Black Sea ship disruption costs crop exporters millions every month Ship’s crew

By Kateryna Choursina

(Bloomberg) – Delays in ship inspections crippling Ukraine’s Black Sea crop exports have cost major agribusiness conglomerate Kernel Holding SA $57 million, the chief executive said.

Kiev has accused Moscow of deliberately slowing down inspections of ships carrying grain through a security corridor. That’s forcing companies to look for alternative river and land routes that are more expensive — costing Kernel about $5 million a month, CEO Ievgen Osypov said.

The high cost highlights the challenges traders face when using Ukraine’s harvest corridor, which is plagued by inspection delays and long queues. Renewal is due on July 17, but few ships are currently passing the route as registration of new ships remains blocked. This increases the uncertainty that Ukrainian farmers face when delivering their next crop.

“Who suffers the most? Ukrainian farmers working in extremely difficult conditions,” Osypov said via email. “Their margins and profitability continue to decline.”

Also read: EU proposes a Russian grain bank

Kernel is one of Ukraine’s largest crop exporters. Since the export deal was first signed about a year ago, nearly 3.3 million tons of grain have been shipped from Black Sea ports — about 10% of the country’s total flows through the corridor.

The company shipped 80% of its sunflower oil from Black Sea ports in the Odessa region from September to March, but since April the share has fallen to 44%, resulting in higher costs.

The disruptions in the Black Sea mean that the terminals are operating at a fraction of their capacity, leading to further losses. Kernel’s TransBulkTerminal, for example, can handle 10 million tons per year, but is currently used for just over 3 million tons, Osypov said.

The company also wants the United Nations, which brokered the Grain Export Initiative, to be more transparent about all operations related to ships in the Bosphorus.

–With support from Megan Durisin.

© 2023 Bloomberg LP

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