Baltic States Seek EU-Wide Ban on Russian Grain Transit Amid Shifting Trade Patterns

Estonia, Latvia, and Lithuania have called for a European Union-wide ban on Russian grain transit. The three Baltic states aim to prevent Russia from utilising European transport networks for agricultural exports, particularly as disruptions in the Black Sea region continue to reshape established grain flows.

Kristen Michal, Prime Minister of Estonia, Andris Kulbergs, Prime Minister of Latvia, and Gitanas Nausėda, President of Lithuania, collectively signed a letter to European Council President António Costa and European Commission President Ursula von der Leyen. The communication requested the implementation of restrictions on Russian grain passing through EU territory en route to international markets.

The Baltic leaders highlighted that Russia has been targeting Ukrainian ports, merchant vessels, and transport infrastructure, while simultaneously seeking alternative routes for its own agricultural exports, including through the Baltic Sea.

Shifting Grain Flows

The call for a ban coincides with a significant shift in Russian grain movements away from the Black Sea. Research from IFCHOR Galbraiths indicates that grain loadings from Russian Baltic and continental ports surged to 1.16 million tonnes in September, more than five times the 216,000 tonnes recorded in August. During this period, Ust-Luga contributed 545,000 tonnes and Vysotsk added 374,000 tonnes. Concurrently, monitored Russian Black Sea and Azov loadings declined from 1.39 million tonnes to 201,000 tonnes, resulting in the Baltic Sea's share of combined shipments increasing from 12.6% in August to 80.7% in September, according to Splash 247.

IFCHOR Galbraiths reported that Moscow has supported this transition through subsidised rail transport and the conversion of fertiliser and other bulk-handling terminals for grain. Murmansk is also preparing to handle its first grain cargoes in October. An EU transit ban would not impede Russian grain moving directly from Russian ports like Ust-Luga and Vysotsk but would close off European ports and transport corridors as alternative gateways.

Estonia has already implemented national sanctions, prohibiting the transit of Russian and Belarusian grain through its ports, specifically products under the CN 10 commodity group. Latvia tightened checks on grain origins at its ports in September following increased interest in routing Russian shipments through the country and is developing measures against cargo suspected of originating in occupied Ukrainian territory. The three governments are now advocating for common EU-level rules rather than a fragmented approach of national restrictions.

Economic Implications and Security Concerns

The changing trade patterns incur higher costs. IFCHOR Galbraiths estimates that transporting grain from Baltic Russia to Egypt is approximately 30% to 35% more expensive per tonne compared to shipping from Russia's traditional Black Sea loading ports, based on pre-escalation freight levels. Russia has attempted to mitigate this disadvantage with rail subsidies, temporary export-duty relief, and priority access for grain on northern rail routes.

While longer Baltic voyages towards North African and Mediterranean buyers could provide some support for tonne-mile demand and employment for geared bulkers, this shift has not compensated for the loss of Black Sea volumes. Total monitored Russian grain loadings across all routes (Black Sea, Azov, Baltic, continental ports, and Far East) fell by 16% month-on-month in September, according to the broker. Logistical bottlenecks and increased costs mean that alternative export routes are struggling to replace the volumes lost through the Black Sea, Splash 247 reported.

Security in the Black Sea has deteriorated, with IFCHOR Galbraiths noting attacks on merchant vessels in Romanian and Bulgarian exclusive economic zones in early October. This extends attacks beyond areas traditionally considered high-risk. The Joint War Committee expanded its Black Sea Listed Area in September, and reported war-risk premiums have risen from around 0.1% to 0.5% of vessel value over a two-week period. Further deterioration could see rates approach 1%. The Baltic states' appeal also advocates for stronger EU-Ukraine Solidarity Lanes and measures to prevent grain from occupied Ukrainian territory from entering international markets via European infrastructure.