Ukraine wants ships to keep exporting its grain despite Russian attacks. Some are interested

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LONDON (AP) – Russia has repeatedly fired missiles and drones at key Ukrainian ports to send grain to the world. Moscow declared large areas of the Black Sea dangerous for navigation. Even the United States has said that ships are at risk of being targeted.

There is still interest from shipowners in moving Ukrainian grain across the Black Sea — if they can mitigate the risks, according to a major shipping group. This is a big deal if.

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Despite warnings and port attacks, which have decimated grain infrastructure, “shipping has always been very resilient to these types of risks,” said John Staubert, senior director of environment and trade for the International Chamber of Shipping, which represents 80% of the world’s merchant fleet.

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This week’s strikes came after Russia withdrew from a wartime deal brokered by the United Nations and Turkey last year to provide guarantees to shippers in a bid to end the global food crisis. Ukraine — which, along with Russia, is a major supplier of wheat, barley and vegetable oil to developing nations — has shipped 32.9 million metric tons of grain to the world and has provided 80% of the WFP’s wheat for humanitarian aid so far this year.

After the collapse of the grain deal, Ukraine sent a letter to the UN’s International Maritime Organization to set up its own temporary shipping lane, saying it would “provide damage guarantees”.

But Russia warned this week that ships crossing parts of the Black Sea would be assumed to be carrying weapons to Ukraine. In an apparently reciprocal move, Ukraine said that ships destined for Russian Black Sea ports would be considered “carrying military cargo with all associated risks”.

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Russian Deputy Foreign Minister Sergei Vershinin said on Friday that the navy will check the ships to make sure they are not carrying weapons before taking further action.

Continuation of shipments from Ukraine will depend on ships obtaining insurance against possible damage or injury and death to crew members and how safety risks occur. The ships that were exporting Ukrainian grain can be worth tens of millions of dollars, have 20 to 22 sailors on board and also carry food worth tens of millions, according to Jayendu Krishna, vice president of marine advisors at Drewry, a marine research consultancy.

All ships undergo threat assessments to allow their crews to be protected from trouble before they set sail, which has grown in importance as ships deal with piracy, terrorism and war zones.

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For the Black Sea, the risks to ships would be: exploding mines, becoming collateral damage in ports or being targeted themselves, which Staubert said would be a “massive escalation.”

The million dollar question is whether the threats to commercial shipping are serious and whether they will be pursued. And there’s no sure way to know until it actually happens,” Staubert said, adding that he has yet to hear from insurers.

With Russia’s warnings, the International Federation of Marine Insurance, which represents national and international marine insurers, said, “It is unlikely that underwriters will want to cover this risk.”

The group believed owners were unlikely to put their ships and crews at risk, echoed Monroe Anderson, chief operating officer of Vessel Protect, which assesses war risks at sea and provides insurance with the backing of Lloyd’s, whose members make up the world’s largest insurance market.

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He did not speak directly about whether insurers like his would take the risk, but said that without protection for ships as they did under the grain deal, “safety conditions cannot be guaranteed”.

The only way to mitigate the risk, Krishna said, was through insurance from the 12 providers that make up the International Group of Protection and Indemnity Clubs, which provide liability coverage for about 90% of the world’s shipments shipped by sea, according to its website.

He said that “protection and compensation clubs would even warn against insurance” without a guarantee from the United Nations or any other body.

P&I Clubs International said only its chief executive could comment and that he was on leave. Individual clubs either declined comment or did not return calls or emails.

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The head of the seafarers’ section of the International Transport Workers’ Federation, a union of crew members, said the question should be whether it is now too dangerous to ask seafarers to go to Ukrainian ports.

“Sailors’ minds will not be about questions of insurance coverage, but more likely about whether their lives are safe amidst the fighting,” David Hendel said in a statement, adding that “crews should never be targeted simply for doing their job.”

Meanwhile, some analysts predict that most of what Ukraine would have shipped across the Black Sea would go out by road, rail and river across Europe, but transportation costs would be higher and likely lower output for Ukrainian farmers.

Ukrainian Foreign Minister Dmytro Kuleba said Thursday that Ukraine has made progress in improving those routes, but the best way to export grain is through the Black Sea. Analysts say that this is how 75% of the country’s grain got to the world before the war.

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In addition, the roads have created divisions in the European Union, with five countries saying on Wednesday they want to extend bans on Ukrainian grain imports until the end of the year.

Carlos Mera, head of agricultural commodity markets at Rabobank, said that while Poland, Slovakia, Hungary, Romania and Bulgaria would continue to allow grain to pass through their borders into global markets, banning them could create challenges such as backing up infrastructure that might favor domestic grain over Ukrainian products.

The five countries say Ukrainian grain has flooded their markets, creating a glut that has driven down prices for their farmers and sparked protests. They signed a joint declaration ahead of next week’s EU talks, urging officials to find ways to get Ukrainian food to the world without hurting their agricultural industries.

It’s another hurdle for Ukraine – and perhaps for developing countries already struggling with high domestic food prices, which help drive hunger.

Mira said wheat prices rose about 17% over the past week, and poor countries having to pay more on global markets for ingredients for basic items such as bread and pasta means “many millions of people are being pushed into food insecurity.”

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