European leaders are desperately trying to figure out how to
get food grain out of Ukraine. Russia last week said it
would open maritime corridors to unblock ports such as Odesa on the
Black Sea if sanctions against the country were lifted.
Politicians are looking at everything from naval escorts to
shifting whatever’s possible overland to the Baltic. Officials at ports,
logistics companies and in the agriculture industry interviewed across the
region say they are scouring maps for solutions like diverting road transport
and reviving rail links such as the one connecting Galati.
The task is complicated by a dearth of truck drivers and the
fact that the Soviets used a wider track gauge than the European standard. That
has caused up to 30 days of delays at borders for existing routes, the EU said,
as cargo needs to be transferred onto compatible rolling stock and customs infrastructure
gets overwhelmed.
Ports in Romania and Poland, meanwhile, are backed up
with traffic or already at capacity while there are shortages of
specialized personnel to handle the surge in demand. Even with Ukrainian
exports at a fraction of what they were, trade officials warn that bottlenecks
will get worse as the rest of Europe starts harvesting its wheat next month.
“The scale of the problem is enormous,” Taras Kachka,
Ukraine’s Deputy Minister of Economic Development, told a conference. “In
the last 15 years, we developed our infrastructure in a way that it cannot be
simply replaced by another destination, another port.”
Ukraine is a major wheat, corn and barley supplier and tops
global sunflower-oil sales. Future crops will undoubtedly shrink due
to the war, but it still has 20 million tons of backlogged grain from
last year.
Ukraine is expanding export capacity at its western
border and simplifying trade arrangements with the EU. European Commission
President Ursula von der Leyen said on May 24 the EU was working to get what’s
stuck in Ukraine to global markets by opening “solidarity lanes” to European
ports as well as financing different modes of transportation. Ukraine’s
ambassador to Warsaw expects Poland to be the conduit for 80% of Ukrainian
grain.
But people on the ground say that’s easier said than done
when you look at the map, particularly the rail network.
In Slovakia, the main traffic operator transported 18,000
tons of corn from Ukraine last month across 12 trains, and private freight
companies are also involved. The issue is that cargoes from Ukraine’s
broad-gauge wagons need to be reloaded onto standard Europe size ones or the
container section transferred onto different wheels.
Poland has a 400-kilometer broad-gauge railway linking
Ukraine with its industrial southwest region of Silesia. It’s been used mainly
for steel products, and in recent weeks to carry refugees. State railway
network operator PLK SA has started investing in boosting capacity, reversing
its earlier focus on connections as far as China via Belarus.
In April, Poland and Ukraine also agreed to create a joint
cargo company and simplify border rules. But with routes to Poland’s Baltic
ports already busy and a shortage of wagons, there are doubts over whether
Poland can boost volumes of Ukrainian grain much above 2 million tons a month
anytime soon. That compares with the 5 to 6 million tons typically
dispatched monthly via its Black Sea ports, said Roman Slaston, Director General
of the Ukrainian Agribusiness Club industry group.
Romania is keen to upgrade Galati to ease congestion at
Constanta on the Black Sea. Galati is connected by the broad-gauge railway
that’s compatible with the Ukrainian system and may facilitate the quicker rerouting
of grains. The government wants to fast-track the construction of the missing
section of 4.6 kilometers and the work will take three months, Prime
Minister Nicolae Ciuca said last month.
Yet it’s still unclear who will do it, according to TTS, which
has spent two months testing logistic options via railway or trucks. The route
involves three countries and three different railway operators. Romania’s
transport minister said he hopes to find a company to build the missing portion
of track this week and may visit Galati with his Ukrainian counterpart.
“Ukraine was exporting 20 million tons of metals per year
and even more grains only on water, so to think that it would be possible to
completely replace these capacities is a dream,” said Petru Stefanut,
TTS’s CEO. “What we’re all trying to do, is to help them as much as we can. But
we can’t compare what they had and what they’ve lost.”
TTS has managed to transport about 200,000 tons of grains
and metals from Ukraine in the past two months, though Stefanut is confident
more will come as routing via the Danube becomes more efficient.
Any increase in supplies is critical after the war in Ukraine
sparked growing fears of a food crisis. At the World Economic Forum in
Davos, Von der Leyen accused President Vladimir Putin of using “hunger and
grain to wield power” as she decried Russia’s bombing of grain warehouses and
blockading of Ukrainian ships filled with wheat in the Black Sea. About three-quarters
of Ukrainian harvests are typically sold abroad, and it’s a key exporter to
Africa, Asia and the Middle East as well as Europe.
Ukraine’s Agriculture Minister expects another 30 to 40
million tons of grain will need to be exported after harvests this summer and
fall. While grain can be stored, farmers need to sell it to get funds for
planting 2023 supplies, with winter-crops like wheat sown in just a
few months.
Kees Huizinga, a Dutch farmer who lives in Ukraine and employs
400 people, used to be able to get a 25-ton truckload of his grain to Odesa
terminals on the Black Sea and back within a day. Drivers are now spending a
week in travel, queues and border checks — at triple the cost — to take
deliveries on a new route, unloading just over the border in Romania. From
there, it still needs to weave to its final destination.
The EU has exempted grain imports from
requiring veterinary or phytosanitary certificates to ease the transit. But in
the three weeks to mid-May, Huizinga had only shipped out 150 tons. Normally,
that would load in just a few hours. He worries that once Romania begins its
own harvest soon, the logjams could worsen.
For now, the most realistic solution remains Romania,
Constanta and the Sulina Canal that links the Black Sea with the Danube. The
port’s customs agency has added staff to help handle the increase in shipments,
with ships lining up to enter. The Romanian railway company has decluttered its
port links and started improvement works, which may result in a 30% to 40%
increase of transport capacity as soon as next year, port manager Florin Goidea
said.
“We expect much larger quantities to arrive, this is only
the beginning,” he said. “This summer will be very crowded. It won’t be easy
for us, but we have to find the solutions.”
