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The Ukrainian crisis: Impact on the regional port system

Edition 61 of Port Technology International (February 2014) featured an article on ‘Dry bulk cargo in Ukrainian ports’. During the past months, the events in the Ukraine have hit world headlines. In this contribution, we discuss how current and recent events and developments in the Ukraine and the Black Sea region are affecting Ukrainian ports.

Turbulent times in Ukraine

After the referendum in Crimea on March 16, 2014, the Autonomous Republic of Crimea became a part of the Russian Federation on March 18, 2014. This event incurred a complete change of legislative and regulatory institutions for ports and railways which previously were a part of the Ukrainian state-owned and centrally regulated transport network. Moreover the tensions in the eastern and southern part of Ukraine are threatening the present integrity of the state. The European Union and the US continue to put pressure on Russia to help solve the clashes with pro-Russian rebels in the east of the country. The political situation in Ukraine was influenced by the presidential elections on May 25, 2014, won by Petro Poroshenko. In late June 2014, Ukraine and the European Union signed a free-trade pact. Just like Georgia and Moldova, Ukraine has the ultimate goal of entering the EU. However, the EU has made no promise it will allow entry to Ukraine. The signing of the pact is a key action as Ukraine's former pro-Russia president Viktor Yanukovich turned his back on signing the EU agreement in November 2013. His position in favour of closer ties with Russia prompted months of street protests that eventually led to the Ukrainian crisis. The recent events in Ukraine might even turn out to be more significant to the country than the independence from the Soviet Union in 1991.During the past half year, the Ukrainian economy destabilised with the local currency devaluating by about 35%. The heavy industry activities in the east of Ukraine (Donbas and Poltava Region) are facing hard times. Russia-Ukraine trade relations are also affected by the recent turmoil. In a reaction to the trade agreement between EU and Ukraine, Russia has threatened to withdrawthe duty-free treatment that Ukraine currently benefits from as a member of the Commonwealth of Independent States (CIS) free trade agreement. If Russia would start to impose customs duties, Ukraine’s exports could be heavily affected (particularly base metals, grains, machinery, equipment and food). Despite the crisis, Russia remains a key trade partner of Ukraine: 24% of its exports are related to Russia. A way out for Ukraine would be to re-export EU products to Russia thereby avoiding possible Russian duties.

Cargo impacts on Crimean ports

The Ukrainian port system is feeling the full impact of the crisis. This section describes the expected intra-Ukrainian cargo-flow shifts; more precisely, which cargoes are more likely to be rerouted to continental Ukrainian ports and which will stay bounded to Crimea.

Kateryna Grushevska and Prof Theo Notteboom ITMMA, University of Antwerp, Belgium

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