Russia Shifts Grain Exports to Baltic and Arctic Ports After Black Sea Attacks

Russian companies have begun repurposing fertilizer, coal, and other cargo terminals at ports in the Baltic and Arctic to handle grain exports, according to five sources in the shipping and grain industries. The move follows a sharp decline in Black Sea shipments caused by Ukrainian drone attacks.

In the previous export season, nearly 90% of Russia's seaborne grain left through the Black Sea. Both Russia and Ukraine have seen grain exports fall drastically amid tit-for-tat strikes on vessels and ports.

At the Baltic port of Ust-Luga, the private Ultramar terminal — which has a declared capacity of 37 million metric tons and previously specialized in mineral fertilizers — was quickly adapted to handle grain. Ultramar began handling grain in August, and rail transport applications for September deliveries to the terminal reached about 260,000 metric tons, destined for Egypt and Saudi Arabia. The terminal exported 16 million tons of fertilizer last year and had not shipped grain before.

A source who saw minutes of an August meeting at the Russian Transport Ministry said redirecting cargo flows of Demetra, the country's largest grain trading and logistics company, to Ultramar was considered. "It's not just Demetra; everyone else wants to go there too. Everyone wants to go to the Baltic," the source said, adding that Demetra grain is now being shipped to Ultramar.

At the port of St. Petersburg, the Modul and BSMZ terminals, which previously did not handle grain, are now taking shipments. One source said Modul can handle up to 70,000 tons of grain in containers per month, though container shipping is generally more expensive.

Ultramar, Demetra, the Transport Ministry, Modul, and BSMZ did not respond to requests for comment.

The conversion could significantly increase the export potential of Russia's Baltic ports, whose existing combined grain handling capacity was estimated by analysts at between 2 and 7 million metric tons, compared with more than 60 million tons in southern ports. One industry source said spare capacity at the Baltic terminals meant the change was unlikely to affect Russia's fertilizer exports.

Russian Railways has given high priority to grain shipments to the Baltic and Arctic, which have already received state subsidies, according to one source. The railway operator declined to comment.

In the Arctic, the Murmansk commercial sea port — Russia's fourth largest, with annual capacity of up to 24 million tons — said last week it is preparing to start grain exports in October. It was not immediately clear which terminals are being converted, and no new construction has been reported recently. The port currently exports coal, ore, and metals.

One industry source said that because Murmansk can handle large Panamax-class vessels, any increase in seaborne shipping costs will not be substantial. The port lies 2,700 km from Novorossiysk, Russia's main southern grain gateway. The source added that a first delivery of 40,000 tons of grain by rail from the southern Stavropol region to Murmansk has been agreed and approved by Russian Railways.

Murmansk, a year-round ice-free Arctic port accessible through neutral waters, is regarded as a more secure destination as risks in the Baltic Sea have also risen amid deteriorating relations with Europe. The port did not respond to a request for comment.

Russia exported 4.4 million tons of grain in July-August, down about 31% from a year earlier. September exports are estimated to fall by half to 2.45 million tons from last year's volume, according to Sovecon consultancy. Farmers have complained about surplus grain they have been unable to export.

Agriculture Minister Oksana Lut told reporters last week that the country has no problems exporting its grain after re-routing shipments through the Baltic Sea, the Caspian Sea, and the Far East.