Opportunities to diversify export logistics in Ukraine

Opportunities to diversify export logistics in Ukraine

Ukraine is the world’s largest producer and exporter of sunflower oil, grain, oil, honey and milk powder. 1/3 of the products are consumed by the EU-13 Member States, the other 2/3 – Asia and Africa countries.
⚓ The country shipped over 70% of its exports. Since the beginning of russia’s full-scale war against Ukraine, some seaports were blocked by the russian armed forces along with hundreds of thousands of tons of cargo. Access to the Black Sea is also limited. According to experts, due to a blockade of ports, the economy loses about $ 170 million every day.

The largest ports, which accounted for more than 85% of sea cargo turnover, remained under the control of Ukraine: Mykolayiv, Olvia, Odesa, Chornomorsk and Pivdennyi. But they work for “return” goods and export their cargoes by road and rail.

Ukrainian railways (Ukrzaliznytsia) is partly an export alternative to ports. In April, Ukrzaliznytsia transported more than 500 thousand tons of grain, of which 138 thousand tons were for export. Before the war, Ukraine exported about 5 million tons of grain and oilseed a month, while the Ukrzaliznytsia’ capacities – 500-600 thousand tons a month. 

The solution to this problem might be in joint efforts of different stakeholders: governments of Ukraine and neighboring countries and private companies that can organize the necessary logistics. Thus, simplification of transit conditions, an increase of capacity at the railway border, and expansion of road crossings towards the EU will provide an opportunity to use the ports of the Baltic States and Romania.

When the work of ports is resumed, the developed logistics with the EU will become the foundation for Ukraine’s economic integration into the European economy.

In order to diversify logistics, it is important to pay attention to the development of Danube, and the ports at the mouth of the Danube such as Izmail, Rhine and Ust-Dunaisk. Previously, they exported a bit less than 5% of exports. The railway infrastructure in this direction should be restored to increase cargo capacity.

In the short-term perspective, the solution for Ukrainian exporters will be a reduction in the gross volume of exports by reducing raw material exports and ensuring product processing in Ukraine. Ukraine already has a very valuable experience in processing sunflower into sunflower oil or milk into milk powder. In addition, domestic production of goods will be developed and new workplaces will be created.

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