How the increase in Bosphorus tariffs will affect freight and competitiveness of Ukrainian grain
20 June, 2025 at 12:06
Starting July 1, 2025, Turkey will increase the passage fee for vessels transiting the Bosphorus and Dardanelles straits by 15%, reaching $5.83 per ton (calculated based on net tonnage under the Montreux Convention). This marks the fourth stage of tariff revisions tied to the rising price of gold.
The tariff, which had remained at $0.8 per ton for 39 years, began being updated in 2022 following a presidential decree by Recep Tayyip Erdoğan. Since then, Turkey has revised the rate annually on July 1, citing the need to update outdated tariffs and boost foreign currency revenue. As a result, the total cost of transiting the Bosphorus and Dardanelles has increased more than sevenfold since 2022 (from $0.8 to $5.83 per ton).
The tariff hike raises costs for shipowners passing through the Black Sea. The new fee of $5.83 per ton effectively adds several dollars per ton of grain cargo transported. For instance, for a Handysize bulker, the cost of grain transportation is expected to rise by approximately $2 per ton. For larger Panamax vessels (60,000–80,000 DWT), transit costs could increase by $150,000–$200,000, or about $3 per ton of cargo.
Consequently, freight rates may rise slightly as shipowners factor in the higher transit costs to maintain voyage profitability. However, the impact of the increased Bosphorus and Dardanelles tariffs is relatively moderate compared to other market factors.
In addition to the Bosphorus tariff, several factors influence maritime freight costs. For the Handysize bulker segment (dominant in grain shipments from Black Sea ports to the Mediterranean), the following are particularly significant:
- War risks and insurance: The risks of operating in the Black Sea during wartime lead to higher insurance premiums.
- Tonnage and cargo balance: The supply-demand ratio for vessels and cargo.
- Fuel costs (bunker): Ship fuel prices significantly affect voyage expenses. New environmental regulations, such as the SECA zone in the Mediterranean starting May 2025 (limiting sulfur content to 0.1%), will further increase fuel costs and pressure freight rates.
- Seasonality and agricultural cycles: Post-harvest periods increase vessel demand, temporarily pushing up freight rates.
- Competition from other dry cargo types.
Impact on the Competitiveness of Ukrainian Grain
Overall, Ukrainian grain routes will be somewhat affected by Turkey’s actions, as the straits are the only gateway to the Mediterranean and key grain markets, and additional costs may slightly raise total freight prices. However, given the current depressed state of the market, shipowners might absorb some of the cost by reducing margins if demand for shipping remains weak.
In the first half of 2025, freight rates saw a slight decline (e.g., Handysize Odessa-Italy routes dropped from ~$17 to $15–16 per ton) due to an oversupply of available vessels, but this trend may reverse after the new harvest.
| Route (Grain from Ukraine) | Vessel Type | Estimated Freight Rate, USD/ton |
|---|---|---|
| Black Sea → Spain (Western Mediterranean) | Handysize (≈30,000 t) | 16–17 |
| Black Sea → Egypt (Eastern Mediterranean) | Handysize (≈30,000 t) | 12–14 |
| Black Sea → China (via Suez Canal) | Panamax (≈60,000–75,000 t) | 33–34 |
Source: Data from traders and brokers
In the 2024/25 marketing year, Ukraine significantly reduced grain exports due to the 2024 summer drought and reduced sown areas caused by the war. Lower grain volumes mean fewer voyages, forcing shipowners to compete for cargo, often lowering freight rates. This was evident in 2024–2025: the Black Sea market was oversaturated with available tonnage, pushing rates to historic lows. Freight rates from Odessa reportedly reached “break-even” levels for shipowners, prompting some to leave the region or idle their vessels.
The current unprofitability of voyages could have an opposite effect in the longer term. As some fleets exit the Black Sea for other routes, vessel supply may decrease, potentially balancing the market. There are signs that the tonnage surplus began to shrink in spring–summer 2025, with some vessels withdrawn and no new ones entering.
Brokers predict this could lead to a slight increase in freight rates in the second half of 2025, even with relatively low export volumes (compared to pre-war levels), as vessel supply adjusts to demand.
In other words, the market is gradually rebounding from its lows due to reduced available tonnage and seasonal demand increases. For the 2025/26 season, UkrAgroConsult forecasts a 16% rise in grain export volumes to 45 million tons.
Higher logistics costs directly undermine the competitiveness of Ukrainian grain on global markets, making it more expensive compared to alternatives from other exporting countries. Often, additional logistics costs are passed on to agricultural producers through lower purchase prices or offset by reduced margins for traders and other supply chain intermediaries.
According to UkrAgroConsult, the rising freight costs in the 2025/26 season may be partially offset by lower grain handling tariffs at ports. Currently, market participants are engaged in active discussions: grain owners aim to reduce costs and consider $7 per ton an acceptable handling rate, while port elevators expect tariffs in the $10–11 per ton range. Due to high competition among grain terminals in the new season, cargo owners may have stronger negotiating power. Considering these factors, the expected average handling rate could be $8–9 per ton, approximately 20–25% lower than at the start of the 2024/25 season.
