Sea as a way to restoration of Ukraine: shipping logistics in a wartime
25 August, 2025
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The war in Ukraine has dramatically changed the country’s logistics map: it destroyed old routes, called into question reliability of the infrastructure, forced businesses to look for new models of work, in some cases to build supply chains from scratch, and constantly to have a plan B, C, and so on ready. Shipping logistics, which before the full-scale invasion was a key to agricultural exports and metallurgy, now has plunged into a deep crisis due to suspension of shipping in 2022. Today, when, thanks to the Armed Forces of Ukraine, Ukrainian ports are working again, it is still undergoing a painful but necessary process of transformation.
How exactly rules of the game at sea have changed, what new challenges have arisen for Ukrainian shipping, charterers and other market players – all these issues were discussed at one of the panels of Ukrainian Transport Forum 2025 organized by Association of International Freight Forwarders of Ukraine (AIFFU) in partnership with European Business Association (EBA) and Maritime Days in Odesa (Interlegal). The forum gathered over 200 key players in the Ukrainian transport market, namely representatives of the government, business, international organizations, forwarding companies, ports, railways, shipping industry, logistics operators, lawyers and insurers.
Let us share a brief overview of the maritime logistics market based on the reports of the speakers of the 3rd section of Ukrainian Transport Forum 2025, moderated by Interlegal partner Arthur Nitsevych.
There is grain, there is demand: logistics shall rule
For a Ukrainian agricultural exporter today, every deal is a whirl of prices, freight and deadlines. But the main thing is that Ukraine has grain with a stable demand. Delivery channels are needed.
Daria Marchenko, a commodity broker at Atria Brokers, emphasized this aspect and immediately set the right tone for discussion: despite the war, prospects for agricultural exports for the current season are more than encouraging, therefore, logistics should rule and facilitate optimal conditions for export.
Last season, we have already shown that we are able to play on all fields: we exported ca. 30 million tons of grain to over 70 countries. Although geography is a little narrower than in the pre-war period, the main directions remain stable:
The European Union: 44% of the whole export volume. The main importing countries are the Netherlands, Spain, Italy.
North Africa: 34%. The largest importers are Egypt, Algeria, Tunisia, where Russia is the main competitor for Ukraine.
Asia: 21%. Bangladesh, Indonesia, Vietnam, China – here too, our unfortunate neighbor often competes with us.
But the 2024/25 season begins with new rules, especially on the European side. In June, the EU fixed tariffs on import of the Ukrainian wheat: now Ukrainian exporters can export only 580 thousand tons duty-free. This means that over 3.5 million tons should be urgently reoriented to other markets.
Meantime, there are also growth points. Indonesia, Bangladesh, Vietnam are already actively buying Ukrainian wheat under forward contracts. Active demand from government procurement is expected from Egypt, Tunisia, Algeria. In China there was abnormal heat and drought, which could significantly increase the demand for barley. Turkey is opening a window for export of nearly one million tons of wheat, due to changes in domestic trade policy within the country.
Turkey is also demonstrating stably high demand for Ukrainian corn. India is also potentially ready to purchase up to half a million tons of the queen of the fields. The European market for Ukrainian corn will be more competitive due to cheaper offers from the USA, but it is expected to maintain a high level.
Summing-up, we see a truly optimistic picture of the new season. There is grain, there is demand, so export is a must. The prospects are more than encouraging, the weather is favorable, price and logistics factors facilitate excellent grounds for active trade. All we need now is to work quickly with those who truly understand the market.
Freight fluctuation
State of the freight market is a clear and very tangible marker of how the war affected shipping logistics in the region. Igor Kolomiitsev, director of Danton Shipping, reminded that before the full-scale invasion, freight rates for 5 thousand tons of grain from the Izmail to the Sea of Marmara fluctuated within $18-25. But in 2022 everything changed: only the Danube ports remained open, while the freight increased up to $105-110.
Imagine: from 18-25 to over 100. Among the first “kamikazes” who went to Ukraine for money was Arab rusty tonnage. They were the first to call at the Danube ports. Turkish ships followed them. Then Ukrainian ones – with our own crews. Later the problems arose: some of the crew members were mobilized, they were not allowed to leave anywhere. Over time, the market began to stabilize. But at its peak, i.e. by late 2022, the rates really reached $105.
Following launch of the first and second grain corridors, seaports reopened and the rates began to decrease. The Danube market, which was formed during the war, began to lose its positions. Now freight rates are even lower than they were before the full-scale war:
Last year, there was no seasonal increase in prices, which usually occurs from the beginning of the harvest till Catholic Christmas. The market is depressed. There are even cases where shipowners sentvessels into lay-up due to financial problems, e.g. when operating costs exceed the time charter equivalent. It does not earn, but constantly goes into the red. This is briefly about what is happening to the freight market now.
