Challenges with the Ukrainian grain liberation agreement

The agreement for the liberation of Ukrainian grain has been signed, but the challenge to move millions of tons of food from ports in the Black Sea has only just begun.

On July 22, Ukraine and Russia signed an agreement backed by the United Nations, allowing the transfer of Ukrainian wheat, corn and oilseeds to the world market, amid growing world concerns about a global crisis. food crisis. But finding transport ships and crews willing to transport this grain was no easy task.

Shipping companies as well as grain traders have hailed the deal as a positive step, but warned of some obstacles to face, such as ensuring the safety of crews and ships, as well as Full insurance policy and suitable costs for shipments through the Black Sea, where there are many potential risks.

First of all, the coastal areas of Ukraine need to be mined or at least cleared of a corridor stretching several kilometers. Kiev says the mine clearing process can take anywhere from 10 days to several months.

Second, the effort to liberate Ukraine would require about 400 bulk carriers (large tonnage ships transporting unpackaged goods), designed to carry up to 50,000 tons of grain between continents. The goal of this operation is to free as quickly as possible the more than 20 million tons of grain trapped in Ukraine.

Farmers collect or harvest grain in a field in Kharkov, Ukraine on July 18.  Photo: AFP.

Farmers harvest grain in a field in Kharkov, Ukraine on July 18. Image: AFP.

Shipping analysts estimate it will take several weeks for the ships to reach the Black Sea. Peter Sand, chief analyst at freight market analysis firm Xeneta, said the speed will depend on whether vessels are available in nearby regions such as the Mediterranean.

More than 100 ships have not been able to leave Ukrainian ports since the military conflict began, most of them bulk carriers. However, Guy Platten, secretary general of the International Shipping Division, said the ships could not set sail immediately.

“The ships have been decommissioned since February 24, so we have to see if they are seaworthy. We have to make sure the crew is full because a lot of the crew has been evacuated.” Platten said.

At the beginning of the conflict, about 2,000 seafarers were present in Ukrainian ports, but now there are only about 450.

It is not clear whether Ukraine will be able to provide enough crew for the grain transport fleet. Before the conflict, Russian and Ukrainian citizens typically made up about one-fifth of the total crew members.

Steps to implement the agreement to liberate grain from Ukraine.  Graphics: Guardian.

Agreement on the liberation of Ukrainian grain. Graphics: Guardian.

After securing the necessary number of ships and crew, ship owners also need to have sufficient “conflict insurance” to insure their ships and staff. This can cause premiums for these shipments to be higher than usual.

Despite international assurances, shipowners may still hesitate to send their staff and vessels on this mission, because the risk of conflict is too great.

Analysts say this process takes a lot of time to process, while the time fund is increasingly depleted. Ukrainian farmers are about to start a new harvest season and the warehouses need to be cleared before that time.

During the blockade of Ukrainian ports in the Black Sea, Ukrainian government officials and agricultural producers tried to solve the problem by transporting grain by road, rail and river.

Cereal exports through these routes hit a record 2.3 million tonnes last month, according to the International Grain Council (IGC), an intergovernmental organization that seeks to promote global cooperation in the field of grain trade. glass. However, this represents only a third of the grain exported by sea every month before the conflict.

The IGC believes that to ensure there is enough space to store grain for the new crop, Ukraine needs to release about 7 million tons per month over the next three months.

“Starting to transport 5 million tons of grain in the first month after reopening the shipping lanes in the Black Sea can be a difficult task. I think that even if the ports are reopened, Ukraine will still need to find ways to increase grain storage space, such as building new warehouses,” said Alexander Karavaytsev, senior economist at IGC.

Thanh Tam (Theo Guardian)

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