In November, 14 ships with steel products left the ports of Odessa and Pivdenny
Stable operation of the maritime export corridor allowed to increase transshipment of export cargo in Ukrainian ports by 22.8% to 41.7 million tons. However, the corridor is not yet fully safe due to the threat of mines and Russian aviation. The convoying of ships, launching of the insurance fund, etc. can increase the volumes of cargo transshipment and make maritime exports safer. This is especially important for iron and steel enterprises, whose production is tied to exports.
Since the launch of the export corridor and up to the present period, cargo traffic through the export corridor has grown to a very significant size. According to Oleksandr Kubrakov, First Deputy Prime Minister and head of the Ministry of Infrastructure, as of December 4, more than 7 million tons of cargo were exported from the ports of Pivdenniy, Odessa and Chernomorsk, of which almost 5 million tons were agricultural products.
“We have already reached an average export figure of about 2.7-2.8 million tons per month (as of September 16). This is the average monthly figure of the previously operating grain corridor. If the security situation does not deteriorate, I have a feeling that in a week’s time, cargo traffic through the new export corridor will exceed the average of the UN-operated corridor,” adds Andriy Klimenko, head of the Monitoring Group of the Institute of Black Sea Strategic Studies on the situation in Crimea and Black Sea region.
Starting from August 8, 200 ships passed through the temporary corridor to leave the ports and 226 to enter. As of December 4, 31 ships were being loaded in the ports of Greater Odessa, and another 30 vessels were following the corridor in both directions.
Export of iron and steel products ranks second in volume after maritime external supplies of agricultural products. According to industry sources, in November the export of iron and steel products through seaports amounted to:
- port Odessa – nine ships with steel products;
- port Pivdenny – four ships withiron ore and one – with steel.
From the two mentioned ports in November, 14 vessels cumulatively exported about 620 thousand tons of iron ore and 140 thousand tons of steel products. In October exports of Ukrainian iron and steel products through the ports of Greater Odessa tentatively amounted to 507 thousand tons of iron ore (four bulk carriers from Pivdennyi) and 213.5 thousand tons of metal products (two vessels from Odessa).
Under current conditions, when road exports are limited by the blockade of border crossings on the border with Poland and the capacity of railroads, “open” seaports can significantly increase the production and export capabilities of steel enterprises. In addition, in the near term, the launch of an insurance fund, which is likely to include iron ore and metal products, could support exports of Ukrainian iron and steel products.
“We should have a permanent possibility to receive ships, insurance of these ships, cooperation with financial institutions. So that the possibility to receive funds would be not after passing Bosporus or Suez, but as before – after loading the products on the vessel,” summarizes Yulia Dankova, financial director of Metinvest group.
Much in the reliability of the corridor operation depends on the real launch of the insurance fund for compensation of damage to shipowners, which is launched with the participation of Ukrainian banks and Western insurers. The total amount of coverage under the program is $50 million. There is no information about its launch and mechanism of operation yet.
“Judging by the latest data, this fund will work not only for agrarians, but also for all other exporters/importers, including MMCs. However, as far as we know, its mechanism will be finally specified in the near future, and the system itself is likely to start working on January 1, 2024,” an industry source said in a comment to GMK Center.
The safety of ships using the temporary route is not yet sufficiently guaranteed: there is a mine threat and obstacles to navigation by the occupants.
The security situation could be improved by ship escort of the corridor’s operation. In late November, President Volodymyr Zelensky said that Ukraine had agreed with its partners to obtain military ships to escort ships in the sea corridor. The convoying of civilian vessels by warships is a new and very important element in ensuring the security of the export route.
Equally important is the continued demining of the Black Sea. In October, Romanian and Bulgarian ships already began trawling the coastal waters of Bulgaria and the route of the Ukrainian sea corridor, but the mine threat remains high. In mid-November, the bulk carrier Georgia S, which left the port of Pivdenny with a cargo of wheat, hit a sea mine near the Ukrainian coast and suffered minor damage.
In general, the efforts of the Ukrainian authorities and international partners are aimed at ensuring the maximum possible security of the maritime corridor. Only comprehensive and systematic measures can bring the desired result, and as we can see from the results of the corridor’s operation for almost four months, this is being achieved, with the exception of a number of incidents. For its part, Ukrainian business is ready to increase exports through the corridor, provided that a sufficient level of security is ensured.