Grain traders seek official declaration on Black Sea shipping risks to avoid contract defaults
Ukrainian grain traders are urging the government to officially acknowledge the disruption to shipping through the Black Sea corridor, warning they could default on export contracts because vessels have effectively stopped calling at Ukrainian ports.
Representatives of two major Ukrainian grain traders and one international trading company, speaking on condition of anonymity, told Latifundist.com that an official government statement is needed to support force majeure claims.
The greatest risks concern contracts concluded on a CIF (Cost, Insurance and Freight) basis, under which the seller is responsible for chartering a vessel and delivering cargo to the buyer's destination port. These contracts mainly cover wheat and barley shipments to North African countries, including Algeria, Morocco, Tunisia and Egypt.
"We are obliged to charter a vessel and deliver the cargo to the buyer's port. But at the moment, we simply cannot do that. Buyers ask us to explain why, and news reports about missile attacks are not considered an official justification. We need a government-issued document confirming that the maritime corridor is not operating," a representative of one Ukrainian trading company said.
According to the traders, without such confirmation, foreign buyers may continue insisting on contract performance, arguing that some vessels had continued calling at Ukrainian ports until recently.
"The problem is not only potential losses on individual contracts. Defaults could result in Ukrainian companies being blacklisted by major state grain buyers. That would pose a broader reputational risk for Ukraine as a grain supplier," another trader said.
Mykola Horbachov, president of the Ukrainian Grain Association (UGA), confirmed that exporters need an official government position on the status of the maritime corridor.
"Technically, shipowners are refusing to enter Ukrainian ports because attacks are taking place every day. Even most vessels that were already waiting nearby decided not to enter Ukraine, while new shipowners refused to consider such voyages altogether," Horbachov said.
According to him, freight rates for voyages to Ukraine at the beginning of the week were two to three times higher than two weeks earlier. However, even at those rates, crews were unwilling to sail.
"Even if a shipowner agreed to provide a vessel, the captain could still refuse to enter Ukrainian ports. If the government officially declares that shipping through the maritime corridor has become unsafe, companies will be able to invoke this when explaining that contract non-performance is due to force majeure caused by the war," he said.
At present, foreign buyers can argue that vessel traffic has not completely stopped and therefore contracts should still be fulfilled.
"They do not care how many vessels entered the ports. Their position is simple: shipping continues, so fulfil the contract. An official government position would allow traders to explain why it is technically impossible to do so," Horbachov added.
The Ukrainian Grain Association has already requested clarification from the authorities but has not yet received a response.
"We asked for clarification but received no reply. In this situation, no response is the worst possible response. The government needs to act to protect Ukrainian exporters," he said.
Horbachov believes that regular Russian attacks on port infrastructure make it unlikely that the situation will normalise in the coming weeks. An official declaration on the disruption of the maritime corridor would therefore provide exporters with grounds to renegotiate or cancel contracts that cannot currently be fulfilled.