Ukraine Grain Corridor 'Massively Disadvantageous' for Black Sea Bunker Market: Sources

Ukraine has since exported 27.7 million mt of agricultural products through the corridor since it was established last summer. Image Credit: UN

The 'grain corridor' scheme guaranteeing safe passage of Ukrainian agricultural export shipments is adding problems to an already-depressed Black Sea bunker market, according to local sources.

The agreement, reached last year under the auspices of the UN, created a protected transit corridor in the Black Sea for vessels carrying agricultural products from three Ukrainian ports. The deal was designed to avoid the war in Ukraine leading to global food shortages.

Ukraine has since exported 27.7 million mt of agricultural products through the corridor, according to news agency Reuters.

But local sources contacted by Ship & Bunker this week have reported the deal bringing unwelcome complications to a bunker market already severely impacted by the war.

"Ukraine's grain corridor is massively disadvantageous for bunker companies," a senior trader familiar with the situation told Ship & Bunker.

"More than 300 vessels at any time wait at the Turkish straits to go up to Ukrainian ports for cargo ops, sometimes for months."

The problem lies with the number of vessels participating in the deal, and the need for extensive inspections.

"When it first started it was mainly the local shipowners, benefiting the Turkish, Greek and Syrian ones, while dry bulk rates globally were good last year," the source added.

"But when they started dropping, more shipowners from other parts of the world started coming to the grain corridor, and it increased the number of ships and the inspections there.

"There are two inspections, one on the way to Ukraine to load grain and one on the way back.

"That means if a bulk carrier was previously lifting bunkers once every 25 days, that cycle is now extended to 60-70 days.

"They just keep waiting in the Turkish strait; if you look it up, both the Dardanelles and the Bosphorus, there's so many ships just waiting for instructions."

The delays are also having an impact on bunker demand globally, with the ships stuck waiting around Turkey not participating in other dry bulk trades around the world, the trader added.

A bunker market source in Turkey said issues with the grain corridor deal were exacerbating problems the market had faced since the outbreak of war in Ukraine.

"First of all, serious effects have come from the fact that there used to be 13,500 ships loading from Ukraine per annum, and now there are zero.

"Most of them were bunkering in Istanbul.

"And the grain control is terrible -- some ships are waiting for 20-30 days.

"Most suppliers are not accepting orders from grain corridor ships due to unknown supply date; supplies are only allowed after Joint Coordination Centre control, and it's unknown when that will happen.

"These ships account for no more than 2-3% in the usual volumes of any supplier here."

Turkey saw about 177,000 mt of marine fuel sales in January, down by 2.6% on the year.