Ukraine's railway is running out of locomotives

Ukrzaliznytsia (UZ) is Ukraine’s sole rail carrier, with no private carriers operating on the country’s main lines. According to Serhii Vovk, the director of the Center for Transport Strategies, the country’s railways carry approximately 60 percent of its freight and about half of all exports. In most European countries, rail transport accounts for only 10-20 percent of freight.

Since the start of the full-scale invasion, Russia has damaged 550 Ukrainian Railways locomotives, with more than 335 damaged in 2026 alone. In early October, Minister of Agrarian Policy Taras Vysotskyi said Ukraine's locomotive reserves were nearly depleted.

"The railroad is the most important. It isn’t just about passenger transport, which we discuss from the perspective of passenger safety, but also about export shipments and military transport,” said Vasyl Shevchenko, a transportation expert who served as acting Minister of Transportation and Communications from 2009 to 2010.

Despite these challenges, the railroad company is not only trying to survive but also to grow. To this end, Ukrainian Railways is working on four fronts:

Railcars are relatively easy to replace, so Russia has prioritized targeting locomotives, the vehicles that power the train. 

"Locomotives are the items most in demand because they are the most expensive," explained Shevchenko. 

Replacing lost locomotives is also difficult because most European models can’t run on Ukrainian tracks. Ukraine uses a wider 1,520-mm rail gauge, while most EU countries use 1,435 mm, so a locomotive built for most European railways can’t simply be brought in and put to work. 

To save locomotives, Ukrzaliznytsia now couples long-distance passenger trains in twos or threes so that a single locomotive can pull them all.

The government has begun forming a ‘railway coalition’ to purchase used locomotives. Slovakia agreed to transfer three electric locomotives and Lithuania agreed to transfer three more. 

To expedite the purchase, the Cabinet of Ministers amended the rules to allow the purchase and lease of traction rolling stock, including used units, without following standard public procurement procedures.

The company has introduced new traffic rules to keep operations going as smoothly as possible during air raid alerts.  When isolated drones are in the air, trains continue to run and boarding proceeds as usual. If the threat level increases, such as during a missile or large-scale attack, boarding will be halted and passengers will be directed to shelters. 

But even such safety measures are controversial and can cause other problems. "Such measures cause passengers to scatter during and after an evacuation," said Shevchenko. "The enemy uses jet-powered drones and various guidance systems. They also have satellite communications and LTE mobile modems."

So any stop, evacuation, or crowd on the platform becomes an easy target, forcing the railway to disperse passengers and trains.

Ukrzaliznytsia is considering using electronic warfare (EW) equipment on trains to jam the signal used to control drones. "We need to install these devices on trains," said Kostiantyn Kryvolap, an aviation expert and former test engineer at the Antonov Design Bureau. "In addition, I think we need to install automatic guidance and detection systems. If we can alert gas station employees to a drone's location and direction, then installing this on a locomotive or railcar is no problem. However, this requires organizational efforts that we currently lack."

The year of 2026 was the most difficult for the railway company since the war began. In just six months, the company lost over 10 billion hryvnia ($222 million) — more than it lost in all of 2025. 

The decline accelerated in the fall. "Just two months ago, we were handling about 400,000 metric tons per day. Now, we're down to 250,000," said Valerii Tkachov, Ukrainian Railways' deputy director of the Department of Transportation Technology and Commercial Operations.

Some cargo is already being transported via road instead of rail. “This [shift to road transport] has become a widespread trend; in fact, according to some reports, there aren’t even enough trucks to handle these shipments,” said Volodymyr Naumov, chairman of the Association of Ukrainian Railway Freight Shippers.

The company is addressing this problem by raising rates by 30 percent for the first time in more than four years. 

Oleksandr Pertsovskyi, chairman of the board of UZ, called the rate increase a “necessary” measure to secure funds for fuel, electricity, and repairs ahead of winter. And it may not be the last — rates are likely to rise by another 15 percent from the beginning of next year, Petrovskyi said.

The second measure is cost-cutting. “Currently, the central administration is already operating four days a week. Many infrastructure projects have also been scaled back. We are considering closing underutilized infrastructure and implementing other cost-saving measures, such as reducing spending on fuel and lubricants, electricity, and so on. In other words, under these circumstances, the railroad is forced to switch to survival mode,” said Tkachov.

On September 20, the company electrified the first new European-gauge track on the Chop-Uzhhorod section. In the Lviv region, construction is underway on an additional 80 kilometers of track.

The company is also considering opening the market to private carriers. One possible first step is a pilot project in which private locomotives, such as those owned by cement plants, would operate on specific sections of track.

"The cement producers themselves raised this issue. These companies have their own mainline locomotives,” Tkachov said. “Ivano-Frankivsk Cement had its own transportation operations until the 1960s. Given Ukrzaliznytsia’s current shortage of locomotives, they are asking to return to this arrangement."

1. How fuel distribution networks protect gas stations from attacks

Russia has systematically targeted gas stations this year. In September, attacks reached Kyiv for the first time, destroying or damaging 16 stations. In total, approximately 350 gas stations have been damaged, representing about 6 percent of the country’s market capacity.

