It GDP should be less than 10-15%. In

It is known from the general economic theorythat one of the most important characteristics of a countries’ economydevelopment is a logistics component in the structure of a product, produced inthe country. This component could be called a macroeconomic indicator. The lessthe factor is, the better the economy performs. The freight forwardingcomponent in GDP should be less than 10-15%.

In developed countries, this condition is fulfilled. For example, in thecountries in European Union and the United States freight forwarding expensesaccount for 12-16% of GDP. In Japan, this number is substantially lower, only 6% of GDP. If we talk about Ukraine, 30-35% of GDP accounts for logisticsexpenses.

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Therefore, a lot of the experts describe the Ukrainian economy as a”third world country” economy. In monetary terms, 30-35% equals toapproximately 31.8 – 37.1 billion dollars loss per year. Based on this, it iscrucial for the country to seek for the reduction of logistics costs.

Thereby,the understanding of the potential for the logistics systems improvement,well-developed long-, mid- and short-term decisions in transport sector andinfrastructure, adequate use of the network and resources could considerablyaffect the economic performance of the country. Ukraine is often called to be a bridge betweenEast and West. Due to the advantageous location, (eastern border with Russia, northern with Belarus,and western with European countries – Poland, Slovakia, Hungary Romania andMoldova), it has a huge transit and logistics potential. However, the wholeinfrastructure, starting from various communication channels and ending withroads, has an extremely high degree of depreciation. Therefore, the speed andquality of the whole logistic process is decreased. Even though the conditionof the rail and road infrastructure is not satisfactory currently, it operatesalmost to a full capacity. Also, Ukraine is washed by the Black Sea and the Seaof Azov, and has the great water arteries such as Dnieper and Danube rivers.

Eventhough Ukraine is situated in such a favorable way, the capacity of Ukrainianwaterways is characterized by a very low usage. When it comes to a decision, where to invest: road,rail or water transportation network, decision makers should consider several factors.From the viewpoint of the relatively low costs of infrastructure construction andmaintenance, roads are the most attractive for the capital investment. Nevertheless,roads and road transport have a plenty of disadvantages and carry a huge socialand environmental impact. Rail transport, on the contrary, is an environmentallyand socially friendly mean of transport.

But also, it requires the largest investmentinto design, manufacture, installation, and maintenance. Water transport is a compromisebetween social, environment and infrastructure costs. Therefore, it is essentialfor the countries which have an opportunity to build and use the waterborne transportnetwork, not to neglect this chance. In this article, I will focus on the potentialof Ukrainian waterways. I will describe the current condition of the river andsea transport in Ukraine, try to figure out what are the issues and mainobstacles to the development of waterborne transport network, consider theadvantages and perspectives of the buildup of the sufficient river and maritimeinfrastructure in Ukraine, and come up with an answer to a question “Why is itworth to develop Ukrainian river and sea transportation?”.

 

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