Russia forced to return to ports in the Baltic states for grain exports despite worsening relations

Russian exporters are being forced to increasingly use ports in the Baltic states to ship grain due to serious disruptions to exports via the Black Sea and Sea of Azov. Despite sharply deteriorating relations between Russia and the Baltic countries, traders are increasingly considering their infrastructure, particularly Latvian ports, as an alternative route. Market participants expect shipments via the region to rise sharply as early as September.

The scale of the shift is already visible in rail transportation requests. As of August 18, applications to transport grain to Russia’s Baltic Sea ports had reached 5 mln tons, mostly for shipments in August and September. By comparison, around 6 mln tons were requested for the key Black Sea ports of Novorossiysk and Tuapse. Last season, Russia exported 46.3 mln tons of grain, or 90% of its total seaborne grain exports, through Black Sea and Azov Sea ports, compared with only around 1 mln tons through its own Baltic ports.

The Baltic states were previously important transit routes for Russian commodities, including oil and fertilizers, but Moscow sought to redirect these flows to its own infrastructure as political relations deteriorated. Russian grain, however, never completely disappeared from Baltic transit: around 1 mln tons moved through ports in the Baltic states last season, down from 2.5 mln tons two years earlier. Disruptions in the Black Sea are now forcing Russian exporters to turn back to these routes.

The Russian Grain Union estimates that 5–6 mln tons of grain could be exported through the Baltic states this season, potentially rising to 10 mln tons if Estonian ports are available. SovEcon gives a more cautious estimate of 200–400 thsd tons per month. The combined grain handling capacity of the three Baltic states exceeds 18 mln tons per year, although these facilities also handle grain of European origin.

The Baltic route, however, cannot fully replace the Black Sea and Azov Sea corridor. Russia’s own Baltic ports have a maximum estimated grain handling capacity of around 7 mln tons per year. According to the Russian Grain Union, even all other Russian ports combined with overland routes could, at best, absorb only around half of the volumes normally shipped through the Black Sea and Sea of Azov. This leaves Russian grain exports dependent on more expensive and capacity-constrained alternative routes.

Tags: Russia, grain, Latvia, Estonia