The maritime corridor set up by the UN to allow the release of grains from war-torn Ukraine is getting busier as demand and confidence grow. A total of 34 vessels carrying 723,886 tonnes of grains and sunflower oil have left the three ports of Odesa, Chornomorsk and Yuzhnyi since August 1, official data shows. While the volumes are a fraction of the usual pre-invasion levels, progress is being made to export the grains stuck in silos to make way for the new wheat harvest.

Most of the vessels traversing the passage are bulk carriers, eight handysizes, five panamaxes and three supramaxes, while 13 general cargo ships and five chemical tankers have also passed through. About 20 of the ships had been stuck in ports when the war broke out. According to data from the Joint Coordination Centre in Istanbul and Lloyd’s List Intelligence, another 20 ships are making their way to Ukraine for the grain trade. The JCC was set up in late July after the signing of the Black Sea Grain Initiative, which was brokered by the UN and Türkiye, and involves Ukraine and Russia.

The opening of the corridor was seen to lend a bit more support to the dry bulk market, when at full tilt, especially for the smaller sizes. However, dry bulk rates have been weakening of late, given bearish views on the global economy, bar supramaxes, which have been on the rise due to increased activity in Asia, namely steel exports from China, and expected strong volumes of corn from Brazil and wheat from Canada.

According to ship brokerage Braemar, a two-tier market is emerging in the Mediterranean, those willing to call in Ukraine or Russia for a premium, and those who are not. London-based consultancy Maritime Strategies International echoed the view, saying ships open for time-charter are increasingly being offered with exemptions for calling Russia or Ukraine, which may result in high freight rate premiums from the Black Sea, while also “increasing the pool of ships outside the region, undermining market balances elsewhere”. 

“The impact on dry bulk carrier demand and earnings has, to date, been minor, but has obvious upside implications,” ship brokerage Simpson Spence Young said. “The size and frequency of shipments will likely accelerate as confidence in the export corridor increases,” it said in a report. However, the reported target of 5 MMT per month “looks ambitious”. Ukrainian grain exports averaged 4.2 MMT per month in 2021, peaking at 6.6 MMT in November. “The successful passage of the first ships will provide encouragement to others but war risks, plus the premium cost of freight and insurance remain obstacles to trade,” SSY said. While the opening of the grain export corridor and the potential for shipments to be scaled up in the coming months put downward pressure on wheat and corn prices, strong global grain demand and reports of hot and dry weather damaging crops in France, Romania and the US kept them elevated compared to recent years, it said. While global supply tightness means demand for Ukrainian grain will persist, there remain uncertainties about the corridor deal, given that it is only initially valid for 120 days, and will need to be renegotiated before the end of November, it added. It could take only one incident to “derail the agreement and break confidence in the safety of the corridor,” SSY said.