Freight Wagons for €2 a Day — Ukraine’s Rail Market Faces Historic Collapse

Ukraine is experiencing a severe surplus of freight wagons, driving rental prices to historic lows. In some cases, operators are forced to haul cargo for free to avoid parking fees, with market balance unlikely to return before 2028.

During 2022 and 2023, Ukraine's wagon shortage allowed rolling stock companies to command rental rates of around 14,000 hryvnias (EUR 300) per day. But the landscape has dramatically shifted: today, a grain wagon can be leased for as little as 100 hryvnias (EUR 2.12) per day. Average prices now hover between 150 and 200 hryvnias (EUR 4), well below the levels needed to cover basic administrative or maintenance costs, rendering many operators unprofitable.

Operators Resort to Free Haulage to Cut Losses

According to Volodymyr Ivashchenko, CEO of TAS-Logistic, a Ukrainian rail leasing company, some operators have resorted to transporting cargo at no charge. Speaking to Rail.insider, Ivashchenko explained that keeping wagons moving helps avoid costly storage fees. "It is financially more viable to run empty or free-load wagons than to leave them idle," he stated.

The oversupply is particularly acute in the grain wagon segment. Ukraine currently holds around 27,000 grain wagons, yet only needs around 19,000 during peak harvest season and as few as 13,000 outside of it.

Surplus Rooted in War and Market Distortions

Several factors have driven this surplus. Thousands of Russian wagons were stranded on Ukrainian territory after the full-scale invasion. Simultaneously, the overall volume of rail freight declined sharply due to the war, with many grain shipments shifting to road transport and ports. Ukrainian Railways (UZ) has also improved its infrastructure, accelerating wagon turnover and reducing bottlenecks at ports and border crossings. These operational improvements, combined with rising costs for spare parts, repairs, and storage, further reduced the number of wagons needed.

Industry Accuses Ukrainian Railways of Market Manipulation

However, not all industry players view the situation as purely circumstantial. Yurii Shchuklin, director of the logistics company Vantazh and a board member of the European Business Association, accuses UZ of deliberately manipulating wagon availability. According to Shchuklin, UZ's dual role as both market regulator and competitor allowed it to inflate prices at auction to benefit both itself and private wagon owners.

"An oversupply already existed since 2020," Shchuklin argued, claiming that UZ's management of turnover artificially created demand, triggering a purchasing boom. Agricultural producers bought 1,600 additional grain wagons and 6,000 dump trailers, further distorting the market. When wagon turnover improved in 2024, rental prices collapsed.

💥 Ukrainian partisans immobilized a Russian train transporting military fuel by planting mines on the railroad tracks in occupied Zaporizhia region and then Ukrainian forces destroyed the entire train with drones. pic.twitter.com/0SFm3gwpqk

— Igor Sushko (@igorsushko) December 15, 2024

Calls for End to Ukrainian Railways Monopoly

The Ukrainian Agrarian Confederation has joined criticism of UZ, demanding tariff adjustments for track access and the elimination of UZ’s monopoly position. TAS-Logistic forecasts that the current imbalance will persist throughout 2025, with sustained oversupply, depressed rates, and limited prospects for short-term recovery.

War conditions, restricted port access, and persistent border bottlenecks will continue to hamper economic revival. Companies are expected to gradually decommission obsolete wagons, but rental prices may only increase modestly, likely after the next grain season starts in late July. Experts believe true market equilibrium may not return until 2028, when sufficient fleet reductions and economic stabilization take hold.