As a result, some gas stations have implemented physical security measures. For instance, Ukrnafta is installing sand-filled gabions and concrete shelters around its stations. Meanwhile, OKKO uses anti-drone nets, protective shielding around fuel pumps against FPV drones, and bulletproof window film.

"Gas stations now have access to a drone tracking system. Accordingly, they are developing safety protocols and establishing control centers to monitor approaching drones, report them, and provide staff with instructions on securing the facility and evacuating people from the premises," said Serhiy Kuyun, director of the A-95 Consulting Group.

The government is also working to support gas stations by adopting insurance regulations for fuel risks and offering preferential loans for underground storage tanks.

2. Ukraine's steel capital comes to a standstill

In late September, ArcelorMittal Kryvyi Rih, the country’s largest steel mill, suspended operations. On October 10, the company announced a shutdown, with industrial assets to  be mothballed in just two months and operations to resume only after the end of the war. The Ingulets and Pivdenny Mining and Processing Plants, as well as the Kryvyi Rih Iron Ore Plant, have suspended operations as well.

"ArcelorMittal Kryvyi Rih is more than just a steel mill," said Viktor Halasyuk, economist and former chairman of the Verkhovna Rada Committee on Industrial Policy and Entrepreneurship. "It is a vertically integrated complex that includes iron ore mining, ore beneficiation, coke production, sintering, blast furnace operations, steelmaking, and rolling. In fact, we’re talking about a quarter of Ukraine’s metallurgical industry.”

The shutdown is a blow to the city’s budget, since the plant accounted for about 30 percent of its revenue. Kryvyi Rih is already preparing budget cuts. The ore mining and processing plant and the steel mill were the main contributors to the city's freight traffic, but now the number of locomotive crews per shift has dropped from 30-35 to 10 per day. 

"Maintaining a steel mill isn't just a matter of putting it on hold," said Halasyuk. "The coke-chemical, blast furnace, power, and water management systems require constant technical monitoring, maintenance, security, and funding. Even after hostilities end, restarting operations will depend on four conditions: site security, the condition of key equipment, access to stable and competitively priced electricity, and the restoration of economic access to external markets, on which the Ukrainian steel industry critically depends.”

3. Ukrainian farmers may run out of money before the New Year

Since July 22, Ukraine has stopped shipping by sea, which was the main route for agricultural exports. Alternative routes allow for only one-third of the necessary export volume.

"From an economic and logistical standpoint, there is no alternative to the Black Sea," said Denys Marchuk, deputy chairman of the All-Ukrainian Agrarian Council.

The result is an excess of grain, exceeding both domestic demand and storage capacity. There is, in fact, so much grain that new solutions have been created to store it. 

"Technologies such as polymer sleeves are now being developed. These are bags that are filled at processing plants and can hold up to 200 metric tons of product," Marchuk said. 

Without sales, however, farmers have taken a major hit. They cannot pay for planting, land leases, or loans. As of the end of October, winter crops had been planted on 75.4 percent of the planned acreage. 

Small and medium-sized farms and farmers in frontline regions are struggling the most because banks often deny them loans due to the risks involved, even when government programs are available.

"If these difficulties continue, it’s possible that the planted area will decrease by more than 40 percent in the spring planting season," said Marchuk.

By: Oksana Zabolotna

Expansion of War-Risk Compensation for Businesses

Resolution of the Cabinet of Ministers of Ukraine №1157 dated September 17, 2026

Why it’s important: This expands financial protection for businesses against war-related risks, notably by including Kyiv and the Kyiv region among the high-risk areas covered by the program and extending coverage to a broader range of business assets. This may reduce financial risks for businesses that continue to operate and invest amid regular attacks, while compensation for insurance premiums may improve access to war-risk insurance and support the recovery of economic activity. At the same time, the program’s impact is limited by available budget funding, the defined list of eligible property, and established compensation caps.

Proposals:

Stage: Entered into force on September 22. 

Initiator: The Cabinet of Ministers of Ukraine

What’s next: Implementation of the resolution.

FINANCES | Ukrenergo has completed the restructuring of $825 million in ‘green’ Eurobonds, with 97.5 percent of holders supporting the move, and Fitch upgraded the company’s rating from ‘RD’ to ‘CCC.’

FINANCES | In September, steel production fell by 80 percent after Russian strikes put seven blast furnaces operated by Metinvest and ArcelorMittal out of commission.

EU ACCESSION | On October 22, the Cabinet of Ministers approved a bill that brings VAT and excise taxes on electricity in line with EU rules.

EU ACCESSION | On October 13, the EU opened negotiations with Ukraine on Clusters 2, ‘Internal Market,’ and 3, ‘Competitiveness and Inclusive Growth.’ Four of the six clusters are now open, and Hungary lifted its veto after the Council adopted amendments to the education law.

INFRASTRUCTURE | In October, the daily workload at Ukrzaliznytsia fell by nearly half compared to July.

AGRICULTURE | Since the beginning of the year, the State Service of Ukraine on Food Safety and Consumer Protection has approved 29 new export destinations for Ukrainian products in 13 countries and the EU — the highest number since 2022.