Ukraine’s request to keep grain moving through Black Sea ports collides with shippers’ reality

Russia withdraws from safe passage agreement

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Ukraine is pushing for grain exports to continue from key ports after Russia’s withdrawal from the Black Sea grain deal. Insurers and shippers aren’t so sure.

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Russia’s termination of the pact this week means it will no longer guarantee safe passage across the waterway. Ukraine is asking other nations to help facilitate shipments from three of its deep-sea ports, which were covered by the deal.

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The United States said shipping stockpiles are not an option, and insurance broker Marsh on July 18 suspended its program for grain exports from Ukraine, underscoring challenges ahead.

No sane owner is going to call there uninsured, said Vasilis Mouyis, joint managing director of Greece-based Doric Shipbrokers SA, which had previously sent vessels through the sea passage. Without the protection of the safe corridor, Ukrainian trade is dead.

Ukraine’s Black Sea ports are a vital artery for its overseas grain sales which historically account for the majority of shipments and the harvest season is now underway. The deal has helped clear the backlog triggered by the start of the war, but closing the corridors could slow down the next crop getting to market.

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Russia’s exit from the pact also occurs as Ukraine advances its counter-offensive in the south of the country. Massive drone strikes were reported on July 18, following the destruction of the main bridge connecting Russia to Crimea. Moscow has warned that navigational risks also remain.

Attempts to continue the grain deal without the participation of the Russian Federation should take into account the risks associated with the fact that the grain export route passes near the area of ​​\u200b\u200bthe hostilities, said Kremlin spokesman Dmitry Peskov.

Support from Türkiye

Ukraine has asked the United Nations and Turkey, which brokered the deal nearly a year ago, whether they will continue to support it.

The main task for Ukraine now is to enlist the support of Turkey, said Dmitry Skornyakov, chief executive officer of HarvEast Holding. He suggested military stores from Turkey could be used for ships entering and leaving Ukraine’s ports.

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It would be a very risky move for Turkey, and the country is unlikely to get involved, according to an official familiar with the matter. Turkey would not jeopardize its warships to assist Ukrainian vessels, and is instead focused on restarting the deal with Russia’s involvement.

Ukraine can still send crops by land and by river, but these routes are more expensive and eat up farmers’ incomes. Shipping through the European Union is also causing tension with its neighbors.

Costs of exporting by sea are likely to rise, in part due to rising insurance and freight rates, said Roman Slaston, head of Ukraine’s Agribusiness Club. He remained optimistic the shipments could happen, but said it could take a few weeks to prepare.

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When Russia briefly suspended its involvement in the deal in October, it issued warnings to ships sailing in the corridor. Some insurance coverage has been suspended, and at least one Odessa-bound ship has turned back.

I don’t think shipowners will go to Ukrainian ports until the corridors are established, it’s not safe to do so, said Paul Markides, marine quality manager at Intercargo, a global trade association for dry bulk shipowners.

with assistance from Megan Durisin, Lars Mucklejohn, Daryna Krasnolutska and Olesia Safronova

Bloomberg. com

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