Association of Ukrainian ports sees Danube logistics situation as critical

MOSCOW. April 22 (Interfax) - The situation in Danube logistics is critical, as exports of agricultural products at Ukraine's Danube ports have decreased, while freight rates have more than halved compared to last year's, Ukrainian media quoted the Association of Ports of Ukraine, Ukrport, as saying in an appeal to Prime Minister Denis Shmygal.

"Ukrainian cargo traffic via the Danube ports was record large in 2023. The government announced that the capacity of the Danube cluster would be expanded from 33 million tonnes in 2023 to 35 million-40 million tonnes in 2024. However, the situation in Danube logistics is now critical. A rapid 'warming-up' of the market was followed by an equally rapid 'cooling down'. Given the huge supply of vessels and the absence of cargo, freight rates have fallen by 2-2.5-fold compared to 2023," Ukrport said in the address published on its website.

Shipping companies have to operate even at a loss in order to keep their market share, it said.

Ukrport warns that a lengthy period of critically low rates could lead to the degradation of the Danube cluster's potential.

"The majority of vessels will halt operations, the critical staff will be lost, and stevedore projects will be frozen," it said.

In this case, if Ukraine needs to once again redirect its export flow to an alternative destination, it will be difficult to restore logistics capacity, Ukrport said.

The association called on the prime minister to initiate government-level discussions with representatives of the stevedore sector, shipping companies, Ukrainian Railways, exporters, the Ukrainian Union of Industrialists and Entrepreneurs, and the Ukrainian Grain Association on measures to support the Danube logistics hub.

"Danube logistics cannot remain efficient being in the status of a 'fire team', which is always ready to come to the rescue. As long as the crisis continues and military risks persist, a certain part of exports should be sent through alternative logistics to maintain Ukraine's ability to diversify export routes. Ukrainian businesses, which have already encountered the blocking of logistics on a number of occasions, share this position. It is quite realistic to reach agreement regarding stable amounts of the Danube cluster's operations. The only thing that is needed is coordination by the state," Ukrport said.

As reported earlier, Ukraine has exported 40 million tonnes of cargo via its maritime corridor, reducing cargo processing at Danube ports by 16% in the first quarter.