Ukrainian grains export remains afloat, despite Russian sabotage of the "grain corridor" — expert




In the last 2-3 months, the degree of sabotage by Russian inspectors of the "grain corridor" has been steadily increasing. But even this survival mode, together with the Danube ports, allows grain exports from Ukraine to remain afloat.


Ahead of the new harvest 2023, no matter how large it may be in Ukraine, in any case the export will be significant and will require the forecasted tonnage supply. In my opinion, there is no need to repeat how much the ship inspections as such are ridiculous, especially in the loaded condition for the exit, where the ship to pass the inspection (to open the hold lids for 10 minutes) a priori needs to wait 5-7 days until the gas level after fumigation will not reach a safe rate.

Today's equivalent cost of waiting for inspections is 7-13 USD/t, and a significant part of this sum is generated by Russian inspectors sabotaging. The degree of sophistication of their methods to delay the inspection is constantly expanding (this is in addition to the already "used" methods, when the commission arrives on board the ship closer to noon, and due to the "short" working day - until 3:30 p.m. - they do not "have time" to conduct the commission with a postponement to next day, then the day after tomorrow, or they are scrupulous about filling out documents that do not in any way belong to the objectives of the inspection declared by the Russian Federation, i.e. the absence of weapons in the holds).

Given the current statements of the Russian side about withdrawing from the agreement, a logical question arises: what if the "grain corridor" continues without their participation? That is, are shipowners ready to enter Ukraine without the JCC (The Joint Coordination Center. - Ed.) with a potential increase in risks, which today seem to be "covered" by the JCC contract.


It is important to note that the precedent of the "grain corridor" of 2022 significantly lowered the risk threshold of shipowners and insurance companies in general. For example, today shipowners are entering Ukraine who had ships, and in some cases, are still being blocked since February 24, 2022.


We have encountered situations when shipowners are not ready to go to Israel "in the old way" (where in fact the risks are close to zero, including the anachronism with calls to Arab countries), but at the same time they are ready to go to Ukraine, even sometimes "closing their eyes" to counterparty risk management.


I think that the "immunity" received by shipowners over the past year gives grounds for confident optimism that even after the rejection of the JCC, the list of candidate ships will not significantly decrease. And in the case of normal operation, it will only increase. But this is provided that insurance companies will at least be ready to continue insurance of military risks (perhaps by supplementing the coverage of the Istanbul-Odesa-Istanbul route as well).


A possible solution could be the creation of a system of escorting military convoys in the Black Sea based on the experience of passing through the pirate zone in 2009-2012 in the Strait of Aden, when convoys of civilian vessels accompanied by military ships were formed. Considering the current "cost" of waiting for an inspection at the amount of 250-650 USD/t (depending on the cargo lot, the size of the vessel), a possible slight increase in the insurance premium will be incomparable to the sums that are literally "thrown to the wind" today, while reducing the competitiveness of Ukrainian grain. The fact is that for grain cargoes from the Russian Federation, there is insurance for military risks in pricing, which can be compared with premiums for entering Ukraine, but there is no JCC inspection. Also, a positive factor in this situation can be the currently rather low global freight market, which encourages shipowners to more willingly pay attention to premium (risky) destinations, including entering Ukrainian ports.


Gennadiy Ivanov

BPG Shipping