Agri commodity logistics again faces serious challenges

Two weeks ago the last vessel left the Odesa port by the grain corridor, and the harvest in Ukraine is well underway. As of 28 July 2023, 8 M mt of wheat, 2.9 M mt of barley and 2.5 M mt of rapeseed were harvested.

UkrAgroConsult estimated the maximum monthly export capacity via land routes and Danube ports at  4-5 M mt of agri commodities. This estimate was based on the maximum export volumes in 2022/23 season and infrastructure investments, but currently new logistical challenges may reduce the monthly exports estimates.

Road logistics/exports by vehicles 

For July 1-26, 174 K mt of grains, oilseeds and meals were exported by road, which is only 8 K mt more than in the same reporting period of the previous month. For the third month in a row, the exports were below 200 K mt by this mode of transport, although the record exports were at 676 K mt in November 2022. This can be explained by the rather high cost of transportation.

Given the high share of logistic costs in relation to a commodity price, it appears only exporters of high-value crops (sunflower, rapeseed) or processed products can afford to export by road. In July 2022, exports by road included mainly sunflower, sunflower oil, soybeans, rapeseed and corn. However, a year ago, prices for these commodities in European ports were higher by 30-50%.