Hermes-Trading: war makes fundamental changes in grain export from Ukraine

2022/06/06 at 11:03 AM

Ukrainian agricultural companies are interested in establishing new supply and export chains for grain, including those via Poland. What prevents this? Yurii Skichko, director of Hermes-Trading and the Svitlovodsk River Terminal, which are part of the AgroVista agricultural group, answers this and other questions in an interview with IntermodalNews.

Yurii Skichko, director of Hermes-Trading, source: AgroVista

How has Russia’s military aggression against Ukraine affected Hermes-Trading’s activities?

The war made fundamental changes to our activities, particularly providing the necessary materials for the sowing campaign. We have reviewed our budget and changed the structure of the sowing campaign a bit. Some of our suppliers of inputs for sowing met concessions to us and we continued to work with them as before. However, most of them have changed the terms of cooperation from supplying inputs for the harvest to that when making a prepayment for the goods. In general, this sowing campaign turned out to be much more economically difficult than the previous ones. We had to refuse to purchase additional equipment, which we had planned earlier. We have revised the structure of sowing: for instance, we have reduced the sown area of beets, which are more expensive to grow corn, but slightly increased the area of sunflower.

What about the export of your products?

Before the war, almost the entire export of our company was moved via the Ukrainian ports on the Black Sea. Due to the Russian blockade, we have begun to arrange new routes for export, primarily through Romania and Poland. After the war, we managed to send some of our products to the western border. In mid-March, the movement of wagons across the border was more or less stable. Those who shipped their goods in late March or early April managed to take advantage of this opportunity. Later, we and other exporters faced major problems. At the border with Poland and Romania, queues of wagons were formed and we had to look for other ways to export our products. That’s why we started working on the Danube.

Loading a bulk ship with Ukrainian grain, source: AgroVista

In your opinion, why were the queues of wagons formed at the border?

The answer is quite obvious. First of all, it is the lack of transhipment facilities at the border stations. As far as I know, Ukrzaliznytsia (UZ) is currently working with the Ministry of Infrastructure of Ukraine and businesses to tackle this issue and plans to build new terminals at the border. This must be done. Unfortunately, we see that the blockade of Ukrainian seaports is unlikely to be lifted soon, so we need to think about the future.

Secondly, the rail infrastructure of Romania and Poland was unprepared for a sharp increase in traffic from Ukraine. Ukrainian railway managers are in constant dialogue with their Polish and Romanian counterparts to speed up freight traffic across the border. Now the movement of wagons is going in accordance with the capacity of railway border crossings. However, this is not enough to normalise grain export from Ukraine.

Has your company faced any problems in moving freight via the Danube?

The reorientation of our products to the Danube was made possible by the support of Ukrzaliznytsia, the Ukrainian Sea Ports Administration (USPA), the Ukrainian Danube Shipping Company and state port operators functioning in the region. They all work as a team and try to help businesses to make the export of their products easier.

However, there are some problems in this area. First of all, the real concern is the increase in freight rates for river and maritime transport, particularly from Ukrainian ports on the Danube to the Port of Constanta and by seagoing vessels to the ports of Turkey and the Mediterranean. If the growth of prices on the railways is still regulated, the freight rates on the Danube and to the countries of destination have increased many times. In my opinion, this issue needs special attention from our state, as well as additional negotiations between all stakeholders in order to normalise the situation and agree on a more affordable price for all.

Hermes-Trading has reoriented its export traffic to the Danube River, source: AgroVista

What are Hermes-Trading’s plans for export in the next marketing year (July 2022 – June 2023)?

Our company is determined to continue working and will try to go on exporting both its products and help to sell the products of our partners-suppliers with whom we work on our own elevators, as well as in regional offices in various regions of Ukraine. I want to hope that the ports of Greater Odesa (Odesa, Pivdennyi, Chornomorsk – IntermodalNews) will be open again. However, as I have already said, the blockade of Ukraine’s seaports is likely to be prolonged, so we desperately need the new transport corridors to be fully operational. Today, the Ministry of Infrastructure and Agrarian Policy of Ukraine, Ukrzaliznytsia, USPA and local authorities are making every effort for businesses to relaunch trade routes and raise Ukraine’s export potential.

In the same way, business is taking steps on its part. The owners, management and staff of the Izmail-based shipyards Dunaisudoservis and Dunaisudnoremont (PSC Danube Ship Repair) initiated and launched the transhipment of agricultural products on the basis of production berths and areas of their enterprises. Thus, a powerful step was taken to support the export of agricultural products of Ukraine. Our holding company also joined this project. On the basis of Dunaisudnoremont, a long-time partner of AgroVista, with which the largest non-self-propelled barge with a capacity of 6,000 tonnes was built, a grain and oil transhipment project was implemented to load both river barges and seagoing ships.

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