Freight rates are not the only concern, some shipowners may withdraw vessels from Ukraine, shipping executive says

Escalating Russian attacks on civilian vessels in Ukrainian ports could lead not only to higher freight rates but also to a shortage of available tonnage, as some shipowners may stop offering vessels for Ukrainian trade, Kostyantyn Sobol, founder of Marelis Navigation S.A., told Latifundist.com.

According to Sobol, the current situation differs from earlier stages of the war because Russian attacks are increasingly targeting ships directly.

He said he was seriously concerned for one of his own vessels for the first time in a long while when it departed a Ukrainian port earlier this week carrying about 50,000 metric tons of grain. During the voyage, the crew twice received warnings that a Russian drone was approaching the vessel, although the drone changed course on both occasions.

"It is one thing when you know a vessel could potentially be hit, but it doesn't happen. It is another when a captain is in port and sees a neighbouring vessel being struck. After that, he no longer wants to stay and asks to leave as quickly as possible," Sobol said.

He said the key issue was no longer only how much freight rates would increase, but whether some shipowners would withdraw their fleets from the Ukrainian market altogether.

In that case, the market could face not only higher freight rates but also a physical shortage of vessels. According to Sobol, Ukraine's seaborne exports currently depend on three factors: shipowners' willingness to risk their vessels, crews' readiness to call at Ukrainian ports, and the availability and terms of war-risk insurance.

The insurance market has yet to reach a final assessment. According to market participants, insurers are still evaluating whether the latest escalation is temporary or whether shipping will have to operate under a new level of risk.