From Zelda Dungeon Wiki
Spirit Tracks to defeat Malladus by stabbing his forehead jewel. It is very similar to its predecessor, the Phantom Sword. However, this sword does not have the ability to defeat Phantoms, but rather do as the Tears of Light in earlier parts of the game and merely stun them. This means that Link no longer has to collect these items, thus he can sneak up behind a Phantom and stab its back right away. It is given to Link by Anjean the Lokomo towards the end of the game in order to protect the land from the growing powers of Malladus. The Lokomo Sword is the only sword upgrade in Spirit Tracks.