Business calls for stabilization and expansion of shipping in the Black Sea region

The business community of Ukraine, united by several associations, in particular the European Business Association (EBA), calls on the parties of the Black Sea Grain Initiative – the United Nations and Turkiye – to promote its stable operation, continuation and expansion, and to ensure free commercial shipping in the Black Sea region. This is stated in the EBA press release.

As the EBA notes, Russian inspectors of the Joint Coordination Center (JCC) are artificially blocking the full operation of the Initiative and disrupting free navigation in the Black Sea. In particular, the Russian side is systematically delaying the inspection of vessels heading through the Bosphorus to/from Ukrainian ports.

“Currently, 140 ships are waiting for inspection by the JCC in the Bosphorus, and Ukrainian ports are operating at only 30% of their capacity. At the same time, the movement of Russian ships in the Black Sea is not limited to regular inspections, while the volume of cargo transported through the Azov and Black Seas is about 250 million tons in 2022. Thus, the business is worried about the situation that has developed in recent months with delays in the operation of the Black Sea grain corridors,” the press release says.

If the Initiative worked in a coordinated manner and at full capacity, the total volume of grain exports could be 30-40% higher. About 10 million tons of agricultural products were not shipped to international markets. In the current marketing year, more than 25 million tons of Ukrainian grain is expected to be exported.

In order to ensure free navigation in the Black Sea region and unlock the Initiative’s activities in full, the business community calls on the UN and Turkiye:

• to take measures to ensure the stable and timely work of inspectors/representatives of the commission operating at the JCC;
• ensure free trade navigation in the Black Sea for all parties or introduce inspections of all Russian vessels sailing in the Black Sea;
• support the extension of the Initiative for at least one year, with automatic renewal for the same periods, unless one party notifies the other of its intention to terminate or modify the Initiative;
• to include Mykolayiv Port, as well as other ports and terminals located in the Buzhka-Dnieper Canal, the specialized sea port Olvia to the Black Sea Grain Initiative in order to increase the throughput capacity for grain export.

As GMK Center reported earlier, in 2022, the sea ports of Ukraine reduced freight turnover by 61.4% compared to 2021 – to 59 million tons. Export transshipment of cargo by port operators decreased by 59.5% y/y – to 47.8 million tons, and import transshipment –  by 74.2%, to 6.2 million tons. Grain cargoes – 28.8 million tons, and bulk dry cargoes – 4.8 million tons are among the leaders in cargo nomenclature. Sea transport last year provided 54% of Ukrainian exports.

The steel industry is the basis of the Ukrainian economy. Before the full-scale invasion of the Russian Federation, the iron and steel complex of Ukraine provided about 10% of GDP and 33% of exports. The domestic steel sector is export-oriented, so the industry is strong influenced by blockade of the Black Sea by the Russian Navy. Currently, the possibilities of exporting stee; products by rail are limited, and the EU seaports, to which steelmakers have reoriented, are unable to process all Ukrainian cargo.

More about the impact of Black Sea ports blockade on the industry of Ukraine – in GMK Center research.