Logistic problems hit Ukrainian grain exports - traders

08.11.2016

Ukrainian 2016/17 grain exports could be 7 million tonnes lower than originally expected due to logistical difficulties and some companies have already redirected shipments from Ukraine to other countries, traders said on Tuesday.

Ukraine had planned to ship abroad around 41 million tonnes of grain in the 2016/17 July-June season versus around 39 million tonnes a season earlier.

Volodymyr Klymenko, the head of Ukrainian grain traders union UZA said a lack of railway grain wagons and a tightening of the rules on grain transportation by trucks were the main obstacles to exports.

"The last grain wagons were built in 1993 and now every wagon is 95 percent worn-out," Klymenko said.

He said that only around 7,000 wagons could be used by traders at the present time while the country needed around 15,000 wagons to meet all its needs. Ukrainian railways has said it has 13,400 wagons.

"Every day traders order 3,600 to 3,700 wagons while the railway is supplying around 2,200 wagons," a major foreign trader said.

"We are already considering redirection of two vessels from Ukrainian ports to European ones," he added, noting that it would cover contracts using maize of non-Ukrainian origin.

He also added that Ukrainian grain exports in October had been expected at 4.5 million tonnes, but in the end had totalled only about 4.0 million tonnes due to the logistical problems.

"In ports we can load even more for exports but wagons are our bottleneck," said Mykola Gorbachev from the European business association.

Traders said new and much tougher rules on grain transport by trucks was the second serious problem that had hit exports.

This summer, Ukrainian transport authorities banned truck carriers from transporting cargo weighing over 20 tonnes - half the level it was previously.

Klymenko said around 14 million tonnes of grain were delivered to ports by trucks last season but the new rules made it possible to only deliver half of that volume this season.

He also said that new rules had doubled the transport costs.

"Ukraine could not export this 7 million tonnes of grain if urgent measures would not be taken," he said.

According to the agriculture ministry, minister Taras Kutovy has proposed the government to establish a special ministerial commission to resolve the issues.


dailymail

Readers choice: TOP-5 articles of the month by UkrAgroConsult