Monday, September 25, 2023

STORY: Growing tensions in the Black Sea mean Russia is feeling the crunch when it comes to moving its own wheat.

The country’s lack of ships has added to rising costs, while Western grain traders aren’t feeling much appetite to deal with Moscow.

All this at a time when the war in Ukraine has come dangerously close to key Black Sea supply routes.

President Vladimir Putin promised to replace Ukrainian grain with Russian shipments to Africa last month.

He did so after Moscow ended an arrangement that gave Ukraine’s food cargo safe passage in the Black Sea.

Russia’s move put a de-facto blockade on its neighbor, and Moscow also attacked storage facilities.

Since then, both Russia and Ukraine have warned ships destined for each others ports could be treated as legitimate military targets.

Sources said insurance for ships heading to Russia’s Black Sea ports currently costs tens of thousands of dollars in additional premiums daily – with rates now ticking even higher.

Industry experts say the financial and security risks associated with trading with Russia have driven up costs of freight for Moscow.

And that has pushed the country toward older and smaller vessels run by less established shipping operators.

Recent industry data hinted at Russia’s growing hunt for vessels.

Requests for charters doubled to 257 in July compared with the same month last year.

The call for ships was up 40% from June, and likely to climb further as the export season gathered pace.

The Black Sea remains a critical area for Russian exports, with other locations more complicated and costly.

Russia’s agriculture ministry forecast grain exports will fall about 8% during the 2023/24 season, but gave no reason for the drop.

The ministry in December announced a plan to build a fleet of 61 new grain ships.

It did not say when they could be built by Russian shipyards.


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