Export volumes of Russian wheat overloaded the transport system

As a result of a number of factors, the volume of wheat exports from the Russian Federation increased to record levels (about 3 million tons per month). The logistics are failing.

In the “standard” winter month, Russian wheat exporters usually export 1.5-2 million tons abroad. But January and February 2021 are clearly unusual months. There are several reasons at once why the volume of exports has risen to record levels. For example, in January 3.2 million tons of wheat were exported (practically two norms), in February this value is planned at the level of 2 million tons.

However, all 2 million tons will most likely be “sold” during the first half of the month. So the export intensity in February will be even higher and will be compared with the record January 2018, when 3.37 million tons of grain were exported at once.

Logistics can no longer cope: huge queues of vehicles and railway wagons accumulate to the terminals (sea and land).

There are three reasons for this.

1. Introduction of quotas and duties from February

February 15 is a defining date. From this moment it starts working:

a) a grain export quota of 17.5 million tons until June 30.

b) duty on the export of wheat. From 15 to 28 February — 25 euros per ton, from 1 March — 50 euros per ton. And all this is within the quota. If the exporter has exceeded his quota, then he will have to pay up to 50% of the customs value, at least 100 euros per ton.

All this stimulates to send the maximum grain abroad as quickly as possible without paying any high duties.

This applies mainly to wheat. In December and January, it accounted for 85-90% of grain shipped from Russia. The rest of the grains (rye, barley, corn) are not subject to such high duties, and therefore «do not deserve» to interfere with wheat exports this winter.

2. Storms on the Black Sea

It does not please with the weather: in January it was stormy practically along the entire Russian coast. This means that the ships loaded with grain could not go on the voyage, which greatly contributes to traffic jams.

3. Non-working January

Traditionally, the long New Year’s holidays this year did not bring any pleasure to grain exporters: because of them, they did not manage to «push» huge volumes of wheat through the transport system. And this is at a time when days are counted, and there is critically little time left until February!

The more frequent stops of vehicles for inspection by the customs service, which will soon have to calculate the weight of the cargo of each vessel and wagon for calculating duties and accounting for quotas, do not add optimism.

One way or another, but before the introduction of strict regulation there are only 2 weeks left. However, it is already obvious that many companies will not be able to sell not only «in excess of the norm», but even fulfill their contractual obligations on time.

After all, all these attempts by exporters to «push» for export volumes that exceed the physical capabilities of the logistics network, obviously lead to its overload.

And the more people who want to «get ahead of everyone», the longer the queue and the more hopeless the traffic jams.