18 Sep 2023 | 18:39 UTC

Ukraine's incoming Black Sea ships raise hopes of end to Russian blockade

Highlights

Ukraine's Black Sea grain shipments stopped after Russia withdrew guarantee of protection

Two grain ships arrived in Ukraine's Black Sea port of Chornomorsk on Sept. 16

Ukraine hope that "brave captains" can help restart grain flow from three key ports

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Ukraine's deep water ports have received two incoming grain carriers for the first time since Russia withdrew from the Black Sea grain agreement, raising hopes for the country's farmers who have been deprived of their main export route for the last two months.

The Aroyat with a gross capacity of 18,315 dwt and the Resilient Africa with 3,276 dwt berthed at Chornomorsk on Sept. 16, according to Kpler shipping data and a minister's announcement on X, formerly known as Twitter. They were hailed by Ukraine's infrastructure minister Oleksandr Kubrakov as "the first civilian vessels to use the temporary corridor to reach Ukrainian ports," the minister posted on X. At the time of publication, the Aroyat and Resilient Africa were still at anchor in Chornomorsk.

"These vessels have brave captains," said one government source. "If more vessels go, others will [want to] do the same."

Since Russia's invasion of Ukraine, civilian ships sailing to and from the ports of Pivdennyi, Odessa and Chornomorsk have followed a so-called "corridor" which avoids mines and provides some security. Between July 27, 2022 and July 17, 2023, the term was used to represent the Black Sea Grain Initiative, a UN-brokered agreement that guaranteed safe passage for grain ships loading at the ports. That agreement was signed by both the two counties, as well as Turkey. Ukraine's government now hopes that it can create a new corridor without Russia.

The guarantees under the Black Sea Grain Initiative gave insurers the confidence to provide cover for ship owners. Those policies were suspended when Russia withdrew from the agreement in July, and Ukraine's government has been in talks to find a replacement.

The country is expected to export 11 million mt of wheat and 19.5 million mt of corn in marketing year 2023-24 (July to June), according to the US Department of Agriculture. That's equivalent to 5% and 10% of global trade in the two grains respectively.

Ukraine's three Black Sea ports exported 32 million mt of grain and foodstuffs under the initiative. Most traders say that the country can achieve these volumes without the reopening of the Black Sea ports, although this would come at a significant cost to Ukraine's farmers because of the much higher cost of using alternative routes.

"The market is watching closely," said a trader. "I would expect more [boats] to come [depending on] how these loadings go.

"It's a significant step but until it becomes a regular flow [again], it's hard to say what effect it will have," said one seller of grain from Ukraine, who added that it was only possible because of Ukraine's recent challenge to Russia's dominance at sea.

The two ships arrived in the same week that Ukraine's military said that it had hit two Russian patrol boats in the Black Sea and stuck two vessels at a Crimean shipyard - attacks that demonstrated the reach of Ukraine's missiles.

Ukraine's grain infrastructure was designed to support exports from the Black Sea, and Russia's blockade of those ports has forced traders to adopt less suitable routes by truck, train, barge and coaster.

The waterborne trade has been rerouted to the Danube, much of it going via the Romanian port of Constanta where it is transshipped onto bigger boats. This has caused long queues of trucks on narrow roads, as well as inflating the cost of freight. It has also drawn Russian drone strikes on silos and berths at the river ports of Reni and Izmail.

The high costs of these alternative routes have discouraged some traders, and one of them said that a lot of rail cars continue to take grain into silos around the three Black Sea ports even though there is no immediate guarantee of a route out.

After the termination of the Black Sea Grain Initiative, Ukraine's first announcement of a "humanitarian corridor" was on Aug. 10, when it said that it wanted to allow the departure of ships that had been stuck at the Black Sea ports since Russia's invasion: five such ships have sailed from the ports since then: a container ship, a Capesize, a Panamax, and two Handies.


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