Summary of Grain Ukraine 2023 Forum: Containers versus Grain Hopper Trucks

During the Grain Ukraine 2023 forum, which took place in Kyiv on May 30-31, it was noted that leading grain traders do not see any alternatives to the “grain corridor” in terms of transportation volumes and prices, according to the railway portal Railway Supply.

However, they are actively working on the development of river and rail logistics, with a particular focus on containerization.

Due to the large-scale war initiated by Russia, grain production shortage in Ukraine has reached tens of millions of tons.

This was discussed by Vadim Miroshnichenko, the head of the trading department at Cargill, who emphasized the need to continue the operation of the “grain corridor.” He mentioned that current global grain prices are decreasing, which means that the cost of logistics may become unbearable for agricultural producers.

“The grain prices are very low, while the cost of alternative routes is very high. Consequently, traveling from regions like Poltava, Vinnytsia, and Chernihiv to the port of Constanta would account for more than 50% of the total cost. Today, no producer can expect to make a profit; instead, they would incur enormous losses if they choose an alternative route,” the expert believes.

He emphasized that Ukrainian ports play a crucial role in fulfilling contracts for grain supply to China, one of the main consumers of the products transported via the “grain corridor.” According to him, Romanian ports, for instance, are “not certified to trade Ukrainian grain to China.”

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Currently, the Ukrainian Grain Association estimates the forecast for the new harvest of 2023 at approximately 68 million tons, of which nearly 44 million tons will be destined for export.

Due to the decrease in prices on the global market, grain traders consider maritime and river transportation as the primary means of shipment.

Therefore, there were many discussions about the further development of transportation via the Danube River.

As for rail transport, it also plays a significant role in freight shipments. This includes not only grain but also more valuable cargoes, such as sunflower oil.

For instance, the logistics director of Kernel, Mykola Miroshnichenko, considers the project of transporting oil to the EU in tank containers to be successful.

“The key task is logistics diversification. We see western routes partially as an alternative. Today, we directly send oil from our plants to Rotterdam by rail. We have already reached volumes of 20,000 tons per month, which is very good,” he noted.

Regarding grain transportation by rail in the current year, Mykola Miroshnichenko does not provide positive forecasts.

“Currently, we operate our own fleet of wagons. There is no shortage of wagons. To be frank, last year logistics performed well… It was one of the best years for wagons, if we look at this business. Auto carriers also had margins, I believe, of 30% or more. Now wagons are very cheap. I assess the next season pessimistically in terms of logistics profitability. Therefore, I wish all carriers, wagon owners, and truck owners to maintain their margins because the next year won’t be as favorable,” he added.

Another major company, Syngenta, is actively developing grain transportation by rail in containers, according to Boris Prykhodko, the head of the Financial Solutions Department.

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“A container is not a bad idea… because, on the one hand, it is a warehouse where grain can be stored, and it is indeed so. We are currently planning a project for grain transshipment in Izmail, where there is a physical shortage of warehouses, and there are constant queues due to waiting for railway wagons being unloaded directly. And a container can serve as a warehouse for storing grain while waiting for barges,” Boris Prykhodko reported.

He added that the company has purchased containers from the DMZ “Karpaty”.

“These are somewhat unconventional containers. They are non-standard. They have a capacity of 43 m3 and can accommodate approximately 28 tons of corn,” said the Syngenta representative.

Currently, the company has successful experience in organizing grain transportation in containers to Poland and Lithuania.

“It was an interesting challenge. We started transporting grain to Poland and then realized that there were long queues at the ports of Gdansk and Gdynia, and the turnover of containers was quite difficult. The last mile became a problem. So, thanks to our partners, we made a decision and went to Klaipeda. To facilitate this, we created exchange buffers in Zamosc, where the wide gauge railway connects with the narrow gauge, and then in Kaunas. This way, we improved the turnover,” shared Boris Prykhodko.

Currently, Syngenta intends to invest in platforms for container transportation.

Terminals at the border between Ukraine and the European Union are also developing in response to new challenges.

Dmytro Kobzar, the director of the Mostyska Container Terminal, noted that they have started working with small traders. “We’ve seen that not only large companies are willing to handle train shipments but also small traders who need to handle 200 or 500 tons. So, we have introduced various loading methods at the terminals,” said the terminal director.

He also mentioned that alongside containers, the company is trying to develop intermodal transportation and plans to continue building grain storage facilities, inviting agroholdings to collaborate.

MOST Logistic Terminal is expanding its processing capacities.

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«In about a week, we are launching one of our large silos with a capacity of 5,000 tons for storage. We continue to develop our infrastructure. We understand that the grain logistics routes remain. European processors are getting accustomed to Ukrainian grain. These are relationships that will be very difficult to break in the next decades and beyond,” reported Valeriy Krupko, the director of MOST LT, during the forum.

According to him, some dry cargo transportation routes are competitive compared to the “grain corridor.” Container transportation is also actively developing in these areas.

Valeriy Tkachov, the Deputy Director of the Commercial Operations Department at Ukrzaliznytsia, urged forum participants to become more actively involved in intermodal transportation of agricultural cargoes through western border crossings.

Valeriy Tkachov, the representative of Ukrzaliznytsia, reminded that after the large-scale invasion by Russia, rail transportation of goods to the EU increased 30 times last year. The representative of Ukrzaliznytsia also discussed the measures that the state-owned company plans to implement for the development of grain transportation.

“Firstly, Ukrzaliznytsia is establishing a foreign carrier that will operate in EU countries. This will allow customers to order transportation both within Ukraine and within the EU through a single window. Secondly, for the development of container transportation, we have proposed a new service – the intermodal train. If you have a regular need, for example, to send a full train on Tuesdays, we are obliged to deliver it according to a strict schedule at a fixed price… Thirdly, as part of this project, our operator ‘Lisky’ will provide proposals in the coming weeks on how to travel from Kyiv to Gdansk. And fourthly, we are testing container transportation,” explained Valeriy Tkachov.

Additionally, he discussed the new directions of the carrier’s work.

Ukrzaliznytsia plans to enter the freight forwarding services. This means that we will offer agribusinesses not only wagons or transportation but a comprehensive service: to transport cargo from point A at a fixed price and within agreed terms. We have already started communicating with major grain shippers, proposed our services, and we will sign contracts with each of them for a month or two, for example, to transport their cargo,” reported a representative of Ukrzaliznytsia.

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Additional opportunities for transporting Ukrainian grain in the new season, according to the President of UZA (Ukrainian Grain Association) Mykola Gorbachev, may come from transit to the Danube port of Reni through Moldova. However, this requires a reduction in tariffs by the neighboring country’s railway. Negotiations are currently underway.

During the forum, a call to abandon the “grain corridor” was also made.

This viewpoint is shared by the owner of the agro-industrial company Agromino, Peter Krogmann.

In his opinion, the “grain corridor” is more advantageous for Russia.

Instead, he proposed rethinking the “paths of solidarity,” including emphasizing transportation to European ports and supporting farmers in the frontline regions.

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