The Geostrategy of Russian and Ukrainian Ports

The Geostrategy of Russian and Ukrainian Ports

Sources: FAO Database, bp Statistical Review of World Energy July 2021. Own port dataset. Data is for 2020.

Even if it is the world’s largest country covering a large share of the Eurasian landmass, Russia has highly constrained access to commercial maritime shipping that can be blocked for strategic reasons.

  • On the Baltic range, Russia has access to the Atlantic Ocean through the Strait of Oresund. This range grants access to Russia’s largest urban agglomerations, including Moscow. With the dissolution of the Soviet Union in 1991, Russia lost access to the ports of the Baltic states (Lithuania, Latvia, and Estonia) that joined the European Union in 2004.
  • On the Black Sea range, Russia and Ukraine have access to the Mediterranean through the Strait of Bosporus, controlled by Turkey. The dissolution of the Soviet Union also substantially impacted this range, particularly the founding of Ukraine in 1991, which left Russia with a substantially reduced number of ports on the northeastern range of the Black Sea (e.g. Novorossiysk, the largest port).
  • On the Pacific range, Russia has a port complex (Vladivostok) with access to the Pacific Ocean constrained by the outlets of the Sea of Japan (e.g. straits of Tsushima and Tsugaru). In the eastern part of Russia, the distances are extensive, and the economic density is low.
  • On the Artic range, the options are excessively limited. The port of Murmansk has been developed over the last century as it represented the only site with ice-free conditions with direct access to the Atlantic Ocean. Still, the Arctic range is poorly connected to Russia’s core economic regions, limiting its opportunities.

Port clusters are characteristics of both the Baltic and the Black Sea ranges, indicating that the lack of options has incited Russia to duplicate facilities in proximity and in sites that are not optimal.

The invasion of Ukraine by Russia in March 2022 created disruptive effects on the global commodity and energy markets, significantly impairing Russian and Ukrainian port activity.

  • Cereals. Both Russia and Ukraine are significant producers and exporters of grains (corn and wheat). However, most of the grain produced globally is for domestic consumption, with 17.1% of the production actually traded at the international level. Even if Ukraine accounted for 10.1% of all grain exports, this implies only that about 1.7% of the global grain supply has potentially been compromised (excluding Russia). Still, several low-income countries such as Egypt, Indonesia, and Bangladesh depend heavily on Ukrainian grain exports, creating serious food security challenges.
  • Petroleum. A large share (73.5%) of the global oil production is exported to international markets. While Ukraine has a very limited role, Russia’s is significant, with 12.1% of the production and 11.4% of the exports.
  • Natural gas. Russia is a large producer of natural gas, accounting for 16.6% of the global production, with Ukraine assuming a marginal role. However, international trade in natural gas, particularly LNG, is significantly less. The most disruptive effect concerns pipeline gas trade between Russia and Europe. Concerns have also emerged regarding the prospects of major projects such as Sakhalin 2, one of the world’s largest integrated, export-oriented oil and gas projects, as well as Russia’s first offshore gas project, and the Yamal facility in northwest Siberia due to the expression of intentions by third parties to exit their investments in the country.
  • Containers. The importance of Russia and Ukraine on the global container shipping market is marginal and mostly focused on imports of consumer goods and processed food. Russian and Ukrainian ports account for only 0.8% of the global container volume. The impacts mainly concerned containers bound to Russia. Due to the crisis and the imposed sanctions on imports from Russia, over 4,500 containers had to queue at Rotterdam, a major container port handling Russian-bound trade (mainly through St. Petersburg). These containers would risk remaining at the terminal for an unknown duration, taking storage capacity away. This created concerns about how the port could continue to handle Russian-bound shipping containers and the considerations for creating a separate space to stow Russian-bound shipping containers.

Another notable effect of the conflict is the disruption of the Eurasian rail landbridge between China and Europe (New Eurasian Landbridge, NELB), impacting supply chains involving intermediate to high-value retail goods. In 2021, about 1.5 million containers worth of cargo were exported from China to Europe using the rail landbridge. Although Chinese exports to Europe are allowed to transit, many cargo importers have switched to the longer maritime route to avoid risks. Trade supported by rail between China and Russia remained unaffected and allowed Russia to continue getting access to several key goods despite sanctions.