Initial impacts of the war were to see the capital, Kyiv, under immediate threat and its main gateways, the Black Sea ports blockaded, cutting Ukraine’s ability to export cargoes, including grain and vegetable oil as well as some petroleum products and metal ores.
With access to the sea cut off traders began using rail as an alternative, transporting goods into neighbouring countries, mainly Poland and Romania.
In the south, however, the rail network is only linked to Danube River ports at Izmail and Reni, which only had a rail link to Moldova, neither line is electrified. Ust Dunaisk, in the east, where the Danube meets the Black Sea, and on its western most border has no rail link.
Informall BG data shows that only a quarter (25%) of all cargo was delivered to ports by rail- mostly grains and metal ore.
Even with the damaged Limansky Bridge, connecting the Bessarabia region with Odessa, the upstream ports flourished last year.
Transport analyst Daniil Melnychenko, an expert working for consultancy Informall BG, based in Odessa, Ukraine, told Seatrade Maritime News: “In the face of the Russian invasion of Ukraine, the country’s Danube river ports emerged as crucial gateways for shippers, acting as catalysts for a paradigm shift in the logistics landscape.”
In fact, the three Danube ports in question handled a little over 5 million tonnes in 2021, the last full year before the February 2022 invasion, by 2023, the last full year’s figures, that had increased to a little under 30 million tonnes, close to a 600% surge in freight.
Melnychenko believes that this figure has now halved as the success of the Ukrainian military in degrading Russia’s naval capabilities in the Black Sea has seen the return of trade to the ports of Odessa, including Chernomorsk and Yuzhnyi.
Surprisingly, Reni and Izmail ports operated well below their actual capacity, at 10% and 33%, respectively, in the pre-war period, while Ust Dunaisk, saw minimal utilisation, at about 8%, handling only a few shipments a month in 2021.
While the total cargo handled in 2023 surpasses nominal capacity, this achievement is attributed to the more efficient use of ports and increased storage capacity in the port hinterland, particularly for grain and vegetable oil.
Nibulon, a major grain trader with a vertically integrated business model in Ukraine, exemplifies this trend by constructing storage facilities at Izmail ports, leveraging its railway network, berths, and cranes. Informall BG estimates suggest that Nibulon’s new facilities can export up to 170,000 tonnes of grains per month from Izmail.
Other exporters also saw the possibilities of using the Danube for Ukrainian freight, with Kernel, Ukraine’s largest exporter of sunflower oil, as well as other agricultural products, investing in Reni port - purchasing a terminal to handle grain.
Louis Dreyfus is another major, vertically integrated, food stuff trader on the Danube River, has a different operational model, using local terminal operators, while the French company has not invested in its own terminal operations.
According to Melnychenko, however, all three traders prefer to use barges on the Danube, as coastal ships were not found to be financially sustainable.
In addition to major players like Nibulon, Kernel and Louis Dreyfuss, smaller private and national stevedoring companies have expanded their capabilities in and around the ports, utilising every available space along the river.
Cumulative efforts and substantial investments in the Danube River cluster have significantly increased its total capacity.
Danube river ports face two critical logistics challenges, said Melnychenko: access to the Ukrainian rail network and the geographical location of the cluster.
Historically neglected due to their location in the Bessarabia region in the south, which is far from the major farming regions, these ports were initially utilised primarily for barge trade with Danube countries, including Bulgaria, Romania, Slovakia, and Hungary.
Reni port remains a crumbling, poorly maintained port, which mainly handles freight destined for, or coming from, Moldova. However, the development of the port of Giurgiulesti, in Moldova, has reduced the enclave’s dependence on Reni.
Izmail, has a more prominent logistics role and Ust Dunaisk has vastly improved its cargo volumes since the war, however, Melnychenko points out that the precise figures for the early part of this year are difficult to confirm.
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