Are foreign shipowners bypassing Ukraine?
Unfortunately, the answer to this question is still affirmative. Maksym Khaulin, director of the Intresco shipping company, states that foreign shipowners are still afraid to enter Ukrainian waters due to military risk and mine danger.
Private operators often choose safer routes through the Romanian, Bulgarian, and Turkish ports. In Ukraine there are mainly adapted vessels or those that have no alternatives on the international market.
As the speaker notes, these are outdated Syrian and Turkish vessels with deadweight up to 30 thousand tons. More or less normal companies have vessels with deadweight over 30 thousand tons, but half of them call at Russian ports: this is not a secret for the market. There are no checks or control over them at all.
Problems with logistics in Ukrainian ports are also noticeable. In fact, now only three ports of the Greater Odesa are operating in Ukraine. They bear all the load, cargo flows, rail transport.
However, Maksym Khaulin highlights also positive signals. Due to launch of the so-called Grain Corridor 2.0, the Ukrainian market is gradually regaining its attractiveness for shipowners.
Operators are gradually returning, especially to the Danube, with infrastructure operating in Reni, Izmail, Orlivka, Ust-Dunaisk, Vilkovo. But there are no cargoes.
Thanks to the Ukrainian Navy, insurance premiums are decreasing. At the beginning of the war, they were 3-5%, now they are 0.5%.
International operators also got interested. Today we heard about Maersk. One more line was launched by Medkon Lines.
Private fleet: in the stage of tactical survival
Maksym Khaulin believes that under conditions when foreign shipowners, despite all the positive signals and market efforts, still bypass Ukrainian ports, Ukrainian private shipping is becoming the key to economic stability of the country. However, without systematic approach and state support, it will not survive and even will be unable to become competitive at the international level.
Private shipping in Ukraine is in the phase of tactical survival, where business is looking for flexible solutions, but already needs a systematic approach. Without regulatory quality and state support, its further development is problematic. However, the Ukrainian market has unique logistics capabilities due to which it may transform into a regional hub, provided that a targeted policy is implemented.
Today, most of the Ukrainian private fleet consists of outdated river vessels over 20 years old, owned not by specialized carriers, but by agricultural, logistics, and trading companies that were forced to invest in shipping due to the lack of stable carriers. In fact, they have no state funding and lack access to insurance, furthermore, service and repair infrastructure is limited due to the war and associated risks.
Maksym Khaulin remembers that before outbreak of the war many vessels got repaired in Ukraine, followed by call to Berdyansk, Mariupol and Crimea for loading. Now all it is lost.
The existing fleet is operating at the limit of its capabilities, lacking renewal and investment while facing high insurance risks. The question is how to survive, not how to develop.
No funds, no guarantees
There were no state programs to support the private fleet even before outbreak of the war. After 2022, banks stopped financing. Not every shipowner can update the fleet or purchase a new vessel with its own resources.
In Ukraine there are no specific forms of leasing. The banks that worked before the war, such as OTP Bank, First Ukrainian Bank, have now stopped these programs.
Neither before the war nor now have there been any affordable loans for updating the fleet. All such loans, for example, for Ukrainian Danube Shipping, were abroad. There were small schemes with state banks. But this does not concern a large-scale updated fleet.
Improvisation as a solution
Besides outdated fleet and lack of state support, Ukrainian shipowners face mine danger in the Black Sea, high cost of cargo insurance and call at Ukraine, regulatory barriers and bureaucracy, sharp decrease of cargo flows in the Danube ports due to the war… Such factors force businesses to improvise and even cause harm to efficiency.
But Ukrainian business does not give up. It looks for solutions on the go, adapts, unites – someway it reminds the Ukrainian military, in the opinion of Maksym Khaulin:
Ukrainian business is creative, like the Armed Forces of Ukraine. But given the constant improvisation it is impossible to build up a strategy.
Solution No. 1: a foreign flags. Ukrainian shipowners register vessels under the flags of other countries, e.g., Moldova, Romania, etc. This is the only way to work in understandable conditions.
Solution No. 2: cooperation. Companies are uniting to share fleets:
For example, Nibulon and the Danube Shipping Company share tugboats, small-class barges for cabotage on the Danube. Various alliances are being created between businesses in order to optimize routes and fleets.
Solution No. 3: reorientation to military cabotage. Some shipowners are reorienting themselves to internal transportation in the framework of military logistics, if funding is available.
Solution No. 4: investment in one’s own vessels. This is a luxury for those who have their own resources – not every company can afford it. Because, as already noted, the Ukrainian private fleet is currently owned by farmers and traders who spend most of their funds on their own trading purposes, such as grain purchases, taxes and duties.
