Russian strikes at Ukraine ports raise insurance rates: market sources

A series of Russian missile strikes on Ukraine’s Black Sea port infrastructure and merchant ships has driven up insurance costs and forced some shipowners to cancel bookings, insurance sources and a broker said on Thursday.

Russian ballistic missiles attacked port infrastructure in southern Ukraine’s Odesa region on Wednesday, the third such attack in four days.

“Russia is deliberately escalating its attacks on port infrastructure in southern Ukraine. The purpose of these attacks is to reduce our export potential,” Deputy Prime Minister Oleksiy Kuleba said on the Telegram messenger.

Ukraine says Russian missile hits second grain ship

Russia has carried out nearly 60 attacks on the port in the past three months, damaging and destroying nearly 300 port infrastructure, 177 vehicles and 22 civilian ships, he said.

A Russian missile hit a Palau-flagged ship in Odesa port on Monday, while another Russian missile damaged a Saint Kitts and Nevis-flagged civilian ship loaded with corn in Pivdennyi port on Sunday.

Ukraine is listed as a high risk area by marine insurers and an additional war risk insurance premium must be renewed usually every seven days. Ships must also have an annual war policy.

Insurance sources said on Thursday that wartime premiums had risen by about 30% this week to just over 1% of the ship’s value from about 0.7% in early September, which would mean additional costs of hundreds of thousands of dollars.

Ships calling in Ukraine were exposed to an “increased risk of direct attack by Russian forces,” British maritime security company Ambrey said in a note.

“Ships calling at Russian Black Sea ports are also assessed to be at increased risk of physical damage,” Ambrey added.

Ukraine is a major global producer of grain, and before Russia’s 2022 invasion, the country was only exporting about 6 million tons of grain per month via the Black Sea. About 85% of Ukrainian food exports now leave Ukraine from its Black Sea ports.

Ukraine’s grain exports in the July-June 2024/25 season have risen about 58 percent year-on-year to 11.4 million metric tons so far, but brokers said the recent attacks could hurt trade.

“Our clients are telling us that some owners are canceling ships and citing the bombing as the reason,” a Ukrainian broker told Reuters.

Ukrainian officials said they have not seen any significant increase in insurance rates.

“Foreign ships continue to operate in our ports. We continue to monitor the situation,” the Ministry of Agriculture’s press service told Reuters in a written comment.

The major local farmers’ union UAC said defaults and increased Russian attacks on ships carrying agricultural products in Odesa ports are complicating export logistics and affecting shipping costs.

“Companies must take into account potential attacks during transport,” Denys Marchuk, deputy head of the UAC, told Reuters.

(Additional reporting by Yuliia Dysa; Editing by Philippa Fletcher, Alexandra Hudson)

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