22 Jan 2024 10:40

Russian grain exports so far unaffected by Red Sea crisis, but fish exporters paying higher shipping rates

MOSCOW. Jan 22 (Interfax) - The situation in the Red Sea, which has escalated recently, has not had an impact on Russian exports of bulk grain yet, but it has already adversely affected container shipments of grain legumes.

Fish exporters are also reporting a steep increase in rates for container services and expect their margins to be squeezed by rising logistics costs.

"Grain exporters have not yet run into problems delivering bulk shipments of grain, although the situation can turn at any moment if the conflict escalates. We hope that all parties in the conflict understand how important grain shipments are for countries in need," the CEO of the Grain Exporters Union, Eduard Zernin told Interfax.

He said the situation is worse for shipments of niche crops and grain legumes, which are often shipped through multimodal channels, mixed with other cargo. "Major multimodal operators were the first to announce a switch to alternative logistics channels, so we're not surprised by the growth of rates for container shipments," Zernin said.

The president of the Pollock Catchers Association (PCA), Alexei Buglak told Interfax that fish products from Asia and Russia's Far East are shipped to Europe through the Red Sea.

"The situation in the Red Sea has forced container service operators to change the route to bypass the African region, which has increased the distance and delivery time. This has affected charter rates, which have risen sharply for container services," Buglak said, adding that the cost of shipping refrigerated containers by sea from the Korean port of Busan to Europe has jumped 45%-50% in January compared to the end of December.

He said the European Union is an important market for Russian white fish. Russian businesses shipped about 90,000 tonnes of flash frozen pollock fillets to the EU last year. "Despite the 13.7% duty on imports of Russian pollock fillet that the EU imposed as of January 1, 2024, shipments to this market are continuing," Buglak said.

He did not rule out the possibility that the situation in the Red Sea and the growth of logistics costs it has caused might lead to an increase in prices for Russian and Asian fish products for European consumers or a decrease in profit margins on certain types of fish products shipped to the EU.

The situation in the Red Sea has escalated due to the Palestinian-Israeli conflict in the Gaza Strip. The Houthis in Yemen are firing on ships from a number of countries sailing through the Red Sea in a show of support for Palestinians.