Russian strikes on Ukraine’s ports push insurance rates up

(Reuters) — A series of Russian missile strikes on Ukrainian Black Sea port infrastructure and commercial vessels has led to a jump in insurance costs and forced some shipowners to cancel bookings, insurance sources and a broker said Thursday.

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

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

Russia has carried out nearly 60 attacks on ports over the past three months, resulting in damage to almost 300 port infrastructure facilities, 177 vehicles and 22 civilian vessels, he said.

A Russian missile hit a Palau-flagged vessel in the Odessa port on Monday, a day after another Russian missile damaged a Saint Kitts and Nevis-flagged vessel loaded with corn in the port of Pivdennyi.

Ukraine is listed as a high-risk area by marine insurers and an additional war risk insurance premium has to be renewed typically every seven days. Vessels also have to have an annual war policy.

Insurance sources said Thursday that war premiums had jumped around 30% this week to just over 1% of the value of the vessel from around 0.7% in early September, which means hundreds of thousands of dollars in extra costs.

Vessels calling at Ukraine are at “heightened risk of direct attack by Russian forces,” British maritime security company Ambrey said in a note.

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

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

“Our clients tell us that some owners are canceling vessels and give bombing as a reason,” a Ukrainian broker told Reuters.

Ukrainian officials said they saw no significant increase in the insurance rates.

“Foreign vessels continue to operate in our ports. We continue to monitor the situation,” the farm ministry press service told Reuters in a written comment.