Resuscitation of Ukrainian shipping requires clear rules of the game
The once large sea and river fleet of Ukraine has practically disappeared today due to privatization, corruption and lack of renewal. Maksym Khaulin believes that resuscitation of the Ukrainian shipping is possible and profitable. However, it requires not only funds, but also clear and understandable rules of the game:
Today, Ukrainian shipping consists of a few dozen private operators, mainly in the river segment. There is a chance to restore it, either through investments in the river fleet, or through the Dnieper and Danube, or through public-private partnerships. However, this requires a fair end to the war. Otherwise, it will be impossible to transport via the Dnieper.
Restoration is possible if:
Preferential lending or leasing for purchase / modernization of vessels is available.
Stable rules of the game are established, such as simplification of registration, tax incentives, VAT refunds.
Guarantee mechanism is launched to cover military risks (e.g., public-private insurance).
Strategy instead of response: what business expects from the regulator
Maksym Khaulin notes that Ukrainian shipowners do not require special treatment, but only stable conditions that will facilitate operation and planning:
Business does not ask the state for privileges. It asks for predictability and access to development tools operating in Europe.
We need transparent rules for fleet registration. Many companies bypass the Ukrainian flag due to complexity of the procedures.
We need to simplify permitting procedures, in particular, for temporary cabotage, access to port infrastructure and privileges for vessel import.
We need tax incentives, financing and guarantees, engagement of the state in joint programs for insurance and subsidizing the new fleet. Also we need certainty in maritime and military transport policy for at least 5-10 years ahead. Neither thirty nor fifty, but for at least five.
If we want the Ukrainian flag to be at sea again, we need a strategy, not just a response.
Self-shipowner
Wartime logistics risks are forcing businesses to look for new ways aimed to facilitate supply stability. Large system companies that previously only chartered vessels are now increasingly investing in their own fleet. Volodymyr Kozakevych, director of AP Marine, a logistics and transport subdivision of Agroprosperis agricultural holding company, notes that for Ukrainian agribusiness this is not so much a desire to expand scope of its activities as a desire to manage logistical risks arising in the process of cargo export from Ukraine.
Agroprosperis as one of the largest agricultural producers and traders in Ukraine, before the full-scale war already owned a powerful fleet of half a thousand of its own and half a thousand leased wagons and had a river fleet. After February 24, 2022, the company invested in road transport and got more focused on the Danube. In late 2024, it acquired its first river-sea vessel and now plans to expand the fleet with a second one.
For players like Agroprosperis, having their own fleet is the main guarantee of fulfilling contracts in wartime. But operating a ship in Ukraine is not easy even for such a large business.
Vessels worth their weight in gold
Volodymyr Kozakevych notes that tax burden on vessel import still remains a serious problem for Ukrainian companies planning to invest in their own fleet. Their own fleet has to be purchased abroad, while tax burden on the vessel is a quarter of its cost: duty 5%, VAT 20%.
Of course, we pay the duty irrevocably and take it calmly. This is not the time to be capricious – the state also needs funds.
He also highlights that logic of the import duty is to protect the national manufacturer; since Ukraine does not produce a large-tonnage marine fleet, it is unclear why such fee applies thereto.
A more tangible tax burden is 20% VAT. It falls on credit and requires availability of working capital. It is especially difficult for pure shipowners who have no other operations in Ukraine: they should apply for reimbursement – it is a long and complicated procedure.
If the company is a VAT payer, as in our case, then the situation is somewhat simpler – VAT is reimbursed within a year, a maximum of one and a half. That is, this is a temporary burden, but it is there.
Crew factor
One of the largest challenges for a shipowner whose ship calls at Ukrainian ports is the safety of sailors on board. Volodymyr Kozakevych states that no insurance removes moral responsibility for a crew working in a combat zone:
With the crazy rates that I pay to the insurance company for vessel call, I am not nervous about the vessel; let the insurance company be nervous.
What I am worried about is the crew. Of course, not all crews are able or willing to call at Ukrainian ports; some are simply afraid to do so. Here the keystone is personnel. We solve this issue by selecting experienced sailors. For example, 30% of our crew had experience of drone attack on the vessel, experience of military seizures. But fortunately, they gained all this experience not on board of our vessels, not in our country, but somewhere in the Gulf of Aden, in the Philippines and in other pirate zones.
In fact, the world is unsafe, and Ukraine is not the only place where ships are afraid to call. In fact, it is probably not even the most dangerous.
Regulation or abuse?
Ukrainian legislation quite adequately regulates standard voyage charters whereunder payment shall be made for tonnage. However, more complex instruments, such as bareboat charter, time charter, hedging and other financial mechanisms that are common to the global shipping market, in fact are not regulated or are regulated poorly in Ukraine. Therefore, business is forced to apply general rules that do not meet specifications of shipping industry.
