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New Grain Corridors from Ukraine and Dry Bulk Flows

This article examines recent progress and initiatives by the shipping industry to meet new IMO targets and provides Signal Ocean Platform data on emissions developments and trends.

The Signal Group
April 2, 2024

On July 22, Ukraine and Russia agreed that exports of grain and other agricultural products from selected Ukrainian Black Sea ports could resume after months of Russian blockade. The agreement comes at a time when storage capacity is reaching its limits, as much of the 2022 wheat crop and some 20 million tons of 2021 grain and oilseeds cannot be shipped due to the blockade. The latest news is a relief for grain exports to developing countries already suffering from severe grain shortages and higher food prices. Delegations from Ukraine, Russia, and Turkey met for the first time with representatives from the UN in Istanbul on July 13 to discuss the safe export of grain. 

The question is whether the resumption of grain exports from the Black Sea is a solution to today's grain crisis. The recent progress is a first step toward resuming grain flows to developed and developing countries by releasing the first grain packages that had been blocked at major Ukrainian ports for several months. Ukraine ships nearly 75% of its agricultural exports through Black Sea ports. About half of these exports pass through the ports of Odessa, Chornomorsk, and Pivdennyi (Yuzhne).

The agreement is expected to allow the export of 22 million tons of Ukrainian wheat, corn, and other grains that have accumulated in the ports of Odessa, Khornomorsk, and Yuzhne. UN Secretary-General António Guterres has welcomed the official launch of the operation in the Turkish city of Istanbul to help implement the agreement brokered by the UN to resume Ukrainian grain exports across the Black Sea amid the ongoing conflict and rising global food prices. The Joint Coordination Centre (JCC) will enable the safe transportation of food and fertilizers from three major Ukrainian ports in the Black Sea by merchant vessels: Odessa, Chornomorsk, and Yuzhny.

In the freight market, the resumption of seaborne grain flows could lead to more substantial growth in dry bulk demand in tonne-days in the third quarter of this year and higher revenues for vessels. However, ship insurers are only willing to insure ships passing through the proposed corridor for the removal of Ukrainian grain if arrangements are made for an international naval escort and a clear strategy for dealing with sea mines. 

The main problem will be insurance coverage for port calls. Currently, there is no certainty on this issue, and the Joint War Committee's possible update of the list of war risk areas will most likely become the basis for many insurers. According to ISM, even in the event of a positive decision by the largest insurers, the rate of the so-called additional war risk premium will be a maximum of 5%, which corresponds to a one-time payment of $0.3 million to $1 million, depending on the condition, age, size and equipment of the vessel.

The current situation of blocked Ukrainian grain exports has led to a decrease in monthly grain flows by sea, with the current level significantly lower than in the comparable period of the last two years. (Chart below 1).

Seaborne Dry Bulk Flows, Grain, from ALL Countries to ALL Destinations, Monthly Volume (Tonnes)

Graph 1 Data Source: The Signal Ocean Platform, Years 2020-2022

It is interesting to see that the share of Russian grain exports by sea to Turkey has increased in the last four months, with the monthly volumes in June and July being 65% to 75% higher than the volumes of the previous year. (Chart 2)

Seaborne Dry Bulk Flows, Grain, From Russia to Turkey, Monthly Volume (Tonnes)

Graph 2 Data Source: The Signal Ocean Platform, Years 2020-2022

The impact of geopolitical tensions on Ukrainian grain exports is illustrated in the third chart, where monthly volumes by the sea in the fourth quarter of 2021 and the first two months of this year were significantly higher than in previous years.

Seaborne Dry Bulk Flows, Grain, From Ukraine to ALL Countries, Monthly Volume (Tonnes)

Graph 3 Data Source: The Signal Ocean Platform, Years 2020-2022

Under the grain agreement between Russia and Ukraine, the first ship carrying grain left a Ukrainian port, raising hopes that the agreement would alleviate the global food crisis and lower grain prices. The chart below (4) provides an overview of the volumes that came out of the main Ukrainian grain ports this year and shows how the recent agreement affects volumes in the last days of July. It remains to be seen whether the agreement will further smooth Ukrainian grain exports across the Black Sea and recoup the food security losses in recent months for both developed and developing countries.

Seaborne Dry Bulk Flows, Grain, From Ukraine to ALL Countries, Monthly Volume (Tonnes)

Ports: Chormonsk, Odessa, Yuzhnyy 
Graph 4 Data Source: The Signal Ocean Platform, Year 2022

The next quarter will be crucial for grain flows from Ukraine, as the successful first shipment of grain from the Black Sea raises hopes that more will follow.

This grain report was produced using insights and reports from the Signal Ocean platform Dry Bulk Flows. If this looks interesting for your business, request your demo today.

-Republishing is allowed with an active link to the source

Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert
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Increased Use of Renewable Energy:

Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.

