KYIV, Oct 2 (Reuters) – A new corridor allowing cargo vessels to carry Ukrainian grain and iron ore from Black Sea ports has significantly lowered freight rates and they are likely to fall further, Ukraine’s farm minister said on Monday. Kyiv launched what it calls a temporary humanitarian corridor in August to allow agricultural exports as an alternative arrangement after Russia blocked the U.N.-backed Black Sea grain deal that had been in place for a year.
Three more cargo ships left Ukrainian seaports on Sunday, while five new vessels came in for loading. “New vessels are coming. Every farmer in the near future will be able to feel that logistics due to this route should become cheaper and, accordingly, the (profit margin) of grain will increase,” Mykola Solsky told national television. Several cargo vessels used the new route in September, delivering grain and iron ore to the global market. “The first (ships) left. It was expensive. The next ones are cheaper. I think freight has become 30-40% cheaper in the last 2-3 weeks. It is still expensive, but it is much cheaper than it was,” Solsky said. He did not give exact figures.
Ukraine is expected to harvest 79 million tons of grain and oilseed in 2023, with an exportable surplus of about 50 million tons in 2023/24. After it invaded Ukraine last year, Russia closed off the Black Sea ports from one of the world’s biggest suppliers of grain, in what Kyiv and its Western backers called an attempt to use global food supplies as blackmail. Moscow said the ports could bring in weapons.
From July 2022, the ports were reopened under a deal brokered by the United Nations and Turkey that allowed Russia to inspect ships for arms but Russia blocked the deal in July this year. Insurance broker Miller said last month that a new marine insurance facility for Ukrainian grain exports using the country’s new sea corridor had been set up. (Reporting by Pavel Polityuk; Editing by Susan Fenton)
Comment: Dropping insurance rates for Ukraine bound ships is the surest indicator that Ukraine is winning the war at sea. Not bad for a nation without much of a navy. Perhaps this was the main goal of the recent raids on offshore oil/gas platforms and coastal radar sites along with the missile strikes on Crimean air defense sites and the Black Sea Fleet in Sevastopol. This is going to be a long war, not that it hasn’t already has been a long war, and Ukraine has to able to conduct some level of commerce if she hopes to continue that war well into 2024 and beyond. Thus the necessity of the Black Sea front of the counteroffensive.
But how permanent is this situation? Can Ukraine reliably keep the crippled Black Sea Fleet away from this new shipping corridor? Granted most of this corridor passes through NATO waters now that it’s established on Ukraine’s terms. Russia can still hit the port facilities. And it only takes one missile or mine to put the maritime insurance industry into a tizzy. I don’t think the Black Sea Fleet can muster much more than that. The collective West does seem prepared to assist or even supplant the insurance industry in responding to the occasional mishap at sea.