The logistics of grain exports from wartime Ukraine: What are the highest priority areas to Address?

• An extensive literature has focused on ways for Ukraine to maintain its grain exports despite Russian harassment in the Black Sea. • However, there has been little focus on which constraints are the binding constraints, and so which reforms are the most urgent. • In this paper we report on the results of a targeted survey and interviews with Ukrainian specialists in this area. • The two most important constraints identified are the inadequacy of export/import capacity at Ukraine/EU borders (especially Poland) and the poor state of the network of the Ukrainian railway Ukrzhaliznytsia. Ukraine is a key global producer and exporter of grain. In peacetime, over 70% of Ukraine’s grain production is exported, and over 90% of these exports go through Black Sea ports. The Russian invasion of Ukraine, and consequently the occupation, blockade, or destruction of these ports, has disrupted the maritime supply chains. In this paper we examine the difficulties experienced in attempts to substitute other modes and outlets for grain exports. We consider the existing literature, which identifies and discusses a large and varied set of problems facing this process of substitution but leaves a crucial question unanswered: Which are the highest priority issues which must be addressed before other reform policies can be effective? We report the results of our use of directed surveys and interviews with Ukrainian industry insiders to seek to identify which areas seem to be most important and appropriate for primary and accelerated policy measures. The results suggest two issues that should be the highest priorities for policymakers at this point: 1) the inadequacy of alternative export modes and locations, unprepared as they were for mammoth volume diversions from the Black Sea ports (including rail capacity and other issues on the EU sides of borders), and 2) the long-standing weaknesses of the rail monopolist Ukrzhaliznytsia, with years of funding neglect resulting in shortage and obsolescence of locomotives and rolling stock as well as a shortage of skilled labor.