The Risks of Trading in the Ukraine

Many shipowners are asking at present - what are the risks of trading in the Ukraine in the current circumstances?

Well apart from the dangerous security situation in the eastern and southern provinces, the principal risk is that of breaching the US and western sanctions. The full sanctions of the US are available here but in short, in response to events in the region in 2014 there were three rounds of international sanctions, both from the US and the EU and other western nations (Australia, Switzerland, Japan etc.). Most of these actions were restrictions on Russian individuals, companies and banks from trading, travelling etc. but some of the sanctions are so far reaching that, in order to ensure no breaches occur, a party trading with or in Ukraine must essentially choose to either trade with Crimea (now under Russian control) or with the remainder of Ukraine (Odessa or Kiev for instance).

If you move between a contested region and government controlled Ukraine, especially if you transport cargo between the two, you will be at risk of sanctions related penalties, vessel seizures and potentially confiscations. The risk is especially strong trading from Crimea to Odessa and there are reports of an increase in vessel arrests in the region generally. Shipowners beware.

Common Bulk Cargoes

When a layperson glances at a modern Bill of Lading from a bulk carrier they often ask what cargo is being carried. This is because in order to avoid claims or delivery disputes, the Bills are very specific about exactly what is being carried, rather than using an understandable description. Here is a short guide, which like all our articles we will expand on over time, to the real-world meanings of common cargoes listed as being carried.

SOME COMMON MODERN CARGOES

FAME - Fatty Acid Methyl Esther - These are basically fatty acids (types of energy-rich acid taken from animal fats, vegetable oils), mixed with a pure alcohol (methanol) so they can be stored in a concentrated liquid form. They can readily be stored and transported and the ship's tanks can be relatively easily be cleaned after discharge. The exact quality and type is very important as the type of use and value can vary greatly. Some FAME cargoes may be used at destination for creating food products, face creams or tablets; it would be very important that such a cargo was not contaminated. But equally you could have a shipment of FAME which was old grease and oils collected from restaurants, and other sources, being transported for use as biodiesel (natural diesel) - this would be less valuable. FAME is a very common cargo in modern shipping because of its wide array of applications.


Swarf - metal scraps - This is one of those old words which has stuck in industrial use for want of a better replacement. Swarf used to refer to little bits of metal which fell on the floor whilst you were cutting or working with metal. They used to be of concern primarily as a safety hazard, because even a very thin slice of scrap metal lying on a floor or bench can be a real danger but today with the market price of all metals soaring they are better known as bulk shipments where scrap metal of all kinds is mixed together for shipment to scrapyards for melting down. Sometimes a shipment will just literally be a load of mixed scraps of all kinds (shavings, taps, pipes, cable) and sometimes it will be solid compressed blocks of such scrap. Sometimes you will see basic sorting processes having taken place, lke a designation 'Swarf - 25 MT honey'. This is a reference to scrap of a yellow and gold colour which has been piled together for melting down, as opposed to another lot of scrap madeup of grey metals.