Transit past Ukraine

Russian grain transit via Ukrainian ports has decreased 19 times from the beginning of the year. During two months of the current year the majority of Ukrainian ports handled no Russian grain while earlier a significant portion of Russian export grain used to go through the ports of Ukraine. Experts say transit loss should be attributed to the decrease of transportation tariffs in Russia which stimulated export via national facilities.

Transit flow down

According to the Ministry of Transport and Communications of Ukraine, transportation of transit grain towards Illichivsk, Kherson, Kerchport of Odessa in January account for 38% of December volume. The foreign trade department of Kherson port says no transit grain was handled in the port this year. and Yuzhny ports almost ceased from the year beginning. The Ministry says the volume of Russian grain delivered to Ukrainian ports in January 2009 amounted to 100 wagons while in 2008 it was 1,800-1,900 wagons per month. 142 wagons with Russian grain delivered to the

Export capacity up

In January 2009 Russia produced 11 million tonnes of wheat and 1.5 million tonnes of barley. “In case of favorable pricing environment we expect grain export of at least 17-17.5 million tonnes or even some 23 million tonnes according to the most favorable forecasts,” Aleksandr Korbut, vice-president of Russian Grain Union, told PortNews IAA. By 2020, grain production will grow to 125 million tonnes in Russia. “We have apotential for grain production,” he said.

Though the majority of Russian grain used to be exported via Ukrainian ports, now Ukraine is afraid of loosing all Russian cargo.

Among the factors decreasing the transit flow experts mark the reduction of transportation tariffs in Russia aimed to stimulate export via national facilities. Within the framework of the new preferential tariffs agriculture producers have already been provided with a discount for railway transportation of grain and milling products. From the beginning of the year Russia introduced a decreasing coefficient 0.5 for transportation from 1,100 km. According to Russian Railways OJSC, from December 2008 up to this moment railway tariff for grain transportation via Russian ports with average distance of 624 km fell by almost 20%: from $15.9 to $13 per tonne.

A significant factor influencing redistribution of cargo flows was the increase of grain export in Ukraine to 16 million. Apart from this, to ensure uninterrupted export of grain, Ukraine started development of additional port infrastructure facilities. According to Poltava administration, one of the largest agricultural companies Nibulon (Nikolayev) intends to build 6 elevators in the Poltava region by 2011 and a grain terminal in Kremenchug (at Dnepr). The volume of investments into the project is to exceed $100 million. The ports also strive to ensure uninterrupted export of grain. Kherson Grain Production Company OJSC (WJ Grain) and Commercial Seaport of Kherson plan to invest in expansion of grain handling facilities in the first quarter of 2009.

As PortNews IAA learnt from Aleksandr Korbut, vice-president of Russian Grain Union, “Nowadays Ukraine dispatches large volumes of grain so there is no reason to handle Russian grain in Ukrainian ports.” That is why Russia also decreased grain transportation to the Baltic ports.