Russia exports its grain by ships of the shadow fleet

Russia, after unilaterally withdrawing from the grain deal on July 17, increasingly relies on the vessels of the so-called shadow fleet – old and small dry cargoes – to transport its food. As a rule, they are owned by little-known operators in Turkey and China. This was reported by Reuters with reference to sources.

The interlocutors of the agency note that in July Russia began actively chartering vessels from shipowners with whom large traders do not work. According to the Shipfix platform, the number of Russian applications for such vessels increased by 40% to 257 applications compared to June.

After the start of Russia’s war against Ukraine, many foreign companies – insurers, shipowners and banks – refused to work with Russian firms, including because of the fear of falling under secondary sanctions. At the same time, the restrictions do not apply directly to Russian food and fertilizers.

After Russia withdrew from the grain deal and intensified hostilities in the Black Sea, the situation with the supply of Russian agricultural products became even more complicated. Shipowners and insurers who are ready to work with Moscow have raised the prices for their services, the agency’s sources note. According to their data, operators charge ten thousand dollars more per day for the transportation of Russian cargo than for similar cargo from the ports of Bulgaria and Romania.

The head of the Russian Union of Grain Exporters, Eduard Zernin, in a conversation with Reuters noted that the increase in freight and insurance costs will affect prices on the world market.

Interlocutors of the agency also believe that in the current situation, it will be more difficult for Russia to maintain the high export rates that were in 2022.

The Ministry of Agriculture of Russia predicted that the export of Russian grain will decrease by approximately 8% in 2023-2024 compared to last year’s maximum of 60 million tons. The department did not specify the reason for the decrease in exports.

• Russia and Ukraine signed a grain deal with Turkey and the UN last July. Since then, the agreement has been extended several times, but on July 17, Moscow withdrew from the grain deal unilaterally. Russia claims that the part of the transaction concerning the export of Russian food and fertilizer was not implemented.
• After Moscow withdrew from the deal, the Russian military began massive shelling of Ukraine’s port infrastructure. Russia also stated that it can consider dry cargo in the Black Sea as military targets.
• Turkey, the UN and other countries called on Russia to return to the agreement. Washington called Moscow’s actions blackmail.