UN-led task force to halt Ukrainian grain shipments in Black Sea as of Nov. 2

Ukraine, Turkey and the UN have agreed to stop vessel movement in the Black Sea maritime corridor for Nov. 2, the task force managing the waterway said, after Russia halted its participation of the initiative aimed at increasing food supply.

On Oct. 29, Russia pulled out from the deal enabling agricultural shipments from three Ukrainian ports in the Black Sea, having accused Ukraine of attacking Russian ships in Crimea.

In a press release Nov. 1, the Joint Coordination Centre said it "can best deliver on its mandate with the full and active participation of all four delegations" after announcing the suspension. It didn't specify how long the stoppage will be.

The development came after Turkish and UN inspectors completed the inspections of 11 outbound vessels Oct. 30 and 46 outbound ships Oct. 31.

Twelve outbound vessels and two inbound safely transited through the corridor Oct. 31, while three outbound ships were sailing on the route Nov. 1.

But the JCC's UN secretariat said the inspections and shipments were "a temporary and extraordinary measure," and that all efforts were exerted to resume full participation.

Following a call between Russian President Vladimir Putin and Turkish President Tayyip Erdogan, the Kremlin called for a probe over the alleged Ukrainian attacks on Russian ships.

"Real guarantees from Kyiv on strict observance of the Istanbul agreements are also necessary, in particular, on the non-use of the humanitarian corridor for military purposes," according to a Kremlin statement. "Only after that would it be possible to consider resuming operations" within the JCC.

With the intervention of Turkey and the UN, Russia and Ukraine on July 22 agreed to unblock agricultural exports from Chernomorsk, Odessa and Yuzhny. Shipments from the ports had been halted since Russia's invasion of Ukraine in February.

Uncertain outlook

As of Nov. 1, nearly 9.73 million mt of grain and other food products had been exported under the 120-day agreement.

Small coasters and Handysize vessels are mainly responsible for carrying the exports, supported by a small number of Panamaxes.

Grain prices had been falling in recent months before a strong rebound after Russia stopped participating in JCC inspection.

Platts assessed the 12.5%-protein Ukrainian wheat price on an FOB Black Sea deep water basis at $322/mt Nov. 1, up from $305/mt Oct. 28. Platts is part of S&P Global Commodity Insights.

Looking forward, shipowners could become hesitant in sending more vessels to lift from Ukraine as marine insurers stopped providing new coverage.

"War cover already granted will be honored, but it is unlikely that terms will be quoted for inbound shipments" unless Russia returns to the JCC, Lloyd's Market Association's head of Marine Neil Roberts told S&P Global.

No inbound ships have been inspected since Russia suspended its participation in the JCC. As of Oct. 30, 15 inbound vessels were queuing around Istanbul for inspection, while another 89 ships had applied to be inspected.

Chris McGill, head of cargo at underwriter Ascot, said any shipments that were quoted seven days before Oct. 29 still have the option to accept the quotes and be fully covered.

"Any shipments that come in to be quoted post yesterday will likely struggle to get coverage," McGill said Nov. 1.

"We're trying to gather as much information as we can from multiple sources in order to create an appropriate solution that makes sense for all involved."

Heightened maritime risks

In late July, insurance broker Marsh unveiled an Ascot-led facility that could provide up $50 million in war coverage.

Marsh's global head of marine and cargo Marcus Baker confirmed the facility has been suspended after Russia changed its position. This does not affect existing coverage, he added.

"Reactivating the facility pending additional discussions with the UN, Turkey and Russia will be a relatively simple process as long as all parties are aligned, but until that time no further voyages will be accepted by the underwriters,' Baker said. "The perceived risk environment has changed."

On Oct. 31, UN aid chief Martin Griffiths told the Security Council that insurance coverage might be still possible but come at higher costs.

"Insurers tell us their premiums may leap by a quarter or a half for shipping crossing the Black Sea," Griffiths said.

In an emailed statement, International Chamber of Shipping's secretary general, Guy Platten, said ships already in the grain corridor must not become "collateral damage" and be allowed safe passage.

"Furthermore, the safety of seafarers must remain a top priority, and all parties must give consideration to the crews who may now be stuck onboard or in port due to factors beyond their control," added Platten, whose organization represents over 80% of the world's merchant fleet.