There is an immense surplus of freight wagons in Ukraine. Oversupply is leading to incredibly low rental prices, whereas business was highly profitable just a few years ago.
Between 2022 and 2023, Ukrainian rolling stock companies could still make a quick buck by renting out their wagons. The daily rental price was around 14,000 hryvnia at the time, the equivalent of nearly 300 euros. At the time, Ukraine had a shortage of freight wagons.
Now, the picture looks vastly different: you can rent a grain wagon for as low as 100 hryvnia, or 2.12 euros. More commonly, the price is around 150 to 200 hryvnia, so up to around four euros. The fall from 300 euros to single-digit prices is a massive crash, and a problematic one for wagon owners. Four euros per day does not cover administrative or maintenance costs, and so their business has become loss-making.
Volodymyr Ivashchenko, CEO of TAS-Logistic, a Ukrainian wagon leasing company, tells Ukrainian publication Rail.insider that some operators are forced to transport freight for free. By doing so, their wagons do not stand idle and they do not need to pay additional fees for fleet storing – more financially beneficial arrangement than leaving them unused.
There is oversupply especially in the grain hopper and gondola market segment, which makes up the majority of Ukraine’s rolling stock fleet. There are around 27,000 grain wagons in Ukraine, but in peak season, it does not need more than 19,000. In the off-peak season, the need does not exceed 13,000.
The underlying reasons
How is such a quick turnaround in the market and its profitability possible? Rail.insider identifies a number of underlying reasons. First, Ukraine acquired thousands of Russian wagons that were left on its territory after the start of the war. Moreover, the war has shrunk freight volumes. Many grain shipments now also take place via the road.
Besides that, Ukrainian Railways has improved its infrastructure in recent years. It has sped up wagon turnover and reduced waiting times in ports and at border crossings. The more efficient operations have reduced the quantitative need for wagons. Lastly, operating costs have grown: Spare parts, repairs, and storage fees have become more expensive.
Or is Ukrainian Railways at fault instead?
On the other hand, Yuri Shchuklin, director of logistics company Vantazh and committee member at the European Business Association, has a different reading of the situation. In an opinion piece for publication ZN.ua, he points the finger straight to Ukrainian Railways. The rail operator is allegedly the architect of both the market boom and the following bust.
Shchuklin argues that Ukrainian Railways (UZ), as a market regulator and commercial player, artificially reduced the availability of wagons. As a result, auction and rental prices soared, which was beneficial for both UZ and wagon owners. In reality, Shchuklin says, there has been a wagon surplus since 2020.
What followed was a purchasing frenzy, continues Shchuklin. He claims that agricultural producers bought an additional 1,600 grain wagons and 6,000 dump truck trailers. When UZ then improved wagon turnover after a 2024 market crash, the inflated prices collapsed.
The Ukrainian Agrarian Confederation has been highly critical of UZ for its tariff and rolling stock policies, and wants the rail operator to stop being a monopolist.
Future outlook
TAS-Logistic believes that the current situation will continue throughout 2025. That means a continued surplus, low rates, and no major growth triggers in sight. Economic recovery will remain constrained by war, limited port access, and western border bottlenecks. Rolling stock companies will gradually scrap outdated wagons, and rates will increase only slightly around the new grain season in late July.
From 2025 onwards, the company believes that the market will gradually move to a new equilibrium by 2028. It looks at the coming years as a “painful period” that is a necessary correction.