Shipping companies are not rushing to export millions of tonnes of trapped grain out of Ukraine, despite a groundbreaking deal to provide safe corridors across the Black Sea. Indeed, explosive mines are drifting in the waters, shipowners are assessing the risks and many are still wondering how the deal will unfold.
The complexities of the deal have triggered a slow and cautious start, but it is only valid for 120 days – and the countdown began last week.
The goal over the next four months is to extract some 18 million tonnes of grain from three Ukrainian seaports blocked since the February 24 Russian invasion. This gives time for about four to five large bulk carriers a day to transport grain from ports to millions of hungry poor people around the world.
It also leaves plenty of time for things to go wrong. Just hours after signing on Friday, Russian missiles hit the Ukrainian port of Odessa, one of those included in the deal.
Another key part of the deal provides assurances that ships and insurers carrying Russian grain and fertilizer will not be caught in the wider net of Western sanctions. But the agreement negotiated by Turkey and the UN comes up against the reality of the difficulty and the risk that the pact will have to implement.
“We have to work very hard to understand now in detail how this is going to work practically,” said Guy Platten, secretary general of the International Chamber of Shipping, which says it represents national shipowners’ associations, representing about 80 percent . cent of the world’s merchant fleet.
“Can we ensure and guarantee the safety of the crews? What is going to happen with the mines and the minefields as well? So a lot of uncertainties and unknowns at the moment,” he said. declared.
Getting wheat and other food is essential for Ukrainian farmers, who lack storage capacity as they harvest their fields. These grains are vital for millions of people in Africa, parts of the Middle East and South Asia, many of whom are already facing food shortages and, in some cases, starvation.
Ukraine and Russia are the world’s main suppliers of wheat, barley, corn and sunflower oil, with fighting in the Black Sea region, known as the ‘breadbasket of the world’, driving up prices. food prices, threatening political stability in developing countries and leading countries to ban certain food exports, deepening the crisis.
The agreement stipulates that Russia and Ukraine will provide “maximum assurances” to ships that brave the journey across the Black Sea to the Ukrainian ports of Odessa, Chornomorsk and Yuzhny.
“The main risk we face will obviously be mines,” said Munro Anderson, chief intelligence officer and founding partner of Dryad. The maritime security consultancy is working with insurers and brokers to assess the risks ships could face along the route as sea mines laid by Ukraine to deter Russia drift.
Shipowners, charterers and insurance companies seek to understand how the transaction will unfold in real time.
“I think it will come [down] to the position of marine insurers who provide war risk and how much they will add in additional charges for ships to travel to this area,” said Michelle Wiese Bockmann, Transport and Commodity Analyst at Lloyd’s List, a global publication of shipping information. .
Bockmann said ships carrying this type of load typically have between 20 and 25 sailors on board.
“You can’t risk those lives without something concrete and acceptable for shipowners and their charterers to transport grain,” she said.
Marine insurers contacted by The Associated Press declined to say whether they would provide cover for those vessels.
Ukrainian officials expressed hope that exports could resume from one of the ports within days, but they also said it could take two weeks for all three ports to become operational again.
The war has wreaked havoc on world trade, blocking more than 100 ships in the many Ukrainian ports.
3 ports included in the export agreement
Since the start of the war in late February, 22 bulk carriers and cargo ships have been stranded at the three ports included in the export deal, according to data from Lloyd’s List Intelligence. About 13 are moored in Chornomorsk, six in Odessa and three in Yuzhny.
Some of these vessels may still have crews on board who could be mobilized to start exporting grain.
Ukrainian traders were able to send grain through the Danube, which helped boost exports to around 1.3 million tonnes in May and up to around 1.8 million tonnes in June, although this is still less half of monthly grain shipments from 3.6 to 4.5 million. tons before the war, according to Svetlana Malysh, Black Sea agricultural markets analyst at Refinitiv.
In the 2021-2022 marketing year, Russia exported around 27.2 million tonnes of wheat, according to Refinitiv trade flows. This is the lowest level since 2017, in part due to the deterrent effect of sanctions. Russian fertilizer exports also fell 25% in the first quarter of the year compared to the same period last year, partly due to Western sanctions, Malysh said.
Patrol boats will escort the ships
For vessels heading to the three Ukrainian ports, smaller Ukrainian pilot boats will guide vessels through the approved lanes. The entire operation, including the scheduling of ships along the route, will be overseen by a joint coordination center in Istanbul made up of Ukrainian, Russian, Turkish and United Nations officials.
Once in port, the ships will be loaded with tens of thousands of tonnes of grain before heading back to the Bosphorus Strait, where representatives from Ukraine, Russia, the UN and Turkey will board. ships to inspect them for weapons. There will probably also be inspections for vessels embarking for Ukraine.
“The balance of power on this deal still rests with Russia,” said Anderson, Dryad’s intelligence chief. All Ukrainian ports outside the deal face an increased risk of attack, he said.
“I think what Russia wants…is to be seen as the state that controls the narrative within the Black Sea,” Anderson said.