27 million tons of grain planned for export stuck in Ukraine
The world is facing a surge in food prices while some countries will encounter a shortage of food and even a hunger, according to UN officials. This is the consequence of the war in Ukraine, which has already lasted three months.
In 2021, Ukraine harvested 107 million tons of grain and oilseeds. Up until the war began, the country managed to export 43 million tons of the 70 million tons expected. This means 27 million tons of grain planned for export is stuck in Ukraine. It is believed that up to 4 million tons of grain and oilseeds are in the terminals and on ships stranded in ports.
Sea Export Stopped
Up to 95% of grain exported from Ukraine has been by sea. But now two ports on the Azov Sea, namely, Mariupol and Berdiansk, and the Port of Kherson on the Black Sea are under Russian control. The Port of Mykolaiv, also on the Black Sea, was severely damaged. Three ports of the so-called Greater Odessa are blocked and waterways are mined.
There remain four Ukrainian ports on the Danube River, namely, Ust-Danube, Kiliia, Izmail, and Reni. However, they are obsolete and of limited throughput and cannot handle more than 300,000 tons of grain per month. Also, there are not enough barges to ship the necessary volume of grain to the nearest Romanian Port of Constanta on the Black Sea.
Bottleneck on the Railroad
After the Ukrainian sea ports were blocked, grain exporters turned their eyes to the railroad.
Cargo can be transshipped or transferred to European countries through 13 railway border crossings: four with Poland, two with Slovakia, two with Hungary, three with Romania, and two with Moldova.
The designed throughput of these 13 railway border crossings is about 3,400 cars per day. This corresponds to approximately 220,000 tons of various cargo, of which 731 wagons or approximately 50,000 tons of grain can be transferred daily. Yet, only 20,000 tons of grain cross the border per day now.
The principal problem is that Ukrainian and European railroads use completely different gauges. For example, the Ukrainian railroad gauge is 1,520 mm (4 ft 11 27/32 in) while European railroads use the standard 1,435 mm (4 ft 8.5 in) gauge. Therefore, Ukrainian and European gauge and rolling stock are completely different both in dimensions and parameters. And it isn’t possible to simply exchange cargo and goods and move rolling stock across the border. Thus, the transshipment from the Ukrainian cars to European cars in points where Ukrainian gauge 1,520 mm and European gauge 1,435 mm are adjacent isn't feasible.
The second way is to change wheel sets on the Ukrainian car. There are five wheel set change points, but they are not used much due to the difference in dimensions of Ukrainian and European cars. Each time it is necessary to match the route on which Ukrainian cars with the changed wheel sets can move. There are only a few such routes. Therefore, this method of changing wheel sets is of limited use.
There are also three other problems. First, exporters use the existing border crossings unevenly. Of the 13 railway border crossings, only five operate at full capacity. These are Izov at the Polish border crossing, Uzhgorod, Chop, and Romanian border crossings. These five border crossings are fully loaded because exporters prefer to send cargo to these locations. The remaining eight border crossings are loaded only at 30% to 50% of their capacity. Exporters, therefore, should build new logistics chains outside the territory of Ukraine to fix with European carriers the movement of grain along the new routes.
The second problem is that the European infrastructure and carriers were not ready for a sharp increase in the volume of grain cargo transportation. European carriers did not have a sufficient number of grain cars with a gauge of 1,435 mm. They also don't have enough locomotive fleet to handle this additional flow of Ukrainian grain. And, of course, they have infrastructural limitations. For example, in Romania and Moldova sections have weight restrictions for the train, thus the weight of the train there must not exceed 2,700 tons while in Ukraine such trains run with a weight of 5,400 tons.
The third problem involves bureaucratic delays at the border associated with customs clearance, border inspection, phytosanitary and veterinary control. In contrast to export grain by sea where only one set of certificates is required for the entire cargo, exporting grain by rail requires one set of certificates per car.
Because of all these problems, the time for grain to cross borders now may be up from two to three weeks while the corresponding certificates are valid for only 15 days.
Export by Truck is a Utopia
Exporters are also trying to export grain by trucks. Some Ukrainian grain market analysts suggested that it is possible to export up to 40,000 tons of grain per day by (or 1.2 million tons per month) using 2,000 trucks. These analysts completely ignore the fact that the turnover of the grain truck from silo to port abroad may take an average of at least five days. This means the fleet must consist of at least 10,000 grain trucks. In order to operate 24/7, each truck must be operated by two drivers who also need to rest periodically. In order to export 1.2 million tons of grain per month, there must be a fleet of at least 10,000 trucks with at least 20,000 drivers who speak foreign languages fluently. This is a utopia.
A Bleak Future
Until Ukrainian sea ports become unblocked, the real volume of grain that can be exported will not exceed 25 to 30 million tons per year under the best scenario. This is only from 30% to 50% of the prewar Ukrainian grain export.
Keep in mind, too, that the logistic costs of export by rail or trucks has already gone through the roof. For example, the cost to deliver grain to sea ports abroad may reach $150 to $250 USD per ton.
This year Ukraine expects to harvest about 70 million tons of grain. Considering the carry on stocks of grain are now about 40 million tons and available total storage capacity of is 60 to 65 million tons, there will be no room to store up to 50 million tons of grain. Provided the ports remain blocked a large number of grain producers may go bankrupt because they will be unable to sell their grain. This means there may be no next sowing season for them and the next harvest will be much smaller than this year's crop. The Ukrainian grain export in 2023/2024 may look very thin.
Until Ukrainian seaports are unblocked, the world food crisis may get worse. Thus, it is in the interest of the whole world to help Ukraine win the war with Russia.
About the Author: Iurii Mykhailov is an agricultural journalist in Ukraine. He is a contributor to Successful Farming.