TOP-TIER shipowners are continuing to avoid Ukrainian grain contracts, despite decreasing war risk premiums and two months of operations without incident inside the internationally monitored grain export corridor.

The corridor has now seen more than 3m tonnes of grain shipments exported.

Despite diplomatic efforts from the United Nations to encourage wider commercial engagement from the shipping sector, several major European shipowners have told Lloyd’s List that they continue to view the security risks as too high to consider re-entering trades.

As a result, Ukrainian grain is largely being transported by smaller old ships operated in many cases by opaque ownership structures and registered to flags on port state control black or grey lists.

The average age of ships carrying grain through the grain export corridor is 20 years and 30% are re-registered to flags on Paris and Tokyo Memorandum of Understanding black or grey lists.

“Safety and security concerns are still the main blockers and the risk is still too high,” said one major European shipowner, who has been monitoring the grain exports closely.

“That may have to change, simply because everyone is starting to realise that this could go on for a long time and it’s unlikely to get better than it is now. So we are evaluating it on a weekly basis, but right now we’re still not comfortable enough to move,” the shipowner continued.

More than 130 successful voyages carrying over 3m tonnes of grains have been tracked through the grain corridor since it became operational on August 1, following a diplomatic agreement establishing the corridor on July 22.

The fact that those shipments have been completed without incident so far has seen war risk premiums reduce from an initial high of 2% of hull value to around 0.5% currently.

The efficiency of the inspections regime has allowed vessels to sail through the corridor within the standard seven-day window generally applied to war risk premiums, thus reducing costs. However, this has not been a sufficient enough drop to lure larger, more modern tonnage to help ramp up the exports.

“It is the charterer that is making the decision, not necessarily the owner,” said one senior dry bulk broker. “War risk premiums will be commensurately higher for the more modern, more valuable vessels.”

He also noted that from next month, Türkiye will be increasing tolls fivefold for ships passing through the Bosporus and Dardanelles, adding to shipping costs for Black Sea cargoes.

“Ultimately it is a question of whether the receivers are willing to pay for all this,” the source said. “Bear in mind that many countries in most need of the food cargoes are not among the wealthiest nations.”

Initial hopes of shipping 5m tonnes monthly from Ukraine were “definitely not do-able,” he said, adding: “There are a lot of actual barriers and we should be satisfied with what we have been managing to do, and perhaps a little more on top.”

Speaking at a press briefing this week, Amir Abdulla, the UN co-ordinator for the Black Sea Grain Initiative, highlighted the need to increase the pace of exports and attract larger vessels.

“To get to the level that will be necessary, we will need the bigger ships to come in and to do that we need the private sector to remain engaged in the activity,” he said, acknowledging that the majority of ships so far had been older and smaller vessels.

International Chamber of Shipping president Emanuele Grimaldi told a press conference in London on Thursday that shipowners would not want to risk large, expensive assets.

“It is a matter of calculation,” he said. “Of course, they are using old ships which are not so expensive — no shipowner is going to think about sending new ships — the insurance is too high.” 

Despite the initial success of the grain corridor managing to restart the flow of grain exports, lowering global food prices as a result, the agreement — which has an initial expiry date 120 days after its inception — is under pressure from Russia.

Russia’s president Vladimir Putin threatened to pull out of the deal last week, saying the west had taken advantage of the grain corridor at the expense of the developing world.

Behind the scenes, the UN is trying to broker a resumption of Russian ammonia exports through Ukraine in a bid to appease Russian objections and agree an extension to the grain corridor remaining open.

Facilitating Russia’s food and fertiliser exports was a central part of the package deal brokered by the UN and Türkiye, alongside the grain corridor on July 22, but Russia has argued that its exports are still being hindered.

“The UN is pursuing all efforts to allow for a positive outcome on Russian ammonia exports to international markets,” said Rebeca Grynspan, secretary-general of the UN Conference on Trade and Development, who leads the facilitation of Russian food and fertiliser exports.

She declined to comment on the specifics of the deal and said it was “too early to say” how close an agreement was.

While diplomats battle to keep the grain corridor open, shipowners are still struggling to move any of the vessels stuck in Ukrainian ports not licensed to carry grain under the terms of the deal agreed. 

According to the International Chamber of Shipping, a total of 83 vessels and 418 seafarers continue to be held in Ukrainian ports.

Initial hopes that Ukrainian seafarers would be allowed to rejoin vessels following a ruling by the Ukrainian parliament late last month that permitted crew to leave the country have yet to materialise in any substantial way.

Seafarers have to obtain the approval of the local military leader in the relevant parts of the Ukraine before they can leave and so far no reports of approvals have been made public.

Shipping officials also report unverified anecdotal cases of seafarers being asked for a “facilitation fee” from the local military.