Ukraine sets up insurance compensation fund to boost exports
Ukraine's parliament has approved a law to establish a Euros 464 million ($500 million) insurance fund to compensate shipping against possible damage sustained when using its ports.
In the last year dry bulk exports from Ukraine have dropped 77.8% and the compensation package is an attempt to broaden the range of exports leaving the country against the backdrop of the ongoing war with Russia.
It was reported in January that at least 12 of the 13 Protection and Indemnity (P&I) clubs - which cover 90% of the world’s ocean-going ships, including those from the UK and the US - said they would no longer be able to provide coverage to clients because reinsurers were exiting the region as a result of financial losses.
According to shipping and insurance industry assessments, there are still between 40 and 60 ships stranded in Ukrainian ports, creating a potential half a billion dollars in claims.
Ukraine is a major producer and exporter of agricultural products, metals and chemical goods but has faced blockades of its Black Sea ports since Russia's invasionin February 2022. Only food cargo can be shipped abroad under the Black Sea Grain Initiative which was brokered with Russia.
Ukraine’s Deputy Prime Minister Oleksandr Kubrakov said: "We’re working on resuming delivery & expanding the range of products. I invite countries of the civilized world & interested businesses to cooperate.”
The Black Sea deal allowed agricultural exports to resume from three ports in the Odesa region which accounted for 72.8% of Ukraine’s bulk exports in 2021.
Filipe Gouveia, Shipping Analyst at BIMCO said: “Almost twenty million tonnes of bulk agricultural goods have so far left Ukraine under the deal which has helped cool cereal prices and improve food security in low-income countries. However, grain shipments were still down 43.3% y/y between August 2022 and February 2023.”
Ukraine is asking Turkey and the United Nations to start talks to roll over the Black Sea grain deal for at least a year and to include Mykolaiv where the marine industry estimates more than 25 ships are still stuck. Currently the deal has to be renegotiated every three months.
Ukraine will also seek an increase in the number of inspection teams in Turkish waters in order to eliminate the ship queue that is hampering export volumes. To reduce inspection delays, Ukraine is considering increasing the minimum size for ships carrying grains from 15,000 to 25,000 dwt.
Prior to the war, more than one-tenth of the world’s wheat and maize shipments came from Ukraine.
Key insurance products impacted by the war in Ukraine should be regularly reviewed. W Denis is a multi-class independent insurance broker who can place all types of commercial insurance, globally. Please contact Vida Jarasiunaite at Vida.firstname.lastname@example.org or, for overseas enquiries, contact Daniel Moss on Daniel.email@example.com for more information.