Analyzing the Impact of Russia’s Grain Targeting

Risk & Compliance

What’s inside?

    Two of Russia’s relatively recent moves increased food insecurity and will likely slow the global supply chain. In mid-July 2023, Russia pulled out of the Black Sea grain deal, which had allowed Ukraine to export grain via Turkey’s Bosphorus Strait to reach global markets. 

    This was significant, because developing countries rely on Ukrainian exports and its wheat stabilized global food prices, noted CNN

    “According to the European Commission, Ukraine accounts for 10% of the world wheat market, 15% of the corn market, and 13% of the barley market. It is also a key global player in the market of sunflower oil. The Food and Agriculture Organization (FAO), an UN body, warned at the time (the deal was established) that as many as 47 million people could be pushed into ‘acute food insecurity’ because of the war.” 

    This was followed by a port attack this week (early August). Foreign Policy captured the severity of this move: 

    “Moscow dealt a devastating blow to global food supplies on Wednesday when Russian drones attacked Ukraine’s Izmail port along the Danube River. Nearly 40,000 metric tons of grain earmarked for Africa, China, and Israel were damaged, wrote Ukrainian Infrastructure Minister Oleksandr Kubrakov. Fires raged across the port’s facilities, and local officials have suspended operations indefinitely.” 

    This blog post will highlight insights generated by Windward’s Maritime AI™ platform, which can help quantify and contextualize the expected impact of these moves on the region, port congestion, and the global supply chain. 

    The Grain Deal Worked Well 

    First, let’s establish a data baseline. During 2021 and the early months of 2022 before the war (January 2021-February 2022), the average monthly number of cargo vessel port calls to the West Coast ports in Ukraine was 717. The monthly average number of port calls to the Danube ports was 131.

    At the beginning of the war in March-July 2022, that monthly average decreased by 93% in the West Coast, with Russia aggression hampering those ports, while it increased by 240% in the Danube ports

    Once the grain deal was signed in July 2022, port calls in both areas dramatically increased:

    • The monthly average increased by 155% in the West Coast ports
    • The monthly average increased by 85% in the Danube ports

    Diving into the subclass details for the same timeframe shows that since the grain deal was signed, operations in the Danube ports increased by:

    • 124% for bulk carriers
    • 136% for container vessels
    • 117% for general cargo vessels

    These are obviously the main types of vessels carrying grain and the numbers are a clear indication of how beneficial the grain deal was for the area and how it helped keep global grain trade flowing.

    What Has Happened to the Danube Ports? 

    Windward’s maritime insights show activity at the West Coast ports – Odessa, Ilichevsk, and Yuzhny – increased with the announcement on the grain deal in July 2022. It has been decreasing since the autumn months, amid fears the deal would collapse.

    The two main Danube ports, Izmail and Reni, have proven adaptable to the changing landscape throughout the war and have stepped up to keep the grain trade flowing.

    Izmail port had a monthly average of 43 port calls by cargo vessels during January 2021-February 2022. The monthly average increased to 93 in the first months of the war (March-July 2022), and again to 221 after the grain deal was signed – an increase of 414% from pre-war numbers! 

    Having this much traffic diverted to a smaller than average port definitely created port congestion and slowed the supply chain for grain: 

    Izmail congestion timeframes 1

    Izmail port congestion (Source: Planet Labs)

    What’s Next? 

    After Izmail’s bombing, plus Ukraine’s subsequent threat to target shipping out of Russian ports, we can expect many vessels to be idling and awaiting instructions. Unfortunately, dire predictions about the world’s grain supply may be realized.

    Unsurprisingly, insurance has become an issue. Before the recent port bombing, a cargo insurance facility providing cover for Ukraine grain shipments via a safe sea corridor was suspended following Russia’s withdrawal from the grain deal, some insurers withdrew coverage, and others significantly increased rates

    Windward will continue to monitor developments and use our Maritime AI™ platform to keep you up to date on the true impact of incidents and events that occur.  

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