LONDON (AP) – Russia has repeatedly fired missiles and drones at Ukrainian ports, which are vital for shipping grain to the world. Moscow has declared large parts of the Black Sea dangerous for shipping. Even the US said ships were in danger of being attacked.
According to a major shipping group, shipowners are still interested in shipping Ukrainian grain through the Black Sea – provided they can mitigate the risk. And that’s a big if.
Despite the warnings and port attacks that have crippled grain infrastructure, “shipping has always been very, very resilient in the face of these types of risks,” said John Stawpert, senior manager for environment and trade at the International Chamber of Shipping, which represents 80% of the world’s merchant fleet.
According to Ukrainian local authorities, Russian forces attacked 11 regions across Ukraine overnight, killing at least eight civilians.
President Joe Biden has appointed CIA director William Burns to his cabinet. It’s a symbolic move that underscores the intelligence chief’s influence and his work in helping the US support Ukraine.
The Vatican is pushing ahead with a plan to reunite Ukrainian children who were trafficked to Russia during the war with their families.
A prominent hard-line Russian nationalist who accused President Vladimir Putin of weakness in Ukraine has been arrested on charges of extremism. It’s a sign that the Kremlin has stepped up its crackdown on aggressive critics following last month’s failed uprising by the Wagner mercenary company.
This week’s strikes come after Russia pulled out of a war deal the UN and Turkey negotiated last year to offer protection to shipping companies and end a global food crisis. Ukraine — which, along with Russia, is a major supplier of wheat, barley and vegetable oil to developing countries — has shipped 32.9 million tons of grain to the world so far this year and has provided 80% of the World Food Program’s wheat for humanitarian aid.
After the failure of the grain deal, Ukraine sent a letter to the United Nations International Maritime Organization to set up its own temporary shipping corridor, saying it would “offer guarantees for compensation for damage.”
But Russia warned this week that ships crossing parts of the Black Sea would expect to transport arms to Ukraine. In what seemed a matter of course, Ukraine declared that ships calling at Russian Black Sea ports would be considered “military cargo, with all the associated risks.”
Russian Deputy Foreign Minister Sergei Vershinin said on Friday that the Navy would check ships to make sure they were unarmed before taking any other action.
Further shipments from Ukraine will depend on ships taking out insurance for possible damage or injury and death of crew members and the impact of safety risks. According to Jayendu Krishna, deputy chief of maritime advisors at Drewry, a maritime research consultancy, ships exporting Ukrainian grain can be worth tens of millions of dollars, have 20 to 22 sailors on board and transport tens of millions worth of food.
All ships undergo threat assessments to allow crews to protect themselves before going to sea from issues that are becoming more important as ships struggle with piracy, terrorism and war zones.
In the Black Sea, the risks for ships would be: explosive mines, collateral damage in ports or even attacks, which according to Stawpert would be “a huge escalation”.
“The million dollar question is whether the threats to merchant shipping are serious and whether they are being implemented. And there’s no sure way of knowing that until it actually happens,” Stawpert said, adding that he hasn’t heard from insurers.
Given Russia’s warnings, “insurers are unlikely to want to cover this risk,” said the International Union of Marine Insurance, which represents domestic and international marine insurers.
The group thought owners were unlikely to put their vessels and crews at risk, confirmed Munro Anderson, operations manager for Vessel Protect, which assesses war risks at sea and offers insurance backed by Lloyd’s, whose members make up the world’s largest insurance marketplace.
He didn’t comment directly on whether insurance companies like his would take on the risk, but said that without safeguards for ships like those provided under the Grains Agreement, “safety conditions cannot be guaranteed.”
Krishna said the only way to mitigate the risk is to get insurance from the 12 vendors in the International Group of P&I Clubs, which, according to its website, offer liability insurance for about 90% of the world’s seaborne cargo.
“P&I clubs will be reluctant to even take out insurance” without a guarantee from the UN or any other organization, he said.
The International Group of P&I Clubs said its CEO was the only one who could comment and was on vacation. Individual clubs either declined to comment or did not respond to calls or emails.
The head of the seafarers’ branch of the International Transport Workers’ Federation, a union for crew members, said the question must be whether it is currently too risky to ask seafarers to call at Ukrainian ports.
“Seafarers’ thoughts will not revolve around insurance coverage issues, but rather whether their lives are safe amidst the fighting,” David Heindel said in a statement, adding that crews “should never be targeted solely for their jobs”.
Meanwhile, some analysts believe most of what Ukraine planned to transport across the Black Sea will be transported through Europe by road, rail and river. However, transportation costs will be higher and likely to result in lower production by Ukrainian farmers.
Ukrainian Foreign Minister Dmytro Kuleba said Thursday Ukraine has made progress in improving these routes, but the best route for grain exports is the Black Sea. This is how 75% of the country’s grain got into the world before the war, analysts say.
Additionally, the routes have sparked divisions in the European Union, with five countries saying on Wednesday they want to extend an import ban on Ukrainian grain until the end of the year.
While Poland, Slovakia, Hungary, Romania and Bulgaria would continue to allow grains to cross their borders into global markets, their bans could lead to challenges such as infrastructure backups that could favor local grains over Ukrainian products, said Carlos Mera, head of soft commodities markets at Rabobank.
The five countries say Ukrainian grain has flooded their markets, creating an oversupply that has pushed down prices for their farmers and sparked protests. They signed a joint statement ahead of EU talks next week, urging officials to find ways to get Ukrainian food out into the world without harming its agribusiness.
It’s another hurdle for Ukraine — and potentially for developing countries already grappling with high local food prices that are fueling hunger.
Wheat prices have risen about 17% in the last week, and poorer countries forced to pay more in world markets for the ingredient in staples like bread and pasta mean “tens of millions of people are becoming food insecure,” Mera said.