Thousands of freight cars were stuck on Ukraine’s border when the war affected exports

LVIV, Ukraine, April 7 (Reuters) – In western Ukraine, about 1,100 wagons of grain trains are stuck near the main railway border crossing with Poland, unable to take their cargo abroad.

These are just some of the 24,190 wagons carrying a variety of goods for export, including vegetable oil, iron ore, metals, chemicals and coal, awaiting crossing Ukraine’s western border as of Tuesday, according to the state-owned railway company, which previously not reported.

Due to the war raging along the southern coast of the country, and its main ports blocked by the Russian invasion, Ukraine can hardly export grain and other goods, say government officials and industry. But as Kyiv seeks alternative ways to export by land, these efforts are hampered by logistical problems and red tape, industry and commodity traders say.

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Valery Tkachou, deputy director of the commercial department of the Ukrzaliznytsia state railway company, said 10,320 cars, or about half of the total, were waiting at the junction near the village of Izov, the main railway border crossing with Poland. The interchange, located about 130 kilometers north of Lviv, serves as a gateway to reach the Polish seaport of Gdansk.

One key problem: the huge amount of goods that has to find an alternative route, causing a shortage of everything from railroad cars to staff, according to industry and government officials. Ukraine, one of the world’s largest grain exporters, exported 98% of grain across the Black Sea before the war. As a rule, only part of the country’s exports went by rail, where transport costs are higher than delivery.

These difficulties are exacerbated by logistical problems, such as the difference in the width of the railway neck used in Ukraine and its neighbors, such as Poland, a legacy from the time when Ukraine was part of the Soviet Union. While the west of the country was relieved of heavy fighting, missile strikes were carried out near Lviv, including on oil facilities, and security around the border is very tight.

Interruptions in Ukrainian exports mean that countries hoping to import Ukrainian grain – including China, Egypt, Turkey and Indonesia – will have to find alternative supplies or face food shortages, the aid agency warns.

Russia’s invasion of Ukraine on February 24 heightened concerns about global food security, leading to rising prices for grain, fertilizers and fuel. World food prices have been rising since mid-2020 due to failures in planting and harvesting in many countries in the first year of the COVID-19 pandemic, and later due to supply chain problems.

Even as Russia cuts operations around Kyiv and the northern Chernihiv region to focus on fighting in the east, the prolonged blockade of ports in the south is dealing a severe blow to Ukraine. Grain exports are a cornerstone of Ukraine’s economy – in 2021 it is about $ 12.2 billion and accounts for almost a fifth of all exports, according to official figures.

The Ukrainian government did not respond to a request for comment. Ukraine said grain exports last month fell to a tenth from March 2021 amid port closures and that disruptions are affecting people in many countries. “Hundreds of millions of people around the world will not receive food unless the blockade of Ukrainian ports by Russia is lifted in the near future,” the agriculture ministry said in a statement on April 1.

Russia has launched a so-called “special military operation” in Ukraine to demilitarize and “denationalize” Ukraine. Ukraine and the West say the invasion was illegal and unjustified.

The Kremlin did not respond to a request for comment. Russia denies deliberate attacks on civilians and civilian infrastructure, despite documented attacks on hospitals, apartment buildings and railways.

Ukrainian farmers, who harvested a record grain last year, say their wheat yields could be halved or more. Russian forces have repeatedly damaged grain depots in eastern Ukraine, a U.S. spokesman said. Kyiv and Moscow have accused each other of planting mines in the Black Sea, posing a threat to merchant shipping. read on

The war destroyed the country’s agricultural sector and “destroyed Ukrainian roads, railways and railway stations that facilitate land transport,” a US official told Reuters last week. “As Putin’s war continues, more and more arable Ukrainian land is being lost by Russian tanks, shells and mines, threatening a much longer-term food crisis.”

Ukraine and Russia are major exporters of wheat, together they account for about a third of world exports, almost all of it passes through the Black Sea. Its waters are shared by Bulgaria, Romania, Georgia and Turkey, as well as Ukraine and Russia, which have been at war since President Vladimir Putin’s invasion of his southern neighbor on 24 February.

BACKUP

Clearing the backlog can take a long time.

