Romanian port is racing to shift Ukrainian grain to global markets

The Romanian port of Constanta is under time pressure to achieve the transit of as much Ukrainian “2021” grain as possible before the 2022 harvest becomes available. The need for speed has increased since India’s surprise u-turn last week on wheat, with wheat exports now banned from the country. India attributed the decision to the heatwave currently striking the country and the impact this could have on yield. However, the decision also has echoes of Indinesia’s recent decision to ban palm oil exports, in order to ensure that domestic supply is not harmed by producers taking advantage of higher prices available abroad.

Back in Romania, throughput pressure on Constanta rose significantly because of the blockade of Ukraine’s seaports by Russian naval forces. Romania is racing against time to move Ukrainian grain to global markets before the next harvest triggers bottlenecks.

Ukraine, which in 2021 was the world’s fourth-largest grain exporter, has re-routed shipments by train via its western border into Poland, Slovakia and Romania, or via barges through its small Danube river ports.

However, unless grain is going to go to waste, Ukraine needs to export 20m tonnes of product before the new harvest, which is due in less than three months. The world, too, facing a combination of Covid- and weather-related events elsewhere in the world that have compounded the shortage of all types of grain and vegetable oils, also needs to get as much wheat out of Ukraine as is physically possible.

European Transport Commissioner Adina Valean said last Thursday May 12th that the EC, the administrative arm of the EU, would work with member governments to put in place effective new transport routes for Ukrainian grain.

Constanta thus far has only seen 1% of the EU target, or roughly 240,000 tonnes of Ukrainian grain, pass through, its manager Florin Goidea told Reuters.

Constanta port operator Comvex had handled roughly 180,000 tonnes of that amount on four ships. Comvex President Viorel Panait said that “we are in a position to handle these goods through great effort, but these efforts are insufficient to make up transit routes overnight for such important volumes. More equipment is clearly needed.”

An added cost consideration is that any vessels heading into parts of the Black Sea will have to pay a hugely increased war insurance premium.

Last year Constanta shipped 25.2mt of grain from Romania, Serbia, Hungary and Austria – itself a record. Panait estimated that operators, with promised fresh investment in infrastructure, could handle another 20% on top of last year’s volumes, or roughly 5m tonnes. He said government- or EU-backed support could help operators invest in costly equipment needed to fully handle Ukrainian cargo. Comvex operates Europe’s fastest-loading grain terminal, which can process up to 70,000 tonnes per day.

Last week it was unloading 10 train wagons per hour. It will add a second unloading line for barges In June, which will double its barge capacity, Panait said.

Comvex has also shipped roughly 160,000 tonnes of Ukrainian iron ore over the last month through its mineral handling terminal. In May it signed a separate contract with a Ukrainian producer to ship up to 180,000 tonnes of iron ore per month.

In June Constanta will start rehabilitating 35 rail lines in the port. It is also working on rehabilitating both wide and regular gauge railroads connecting Ukrainian territory with Romanian sea and Danube river ports.

Constanta will use EU funds for a dredging project to improve berth depth. It plans to expand operating capacity by adding 17 berths, but this is in the longer term and will not help solve the short-term problem.