Ukraine resumes grain export

AThe first grain ship Razoni carrying 26,000 tons of corn has left the port of Odessa on Monday, 1 August, marking the start of a new chapter in the conflict between Russia and Ukraine.

The shipment comes as a result of the quadripartite agreement signed between both countries, Turkey and the United Nations in Istanbul and is regarded as a major diplomatic breakthrough despite Russia’s missile attack on the Black Sea port of Odessa coming less than 24 hours after striking the deal.

The agreement aims to allow for the safe-passage corridors in and out of Odessa, Chornomorsk and Pivdennyi under the direction of Ukrainian pilots. Vessels will be inspected before they arrive in Ukraine upon entry and exit of the Turkish Straits by Russian, Ukrainian and Turkish officials, to ensure weapons are not being smuggled. The distrust between the parties or disagreement among inspectors may however easily throw the agreement into doubt and put the safe passage at risk.

Ukraine has already started to accept applications from new vessels while shipowners are trying to negotiate the insurance terms with a number of underwriters who have placed Ukrainian waters on their high-risk zone. It remains unclear what sort of cover insurers will be prepared to offer as it is difficult to determine how the Istanbul agreement will work in practice.

There are currently over 80 vessels stuck in Ukraine (for various reasons including lack of crew, lack of repairs, contractual and feasibility issues) which will need to get cleared first before new vessels could load. 

Those trading to the Black Sea are likely to face delays and demurrage -  as well as higher costs if availing themselves of the Istanbul grain deal - in addition, of course,  to the  risks and expenses involved in transiting heavily mined waters vulnerable to missile attacks.