Black Sea Grain Corridor Attracts Enough Ships to Create a Backlog
The renewal of Ukrainian grain shipments under the Black Sea Grain Initiative has made a tangible impact, adding 6.5 million tonnes of agricultural commodities to the supply in Europe, Africa and Asia since August 1. The exports have helped bring food prices under control in vulnerable nations, including parts of the Middle East and Africa that are particularly dependent upon Ukrainian grain. While Ukraine would like to build on the momentum and accelerate shipping, the ship inspection process built into the multiparty safe corridor agreement has turned into a bottleneck, according to a new report from the Financial Times.
When the initiative got underway, brokers reported that convincing vessel operators to sign on for a trip to an active war zone was a challenge, especially once Ukraine began retaking occupied areas in the east and south. With already-high tensions on the rise and insurance premiums running up to 40 percent above normal for the voyage, many owners and operators decided to stay out of the trade.
But according to FT, enough shipping players have showed up that a backlog of about 120 bulkers has built up on both sides of the route. On average, the vessels engaged in these voyages are older and smaller, minimizing insurance costs but maximizing the number of ships. Each one has to be inspected by Ukrainian, Russian, Turkish and UN inspectors before it can proceed in or out. The inspection team has been processing about seven ships a day at a designated anchorage in the Sea of Marmara, but it is not enough to keep up with demand, according to the FT. The waiting time per vessel is now in the range of two weeks.
Amir Mahmoud Abdulla, UN coordinator for the Black Sea Grain Initiative and former chief operating officer of the UN World Food Programme, told FT that the initiative needs to get "all parties to agree that we need to add inspectors."
Russia has proposed restricting - not accelerating - the Black Sea Grain Initiative. At a conference in Vladivostok in early September, Russian President Vladimir Putin said that "we should probably think about limiting the destinations for grain exports, and I'm going to discuss that with Mr. Erdo?an, president of Turkey." He accused western nations of taking more than their share of Ukraine's grain and claimed (falsely) that only two ships had departed Ukraine for developing nations.
The initiative is subject to renewal every 120 days, and the time will be up for the first round on November 19. The prospects of the deal after that point are uncertain, and Ukrainian agriculture minister Mykola Solsky told a conference in late September that any renewal would probably be negotiated up until the last minute.