Ukraine Market Report — Q3 2023
The corridor arrangement lapsed in July and Ukraine established a unilateral route along its western Black Sea coast. Within months it was carrying more than the arrangement it replaced.
Overview
The negotiated grain corridor arrangement lapsed in July. Export volumes through the Black Sea fell sharply.
In August Ukraine announced a unilateral temporary corridor hugging its western Black Sea coast through Romanian and Bulgarian territorial waters.
What the unilateral corridor demonstrated
It began cautiously — a small number of vessels, high insurance costs and considerable uncertainty about whether commercial shipping would use it.
Traffic built through the autumn. Insurers eventually priced the route, shipowners accepted charters and volumes rose. By the end of the year the corridor was carrying substantial cargo including cargo types the previous arrangement had not covered.
Three things made this work, and they generalise.
The route was physically viable. It hugged the coast and passed through the territorial waters of two EU and NATO member states.
The insurance market could be persuaded. This was the binding constraint, not the shipping. Once a workable insurance structure existed, commercial vessels followed.
The alternative routes stayed open. Because western land and Danube capacity had been maintained through the corridor period, the July lapse did not stop exports entirely, which bought the time to establish the new route.
That last point is the direct return on the redundancy described in the previous quarter's report.
Macro position
Growth continuing. Inflation falling to low single digits. The exchange rate regime moved to managed flexibility in October, ending the fixed rate held since February 2022.
Sectors
Agriculture — the corridor restored the export season.
Logistics — western routes remained essential.
IT services — growing.
Energy — reinforcement ahead of winter.
What the quarter settled
That a country can establish an export route unilaterally if the physical geography permits it and the insurance market can be brought along — and that maintaining a fallback is what makes attempting it possible.
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