Volodymyr Kozakevych complained, if shipowners can still cope with taxes amounting to a quarter of the asset value, regulatory gaps sometimes simply make it impossible for business to operate.
If one starts to deviate even slightly from standard terms and conditions of voyage charter, in Ukraine nothing at all is prescribed for shipping business. Only some general rules apply that cannot be imposed on either the vessel herself or the shipping business in any way. It turns out that one does not seem to be violating anything, but the tax burden is already such that it is impossible to reimburse it at any crazy rates.
This is simply a disregard for business compared to Greece, Bulgaria, or any country with proper maritime industry regulation.
The expert is sure: if we ask the question of how the state could help a Ukrainian shipowner, the answer is legal certainty and adaptation of legislation to shipping business and up-to-date realities.
Three years before outbreak of the war, the Ukrainian river business players reached the level of systemic dialogue with the state. Working committees were organized at the ministry, where business entities, jointly with government representatives, purposefully worked on updating the legislation, not in order to avoid taxes or responsibility, but in order to have clear and understandable rules of the game.
These working groups were attended not only by experts from the ministry, but also by the ministers themselves, their deputies, and, if necessary, by representatives of other departments. It was a real dialogue and it yielded results. Unfortunately, this process was interrupted by the war. But these three years show a bright example of how the state and business can work together effectively.
I hope we will return to such scheme when the war is over. We should not give up, we should just come up with specific proposals, return the practice of working groups under ministries and adapt the legislation step-by-step.
Charter party in the crosshairs: legal risks for charterers
Following outbreak of the full-scale invasion, the issue concerning fulfillment of obligations under charter parties became acute for market players. Lawyers received lots of inquiries on whether it was possible to cancel the charter party, to suspend its execution, or whether there were grounds to declare force majeure or frustration of the contract. Legal discussions arose regarding an option to reject vessel call at a dangerous port and under what conditions a port can be treated as dangerous in general. Interlegal partner Karyna Gorovaya noted that arbitration proceedings upon such issues are still ongoing.
Most charter parties are governed by English law. The doctrine of force majeure is not provided thereby. It may apply only if the parties have incorporated a force majeure clause into charter party.
Frustration is somewhat similar to force majeure: it also occurs when certain circumstances arise out of the person’s control and make it impossible to perform the contract. However, its consequences are somewhat different: in case of frustration, the contract is discharged in full. This category, unlike force majeure, is provided by English common law, but is used extremely rarely due to its complexity.
Special attention should be given to the right of deviation, i.e., deviation of the vessel from its route. Even if this is not provided by the charter party, the war risk rules allow for such a possibility in case of actual threat. But the key condition is that the deviation should be reasonable: only if there is a danger to life of the crew or to the cargo on board.
Legal disputes concerning cancellation of charter parties due to the danger of the port of destination are difficult in practice.
One of the charterer’s key obligations is to nominate a safe port of call. If the port is treated as dangerous, in particular, due to hostilities, charter parties usually contain a clause that the shipowner may demand changing the port or declare cancelling the charter party.
However, Ukrainian Black Sea ports are now dangerous by default. Does the shipowner have the right a priori to reject the charter party and cancel it at any time?
Logically, no, because the war has been going on for four years and all market players are well aware of the threats to Ukrainian sea ports. However, in practice everything depends on circumstances. One example is the case conducted by Interlegal team.
It concerned the charter party on voyage to Izmail. The shipowner canceled the contract, citing the danger and the crew’s reluctance to enter the port. Although the shipowner fully understood the risks at the time of entering into the charterparty, the arbitral tribunal supported its position.
Award was based on the fact that since the signing of the charter party safety situation in Izmail had significantly deteriorated: just at that time Russia withdrew the Grain Deal and significantly intensified shelling of port infrastructure. As a result, the arbitrators recognized that circumstances have changed to the extent that the shipowner has the right to cancel, while the charterer’s losses are not subject to recovery.
Dynamics of threats can radically change legal assessment of the situation. That is why it is important to prescribe the most specific conditions in the charter party regarding war risk, deviations and force majeure, adapting each contract to actual risks.
Karyna Gorovaya summed-up: Read your contract. Watch what you are signing. It is even better to draft the contract yourself, to incorporate the necessary clauses therein. No one knows your risks and your business better than you.
Today Ukrainian shipping logistics relies on enthusiasm, adaptability and business intuition. But survival is not a strategy. In order for Ukrainian shipping logistics to be competitive and to remain a reliable support for agricultural exports, systemic changes are necessary: updating legislation, state support for shipowners, a clear and consistent policy for the development of the industry. War has already changed the rules of the game: now it is time to change the rules of regulation.
