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Agri commodity logistics again faces serious challenges

2 August, 2023 at 09:08

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%.