MariTrace, 22 August 2023
Ukraine is proposing a new export corridor for grain shipments, closely following the coastline of Romania and Bulgaria, after the safe passage of the Joseph Schulte last week. The route is intended to replace the Black Sea Grain Corridor that expired in July. Ukraine’s government are working with Lloyds and Marsh & McLennan to set up an insurance pool for the Black Sea, with the Ukrainian government backstopping the risk. While the details have yet to be finalised, Ukraine is confident the pool could provide cover for up to 30 vessels at one time.
The container ship Joseph Schulte embarked from the Port of Odesa at 05:11 UTC on 16 August after 539 days in port, bound for the Port of Ambarli (Turkey), carrying an estimated 34,657 tonnes of cargo, including grain. According to MariTrace data, Joseph Schulte is currently at anchor 2.46 kilometers (1.3 NM) SSE of Ambarli, in Turkish waters.
Insurance and shipping costs for commercial vessels passing through the Black Sea increased immediately after Russia’s invasion of Ukraine in 2022. War risk insurance remained available after the end of the grain corridor deal, but with very few customers. Amended definitions of ‘war risk area’ for the Sea of Azov and the Black Sea were circulated by insurance clubs and insurance service providers, with effect from May 2023.
What is war risk insurance?
Separate to hull insurance (which covers the physical vessel), crew and cargo insurance (covers the onboard crew and cargo) and other specialised policies (e.g. cyber), War Risk Insurance provides ship owners with financial protection against losses incurred through events such as war or terrorism, typically including damages incurred through acts of piracy and malicious physical attacks on vessels, or where a ship is detained or confiscated. Some also provide for losses incurred due to a vessel being blocked or trapped in an area of conflict. Owners of commercial vessels also pay a 'breach premium when entering high-risk areas, in addition to annual war-risk insurance cover. Breach premiums are calculated according to the value of the ship, or hull, for a seven-day period. The twelve P&I clubs that comprise the International Group of P&I Clubs currently provide cover for about 90% of the global commercial fleet, for example UKP&I and regional specialists such as Singapore War Risk Mutual.
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