Black Sea attacks choke wheat supplies to Bangladesh, push up import costs

Russian drone attacks on commercial ships in the Black Sea have disrupted wheat supplies to Bangladesh, with shipments from Ukraine and Russia falling to less than 1% of their usual volume over the past month, according to a Bangladeshi importer.

The disruption is pushing up freight costs and forcing buyers to seek alternative suppliers as attacks threaten a key route for Ukrainian and Russian grain exports to countries like Bangladesh and Indonesia, Nikkei Asia reported on Monday.

“Over the past month, less than 1% of the usual volume has arrived,” Shafiul Taslim, director of finance and operations at TK Group, told Nikkei Asia.

The conglomerate, which operates in food and animal feed, said Bangladesh sources about 70% of the grain it imports for flour production and other uses from Ukraine and Russia. Its purchases from the two countries are split roughly equally, depending on prices, Taslim said.

Russia has intensified attacks on commercial shipping in the Black Sea since late June. At least six attacks were reported in October alone, killing dozens of people, according to the Nikkei report.

Ukraine’s Black Sea ports are major gateways for grain exports. But security risks have forced some exporters to suspend shipments on smaller vessels and divert cargo through the Danube River to Romania.

The alternative route is longer and more expensive. Freight costs from Ukraine’s Danube port of Izmail to Romania’s Constanta rose to about €30 per metric tonne in September, from €10 just a few months earlier, Ivan Niyakiy, chief executive of Ukrainian port operator Olir Resources, told Nikkei Asia. The higher costs are reaching Bangladeshi buyers. Taslim said freight for wheat had climbed to more than $300 per tonne.

Bangladesh has also turned to Romania and Bulgaria for supplies. But Taslim said the wheat available from those countries was of lower quality and that increased demand had made shipping difficult.

“There are no available shipping slots before December, which creates further challenges for us,” he told Nikkei Asia.

The disruption comes as Asian markets compete for alternative supplies. Indonesia, another major buyer of Ukrainian wheat, has already begun replacing it with grain from Australia, the United States, Argentina and Bulgaria, according to the report.

Ukrainian exporters warn that the situation could worsen over the next two to three months, potentially making their grain less competitive in Asian markets.

“The question the market is asking is gradually shifting from ‘How much does freight cost?’ to ‘Who is willing to provide a ship at all, and on what terms?’” Dmytro Kazanin, chief executive of Ukrainian logistics company TEUS Group, told Nikkei Asia.