As the Ukrainian railway network uses a Russian width of about 1.5 meters, or about 10 centimeters more than in most European countries, railway workers have to lift cars with a jack and manually change the chassis on Polish roads, said Tkachev. . In addition, they can unload grain from Ukrainian wagons and pour it into Polish ones – a process that can take up to half an hour per wagon.

Weavers from the state railway told Reuters that up to 500 cars a day are currently crossing the border near Izov – in fact three weeks. He added that there are a dozen more checkpoints, many of which are not supported.

The state railway is working to increase the capacity to 1,100 grain wagons a day in three months to Poland, Romania, Hungary and Slovakia – almost ten times more than in March, he said.

According to Tkachev, she is hiring more people and purchasing equipment to help switch rail chassis, transfer staff from passenger trains to freight, and work to remove other obstacles, such as customs procedures.

“We are working to speed up the process … to reduce the number and duration of car inspections, as well as the volume of documents,” he said.

HIT FOR EXPORT

One of the companies affected by the backlog is Astarta Holding NV, a Ukrainian food producer. The company agreed to supply 25,000 metric tons of corn to European customers in April, but has not yet received the necessary permission from the railway authorities, said Yulia Berashchenko, director of investor relations and business development “Astarta”.

Astarte said it also has about 150,000 tons of grain, mostly corn, without work in its silos. At this time of year, the high vaults should be almost empty, the report said.

Official figures released by the government on Sunday cite exports of 1.4 million tonnes of corn and wheat in March. That was about a quarter of February and less than about 3 million tons in March 2021.

But exports over the past month include grain shipped to ships stranded in blocked Ukrainian seaports, Deputy Agriculture Minister Taras Vysotsky told Reuters.

Vysotsky told Ukrainian national television on Monday that only 300,000 tons of agricultural products had left the country by rail.

Analysts say Ukraine, which exported 43 million tons of grain from the start of the season in July until the invasion in late February, could export only about 1 million tons in the next three months due to logistical difficulties. Before the war, the government predicted that grain exports this season could reach 65 million tons.

In a televised speech on Monday, Vysotsky expressed hope that Ukraine would be able to export 1.5 million tons a month by rail, adding that it would be only a third of the volume normally shipped to ports, but would still bring in the necessary profits. agricultural sector.

“DILL IN THE OCEAN”

Commodity traders, such as Cargill Inc, are looking for ways to export food from the country, but there is no easy solution, an industry source said.

Cargill did not respond to requests for comment.

Kyiv is negotiating with Romania to transport its agricultural products through the Romanian Black Sea port of Constanta, the agriculture ministry said on March 30. sailed towards Constanta, industry representatives said.

Once in the Romanian port the grain will have to be transported on large ships for transport around the world, making the whole process complicated and expensive. According to the Ukrainian agricultural consulting company “APK-Inform”, the cost of delivery of Ukrainian grain to the Romanian port of Constanta was 120-150 euros (133-166 dollars) per ton.

Before the war, traders paid about $ 20-40 per tonne to transport grain to Ukrainian Black Sea ports.

Any hopes of a quick reopening of this route were further dashed over the weekend. On Sunday, Russian missiles hit the port of Nikolaev, as well as oil production near the major center of Odessa on the Black Sea, local officials said. Russia’s Defense Ministry said its missiles had destroyed an oil refinery and three fuel depots near Odessa. It says that they were used by Ukraine to supply its troops near Nikolaev.

The Ukrainian government says it is also concerned about its own food supplies to the country, although it says it has enough supplies for three years.

Last month, Ukraine suspended exports of rye, oats, millet, buckwheat, salt, sugar, meat and livestock since the invasion, and introduced licenses to export wheat. However, the government said it would allow free exports of corn and sunflower oil.

The manager of one of the country’s major foreign commodity traders said that even if the country manages to quickly increase its agricultural export capacity to 700,000 tonnes a month to 1 million tonnes a month by rail and across the Danube, it would be just “ a drop in the ocean ”.

“We can get 10-15 percent of the power we really need,” he said. “I think the risks to the economy are huge.”

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Report by Sylvia Alois and Pavel Polityuk from Lviv, Ukraine, additional reports by Maria Starkova in Lviv, Michael Hogan in Hamburg, Gus Trompis in Paris and Steve Holland in Washington. Editor Cassel Brian Lowe

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