Insurance for ships carrying Ukrainian grain has risen sharply after recent Russian attacks – Bloomberg
14 October 2024 12:23
The cost of insurance for ships passing through the Ukrainian corridor in the Black Sea has risen sharply this week after Russia stepped up attacks on Ukrainian ports. This is stated in the material of Bloomberg, "Komersant Ukrainian" reports.
According to two people involved in the insurance market who wished to remain anonymous because of the confidentiality of the information, the cost of insurance now exceeds 1% of the value of the vessel. Last week, this cost was 0.75% of the vessel’s value. For a $50 million vessel, this means an increase of $125,000 per voyage.
While ships travelling to and from Odesa have faced the risk of attack since Ukraine launched its shipping corridor last year, Russian attacks have intensified in recent days. So far, traffic has remained steady, but continued attacks may make shipowners more cautious about passing through the corridor, which has successfully exported large volumes of grain.
Meanwhile, Chicago wheat futures are up about 2.5% since the start of this week, as risks to Black Sea exports added to weather concerns in key producing countries.
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Russia attacked at least three ships with missiles last week, according to Ukrainian officials. Wednesday’s attack killed at least eight people and damaged a container ship carrying humanitarian aid ordered by the UN for Palestine, Ukraine’s Minister of Agrarian Policy and Food Vitaliy Koval said.
Ukraine is a major grain exporter, and agricultural goods generate vital revenues for Kyiv. Over the past three months, Russia has carried out more than 60 attacks to undermine Ukraine’s export capabilities, Infrastructure Minister Oleksiy Kuleba said. These attacks targeted 300 port infrastructure facilities, 177 vehicles and 22 commercial vessels. At the same time, 79 civilians were injured, including port workers, crews of logistics companies and ships.
One broker said that after the attacks, traders have shown greater interest in insuring their cargo, which is covered separately from the vessels themselves.
“This morning we have received new requests from clients for war risk insurance in Ukraine, and these are clients to whom we previously offered this coverage, but they were not interested,”
– said Maxim Dubovoy, co-owner of Atria insurance brokerage.
It is worth noting that insurance rates are still volatile due to the number of attacks, according to the two insurers. Rates also vary from one insurer to another. Vessels can often get lower rates than the market rates due to discounts for no claims.
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