The head of the United Nations’ shipping agency has called for safe passage for merchant ships in the wake of three vessel strikes in the opening days of the Russian invasion of Ukraine.
Kitack Lim, the secretary-general of the International Maritime Organization (IMO), said yesterday: “The security situation in the Ukraine is impacting trade by sea. The safety of marine personnel including seafarers is vital. Shipping is essential to global trade – as has been proven during the course of the Covid-19 pandemic. I urge all parties to take steps to ensure the protection of seafarers, vessels and cargo.”
Thus far the Turkish-owned bulk carrier Yasa Jupiter, the Moldova-flagged chemical tanker Millennial Spirit and the Panama-flagged bulk carrier Namura Queen have been hit by military forces in the opening two days of the conflict. The majority of international vessels in the region have exited the area to safer waters while Ukraine’s key ports, closed since Thursday, are coming under increased bombardment from Russian forces.
Insurance rates have leapt for ships heading into the area with Reuters suggesting an additional war risk insurance cover for seven days has been quoted at anywhere up to 5% of insurance costs, up from an estimated 0.025% on Monday.
The Turkish foreign minister said yesterday Turkey cannot stop Russian warships accessing the Black Sea via its straits, as Ukraine has requested.
Putting some perspective on Russia and Ukraine’s importance to world shipping, Clarkson Research Services has run the numbers (see chart below).
Russia is estimated to account for around 5% of global seaborne exports, though a smaller percentage in terms of tonne-miles with short-haul exports to Europe from western Russia and to Asia from the east significant. Ukraine accounts for a further 1% of export volumes.
Tanker rates have spiked as fighting broke out. Aframax and suezmax rates on the Black Sea-Med route jumped more than four-fold this week, pushing earnings to around $170,000 a day, with average aframax spot earnings jumping from $11,000 a day last week to over $68,000 a day, whilst average suezmax earnings rose from $4,000 a day to over $41,000 a day according to Clarksons.
“The next few weeks will continue to be marred by uncertainty and rates will likely remain elevated and volatile, especially in the Baltic and Black Sea regions. However, once the impact of the sanctions is clearer, the market will settle down,” a new report from Poten & Partners suggested.
For all the news on how the invasion of Ukraine is affecting global shipping, check out Splash’s dedicated coverage here.