Shipowners and insurers are reacting with caution to Friday’s news of a deal hammered out between Russia and Ukraine, assisted by Turkey and the United Nations, to ship Ukrainian grain through the Black Sea for the first time in six months since war began.
Within less than 24 hours of the agreement being sealed, Russia had struck facilities at Ukraine’s top port, Odesa, adding to concerns about the many sea mines dotted around the Black Sea.
A joint co-ordination centre staffed by members of the four parties to the agreement is to monitor ships passing the Black Sea to Turkey’s Bosporus Strait and on to world markets.
The Ukrainian Seaports Authority has issued a communique advising that preparations are being made at the Ukrainian ports of Odesa, Chornomorsk and Pivdennyi for cargo operations, requesting applications for the inclusion of vessels which will be led by convoy to and from these ports.
Daejin Lee, lead shipping analyst at S&P Global Market Intelligence, reckoned it would take a few weeks to months to resolve insurance and safety concerns for the Black Sea routes from major grain ports. Therefore, Danube River ports will likely remain a safe and attractive option for grain exports in the near term.
There are over 80 ships stuck in Ukraine – many with cargoes onboard including grain – which need to get out before new ships can go in. Coordination efforts are continuing for the first ship loaded with grain to depart from Ukraine’s Black Sea ports, the Turkish National Defence Ministry said yesterday.
Ukraine shipped 50m tonnes of grain in 2021, accounting for 10% of global exports, but volumes totalled only 1.3m tonnes in Q2, down around 90% year-on-year, according to data from Clarksons Research.
“While there remain some concerns around implementation, and there are a range of scenarios around how quickly exports may ramp-up, the deal should facilitate some increase in shipments from Ukraine, helping to free up storage space (already largely full with last year’s crops) ahead of this year’s wheat and corn harvests which are due in the coming months,” Clarksons noted in its most recent weekly report.