Ukraine’s trains, the country’s lifeline, have money problems

The Russian drones slammed into the railway hub in the city of Fastiv, around 50km south-west of Kyiv, on the night of December 5th. Residents who came to the station the next morning found a bombed-out shell of a building, still smoking—and trains continuing to rumble on their routes. Days after the attack, workers were tearing scrap from the structure and sweeping glass from the walkways, as passengers waited for their trains in temporary tents.

Ukrainians take pride in the reliability of their trains. Ukrzaliznytsia, the state-owned railway company, has millions of riders every month. Its cars ferry aid from Europe to the front lines and return carrying wounded soldiers. The railway is the backbone of the domestic economy and international trade. Its freight lines sustain Ukraine’s embattled industry in the east, ship cargo throughout the country and carry crucial grain exports to the border.

Yet in recent months the number and accuracy of Russian strikes on the railway have surged. Since August 1st there have been more than 700 attacks on railway infrastructure, compared with 313 in the first seven months of the year. Passengers face higher risks, hours-long delays and limited capacity, as more carriages and locomotives are forced out of service.

Russia can increase the aerial attacks because it now produces vast quantities of cheaper, more accurate versions of Iran’s Shahed kamikaze drones. “Before, they would not have spent two or three Shaheds on one locomotive. Now, they don’t hold back,” says Oleksandr Pertsovskyi, head of the national railway company.

Mr Pertsovskyi says the Russian anti-rail strategy is three-fold. Near Odessa in the south it aims to stop export cargo from reaching the country’s Black Sea ports. In the northern Sumy and Chernihiv regions, it targets passenger trains in an effort to make those areas uninhabitable. And in Donetsk in the east, which Russia claims yet has failed to fully capture, bombardment of bridges, locomotives and electricity substations attempts to sever the region from Ukraine. That has been partially successful. On November 6th Ukrzaliznytsia announced that it would temporarily close railway routes near Donetsk’s front lines.

But as conditions worsen, Ukrzalizyntsia adapts. The company dispatches firefighters to frontline blazes. Teams of workers are ready day and night to weld rails, fix signalling equipment and rebuild bridges. In the early weeks of the war Yurii Vereshchaka, a conductor, helped evacuate more than 10,000 people. With bombardments rising, he says, “I need to work more cleverly, more carefully now.”

But while the war has made Ukraine depend on railways, it has mangled Ukrzaliznytsia’s finances. In the first nine months of 2025 the once profitable company made a loss of $172m. Lucrative freight traffic subsidised passenger routes, but no more. Exports to Russia are banned. Most coal mines are occupied by Russia. Industrial plants have been damaged or destroyed. Farms are landmined. As a result, railway freight volumes have halved from about 315m to 160m tonnes a year.

Running Ukrzaliznytsia’s diesel and electric fleet is increasingly expensive. Diesel prices have risen and electricity costs have more than doubled due to Russia’s efforts to knock out Ukraine’s power grid. Last month Yulia Svyrydenko, Ukraine’s prime minister, said Ukrzaliznytsia had received $310m in ad hoc funds from the state budget this year, and will get another $382m next year.

Ukrainian officials point out that guaranteed annual subsidies for passenger rails are standard in Europe. Ukraine plans to eventually adopt such a model, but its current needs are more urgent. Ukrzaliznytsia has already pledged to reduce costs and raise revenue by $239m. Its plan includes consolidating services, automating administration, deregulating first-class passenger fares and selling non-core businesses.

A separate issue is legacy debt that has grown since 2012 from mismanaged infrastructure projects. The company has more than $1bn of debt in Eurobonds; most are due next year. It is negotiating with bondholders to restructure the agreements.

Most contentiously, the company has proposed a two-phase price rise totalling 41% for its freight customers, arguing that prices have not kept up with rising costs. Businesses lobbied against the plan. If prices rise, “then of course more operations will close,” says Oleksandr Vodoviz, an executive at Metinvest Group, a steel and mining concern that is Ukraine’s biggest private exporter.

Metinvest has already shut or reduced several mining and processing operations due to rising costs, he notes. With other facilities occupied by Russia, the company’s exports have halved. Mauro Longobardo, CEO of ArcelorMittal Kryvyi Rih, a rival steel manufacturer, says he wants Ukrzaliznytsia to be candid about costs and see business customers as partners, rather than trying to force them to cover its losses on passenger transport.

Mr Pertsovskyi hopes for government help, but worries that spiralling costs could soon make even freight routes unprofitable. “Not solving these crises is not an option,” he says. “We cannot stop for a second. If we lose electricity, then we use diesel. If not diesel, then trains combined with buses. One way or another, we must keep the country connected.” If Ukraine’s railways came to a halt, he says, it would be as if the sun stopped shining. ■