Situation in Ukrainian ports

Ukraine is situated between the European Union and Russia, at the crossroads. On the one hand, Ukraine has land borders with the EU Member States of Poland, Hungary, Slovakia and Romania. And, on the other, it has border crossings with developing Eastern European economies, namely Russia, Belarus and Moldova.

 

Ports

According to operational data of the Ukrainian Sea ports Administration, from the beginning of 2014, Ukrainian seaports have handled a little bit less than 23 million tons of cargo, which corresponds to the level of cargo handling volumes in 2013. In 2013 Ukrainian ports processed 148 mln tons. The main cargoes are grains (20%), ore (18%), steels (15%), coal (10%), mineral oils (8%), fertilizers (5%), containers (5%) and others (18%). Numbers are not exact but show the shares.

 

The port infrastructure of Ukraine consists of 18 sea commercial ports situated in the Black Sea and Sea of Azov. 5 of them are situated in the Crimean peninsula and in 2013 the statistics show they handled:

 

• Sevastopol – about 4,8 mln tn,
• Kerch – about 2,8 mln tn,
• Feodosiya – about 2,6 mln tn,
• Yevpatoriya – about 0,97 mln tn,
• Yalta – about 0,16 mln tn.

 

Total: a little bit more than 11,3 mln.tn.

 

One can see that these ports do not play the first violin in Ukraine although, of course, are very important for the industry. Interestingly to note that two Ukrainian ports in the Sea of Azov, Mariupol and Berdyansk, may face something if Russia is going to take control over the Kerch Strait.

 

In February 2014 Ukraine exported over 2.3 mln tonnes of grains and pulses, which became the record for the month period. Previously, only in 2008/09 MY Ukraine reached the maximum volumes of the February export shipments of grains, which totaled 2.1 mln tonnes. Maize formed the major share in the structure of grain exports - 85%, or almost 2 mln tonnes. Wheat formed nearly 12% of the general grain exports, at the volume of over 287 thsd tonnes. As for the shipment structure by the ports, in February 2014 the terminals of the Odessa port zone supplied nearly 58.5% of the grain export volumes on foreign markets, the terminals of Nikolayev region – 32.2%, and the terminals of Sevastopol - 3.6%.

 

Despite all concerns, at the moment Ukrainian ports and shipping operations mostly continue as normal. Cargo movements have not yet been affected by the escalation. According to GAC Shipping agency, only on March 6 operations were suspended in Kerch but due to foggy weather and political developments have had no impact on merchant shipping and operations at all the country’s commercial ports.

 

The Sea port administration of Ukraine based in Kiev reported on March 11 that security over the Crimean ports has been strengthened.

 

Shipping

The insurance industry refrains from calling Ukrainian waters a Listed War area with a greater risk of vessels being damaged or seized. The IG Joint War Committee met again on March 7 to consider the developments in Crimea. No changes were made but the area remains under close review.

Local P&I correspondents report most ports in Ukraine function as normal but foreign crew members are recommended to keep away from areas where any demonstrations are taking place and even to refrain from coming ashore.

Shipping people expect shipping costs for commodities from Ukraine would rather be raised. But now it is too soon to charge higher freight. Yes, owners and shipping executives are worried, but now everyone is waiting how the situation develops. So, everyone is keeping an eye on what is happening everyday in the country.

Port, logistics and shipping are very conservative. Quite probably no serious problems have been faced just because now port terminals are handling cargoes that were delivered to ports long ago.

It would be interesting how logistic chains now are being changed. For sure, logistic executives are going to mitigate risks and would rather send new lots of cargo to other ports, not engaged into the political conflict.

The situation could change quickly.

 

Arthur Nitsevych

Managing partner

Interlegal

Focused on Shipping and International trade