around 15% to 20% of reduction in the first half of the year 2020.
- Ukraine's trade with China improved while that with EU suffered in the year 2019. Ukraine’s exports of goods to the EU grew by very moderate 4% (January-November) 2019, gradually decelerating over the year, while exports to China soared by 70% and overall exports increased by 6%.
Key Market Trends
Ukraine Constrained by Weak Road Infrastructure
Over the past few years, Ukraine has intensified its trade links with the EU driven by both the positive stimulus provided by the Association Agreement and a negative stimulus, namely the need to replace lost trade links with Russia. Between 2013 and 2018, the share of EU in Ukraine’s international trade in goods increased to 42% from 31%, while 2018 trade value at USD 43.4 bn almost reached the pre-crisis level (USD 43.8 bn in 2013) and grew by over 50% from 2015.
However, future trade growth is constrained by logistical constraints. In 2018 and 2019, Ukrainian carriers have faced restrictions on their ability to deliver cargo by road to EU countries. Poland proved the biggest sticking point as the number of Ukrainian cargo trucks allowed to pass in or through Polish roadways was reduced despite growing trade volumes. The role of road transportation in the EU-Ukraine trade is high. According to Eurostat road carriers accounted for 38% of Ukrainian exports and 81% of imports from the EU (in euros) in 2018. Switching mode of transportation may be difficult as Ukraine’s rail, seaport and air capacity is limited and not always cost-effective.
Ukraine’s main network of roads connects all of the major cities of Ukraine and provides cross-border routes with neighboring countries. The total length of international highways on the territory of Ukraine exceeds 8,600 kilometers. However, the extremely poor condition of Ukrainian roads is one of the reasons they are named the deadliest in Europe.
In the assessment of the Ukrainian government, the condition of the roads and bridges in the country does not allow for the quick or safe transportation of passengers and cargo, and for the development of transit traffic. The Ukrainian road infrastructure is completely dilapidated - according to government estimates, 97 per cent of the roads require general refurbishment or ongoing repairs, some 9,600 bridges do not meet the modern technical requirements, out of which 1,923 bridges are in need of immediate repair and 86 are at risk of collapsing.
Increasing Cargo Transshipment in the Country
Ukrainian ports began 2020 with a significant increase in cargo transshipment. The warm winter, as well as the export of grain and ore and a significant increase in coal imports, led to an increase in freight volumes of over 20%. In total, 13.5 million tons of cargo were handled in the seaports of Ukraine in January 2020. Grain loads continue to occupy the first place in terms of transshipment. In January 2020, 4.7 million tons (+ 22%) were shipped via seaports. The increase in cargo transshipment in Ukrainian seaports was mainly due to exports. During the first month, 10.2 million tons were processed in the export direction, which is 1.5 million tons or 17% more than in the same period last year. The top five transshipment leaders among Ukrainian ports include the Southern, Mykolaiv, Black Sea, Odessa and Mariupol ports. It is headed by the five port of Southern with a gain of transshipment of 28.5%. In January 2020, the volume of domestic traffic increased by 45% or by 29 thousand tons and made up more than 93 thousand tons. For the most part, the internal transport between the ports carried grain, other bulk cargoes and oil.
Competitive Landscape
The number of international players in the Ukraine freight and logistics market is increasing. The road freight market is competitive with reducing margins. While the rail freight market is observed to be suffering due to lack of competition.
Some of the major players in freight and logistics in the country are DHL, DSV, CEVA Logistics, and Agility to name a few.
Additional Benefits:
- The market estimate (ME) sheet in Excel format
- 3 months of analyst support
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Table of Contents
Methodology
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