Collaboration and Industry Partnerships:

Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.

To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.

Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.

Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.

Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert

Increased Use of Renewable Energy:

Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.

Collaboration and Industry Partnerships:

Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.

To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.

Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.

Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.

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New Grain Corridors from Ukraine and Dry Bulk Flows

Posted by
Maria Bertzeletou
|
August 4, 2022

On July 22, Ukraine and Russia agreed that exports of grain and other agricultural products from selected Ukrainian Black Sea ports could resume after months of Russian blockade. The agreement comes at a time when storage capacity is reaching its limits, as much of the 2022 wheat crop and some 20 million tons of 2021 grain and oilseeds cannot be shipped due to the blockade. The latest news is a relief for grain exports to developing countries already suffering from severe grain shortages and higher food prices. Delegations from Ukraine, Russia, and Turkey met for the first time with representatives from the UN in Istanbul on July 13 to discuss the safe export of grain. 

The question is whether the resumption of grain exports from the Black Sea is a solution to today's grain crisis. The recent progress is a first step toward resuming grain flows to developed and developing countries by releasing the first grain packages that had been blocked at major Ukrainian ports for several months. Ukraine ships nearly 75% of its agricultural exports through Black Sea ports. About half of these exports pass through the ports of Odessa, Chornomorsk, and Pivdennyi (Yuzhne).

The agreement is expected to allow the export of 22 million tons of Ukrainian wheat, corn, and other grains that have accumulated in the ports of Odessa, Khornomorsk, and Yuzhne. UN Secretary-General António Guterres has welcomed the official launch of the operation in the Turkish city of Istanbul to help implement the agreement brokered by the UN to resume Ukrainian grain exports across the Black Sea amid the ongoing conflict and rising global food prices. The Joint Coordination Centre (JCC) will enable the safe transportation of food and fertilizers from three major Ukrainian ports in the Black Sea by merchant vessels: Odessa, Chornomorsk, and Yuzhny.

In the freight market, the resumption of seaborne grain flows could lead to more substantial growth in dry bulk demand in tonne-days in the third quarter of this year and higher revenues for vessels. However, ship insurers are only willing to insure ships passing through the proposed corridor for the removal of Ukrainian grain if arrangements are made for an international naval escort and a clear strategy for dealing with sea mines. 

The main problem will be insurance coverage for port calls. Currently, there is no certainty on this issue, and the Joint War Committee's possible update of the list of war risk areas will most likely become the basis for many insurers. According to ISM, even in the event of a positive decision by the largest insurers, the rate of the so-called additional war risk premium will be a maximum of 5%, which corresponds to a one-time payment of $0.3 million to $1 million, depending on the condition, age, size and equipment of the vessel.

The current situation of blocked Ukrainian grain exports has led to a decrease in monthly grain flows by sea, with the current level significantly lower than in the comparable period of the last two years. (Chart below 1).

Seaborne Dry Bulk Flows, Grain, from ALL Countries to ALL Destinations, Monthly Volume (Tonnes)

Graph 1 Data Source: The Signal Ocean Platform, Years 2020-2022

It is interesting to see that the share of Russian grain exports by sea to Turkey has increased in the last four months, with the monthly volumes in June and July being 65% to 75% higher than the volumes of the previous year. (Chart 2)

Seaborne Dry Bulk Flows, Grain, From Russia to Turkey, Monthly Volume (Tonnes)

Graph 2 Data Source: The Signal Ocean Platform, Years 2020-2022

The impact of geopolitical tensions on Ukrainian grain exports is illustrated in the third chart, where monthly volumes by the sea in the fourth quarter of 2021 and the first two months of this year were significantly higher than in previous years.

Seaborne Dry Bulk Flows, Grain, From Ukraine to ALL Countries, Monthly Volume (Tonnes)

Graph 3 Data Source: The Signal Ocean Platform, Years 2020-2022

Under the grain agreement between Russia and Ukraine, the first ship carrying grain left a Ukrainian port, raising hopes that the agreement would alleviate the global food crisis and lower grain prices. The chart below (4) provides an overview of the volumes that came out of the main Ukrainian grain ports this year and shows how the recent agreement affects volumes in the last days of July. It remains to be seen whether the agreement will further smooth Ukrainian grain exports across the Black Sea and recoup the food security losses in recent months for both developed and developing countries.

Seaborne Dry Bulk Flows, Grain, From Ukraine to ALL Countries, Monthly Volume (Tonnes)

Ports: Chormonsk, Odessa, Yuzhnyy 
Graph 4 Data Source: The Signal Ocean Platform, Year 2022

The next quarter will be crucial for grain flows from Ukraine, as the successful first shipment of grain from the Black Sea raises hopes that more will follow.

This grain report was produced using insights and reports from the Signal Ocean platform Dry Bulk Flows. If this looks interesting for your business, request your demo today.

-Republishing is allowed with an active link to the source

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