Ukraine to compensate damaged cargo ships, as Russia rejects Black Sea proposal

Ukraine’s government will partially compensate civilian vessels damaged by Russian strikes in the Black Sea as Kyiv and foreign partners discuss stabilizing shipping routes amid Russian attacks on both foreign and Ukrainian ships.

Under a mechanism developed by Ukraine’s Infrastructure Ministry, Kyiv will compensate shipowners, operators, and charterers whose vessels fly under the Ukrainian or a foreign flag for up to 80% of the assessed damage if insurers don’t cover the risks.

The mechanism will cover damage to or destruction of ships, loss of or damage to cargo, and emergency and rescue operation costs.

"This decision is intended to reduce financial risks for participants in maritime shipping and to support the continuity of Ukraine’s export and import logistics," the Infrastructure Ministry wrote in a public statement.

"Despite the constant threats, Ukraine’s maritime logistics keeps operating. Our task is to ensure its stability and to create additional guarantees for shipowners carrying cargo to Ukrainian ports."

With the hostilities in the Black Sea threatening global food supplies, Turkey, India, and Egypt offered to transport food from both Ukrainian and Russian ports under their respective flags, but Moscow declined to guarantee them safe passage, President Volodymyr Zelensky told Bloomberg on Oct. 19.

Some in the logistics sector are skeptical that talks between foreign partners and Russia will yield results anytime soon.

Russia stepped up attacks on cargo ships in the Black Sea over the summer, hitting 52 vessels in just six weeks in July and August. While ships are now largely avoiding Ukrainian ports, Russia hasn’t stopped its attacks, with Romania accusing Moscow of hitting four merchant ships in 24 hours on Oct. 15, killing eight people.

As a result, insurance rates in the Black Sea are through the roof, with London’s marine insurance market expanding its high-risk zone beyond the coastal waters of Ukraine and Russia on Sept. 18, Reuters reported.

Russia's attacks on vessels, as well as port facilities, have effectively halted Ukraine’s agricultural exports, putting around 32 million metric tons of agricultural products worth approximately $10 billion at risk, Ukraine’s Agriculture Ministry said last week. Alternative routes, such as the Danube River ports and railways, cannot handle enough cargo.