Russia is testing exporting grain through the Arctic port of Murmanka, thousands of kilometres from the farms where it is grown, as Ukraine's drone campaign has all but cut off its traditional route via the Black Sea. A bulk carrier in Murmansk started loading 29,500 tonnes of wheat on Wednesday for a trial shipment to buyers in north Africa, adapting facilities normally used to handle fertiliser for grain. The extraordinary detour illustrates how the escalating battle for control of the Black Sea has upended trade in Russia, the world's biggest wheat exporter, and Ukraine, another major supplier, despite relatively strong harvests in both countries. The disruption has driven up costs for overseas buyers even as prices received by Russian and Ukrainian farmers have plunged.
Ukraine has faced repeated disruptions to its grain exports since Russia's full-scale invasion in 2022, when Moscow blockaded its Black Sea ports, but it is only since Kyiv stepped up drone attacks on Russian ports and commercial vessels this summer that Moscow's own grain trade has suffered such severe disruption. The test Arctic shipment is the first of its kind, but Moscow has already been exporting via ports in the Baltic.
"The principal problem is not simply whether we can redirect a certain volume," said Arkady Zlochevsky, president of the Russian Grain Union. "It is that the logistics will cost substantially more than shipments through the Azov-Black Sea basin, and somebody will have to cover that difference."
Russian wheat exports from July to September were 38 per cent lower than last year, according to Russian rail freight company Rusagrotrans, despite a better harvest. Freight rates on some Black Sea routes have more than doubled since mid-July, according to Fastmarkets, forcing importers to seek alternatives.
Exporters have resorted to increasingly inventive solutions. Some vessels are sailing inland from the Sea of Azov, up the Don and through the Volga-Don Canal towards the Caspian Sea and buyers in Iran. Others are using containers to transfer grain from railway wagons into ships at terminals without conventional bulk-loading facilities. But the alternatives cannot replace the southern ports. Zlochevsky estimated that Baltic terminals could compensate for no more than half the lost Black Sea and Azov volumes by the end of the year. The rush north has overwhelmed railways, with wagons piling up at terminals, he said. Ukraine faces similar constraints due to Russian attacks. Its alternative routes, including via the Danube and road or rail via neighbouring EU countries, can handle only about half of normal agricultural export volumes, according to agriculture minister Taras Vysotskyi.
Source: Financial Times Companies · Summarized by HeadlinesBriefing