Following 500 days of war since Russia's invasion of Ukraine, the entire global population has been impacted somewhat by the food supply chain disruptions and climate challenges which have driven up food and gas prices since February 2022. The human impact in Ukraine and neighbouring countries is more profound as more than 8 million refugees have fled Ukraine in what the World Health Organization describes as "the largest movement of people in the European Region since the Second World War". The repercussions have reverberated around the world but with Ukraine's counter-offensive continuing in the eastern Donetsk and south-eastern Zaporizhzhia regions, can we expect economic, security and supply-chain improvements to follow in the months ahead?

That was the exact topic discussed at Kwayga's recent webinar, delivered on behalf of USAID, whereby the best Practices in Logistics and Distribution were shared with Ukrainian Food suppliers and European Grocery Buyers. This informative supply-chain session provided valuable insights on key considerations such as transportation, consolidation, storage, customs, 3PL, and regulatory compliance with experts in the field from Kuehne + Nagel, DP World, Druzhkivska and the Logistics Consultants.

Considering the atrocities in Ukraine, the resilience of the Ukrainian people was evident during this recent logistics workshop. As with all adversity comes innovation, and now many Ukrainian food and drinks producers are shipping wonderful produce across the continent in new and emerging supply-chain routes. Thankfully the EU’s continued support for economic resilience within Ukraine has removed formal trade barriers and simplified customs procedures to a T1 transit document (to facilitate the movement of non-Union goods within the customs territory of the Union). These initiatives, plus other innovations, will support Ukrainian food and drinks exporters to gain valuable contracts across the EU and UK, promoting quintessential Ukrainian produce plus cost-saving opportunities.

Current Food supply-chain options from Ukraine to EU/UK

During Kwayga’s webinar, we learnt from Kuehne + Nagel and DP World that a number of options exist to move food and drink products from Ukraine to Western Europe. The most straightforward options are full trucks or full container loads via road. However, a number of groupage options for pallets exist also through Warsaw or Rotterdam which can take 7-8 days to travel from Ukraine to the UK, as an example. Larger loads without time constraints can go via sea freight from Poland, Romania and the Baltics, while similarly rail freight options were mentioned too for lower value items (but with the downside that temperature controlling is not yet possible on these routes).

Grains and commodities are travelling directly from the Black Sea due to the Black Sea Grain Initiative, which is an agreement between Russia and Ukraine made with Turkey and the United Nations (UN) during the 2022 Russian invasion of Ukraine. The initial agreement was signed in Istanbul on 22 July 2022 to create procedures to safely export grain from certain ports to attempt to address the 2022 global food crisis. Following a number of extensions, the current agreement is due to expire on 18 July 2023 and for the past 12 months, more than 950 voyages had successfully left Ukrainian ports carrying over 30 million tonnes of grain and other food products to more than 40 different countries. It is worrying that in recent weeks, Russia has repeatedly claimed it will withdraw from the deal in July 2023 unless its demands are met.

Border crossings into the EU from Ukraine were noted bottlenecks in Spring 2023, but these delays have now eased as Poland and neighbouring countries have reached an agreement with the EU and Kyiv to permit these crossings. It was stated by numerous speakers that the supply chain is an area that requires consistent improvements from both sides - Ukraine and the EU, in response to the demands of traders plus the prevailing conditions.

One aspect within the food supply chain which is particularly challenging for Ukrainian food and drinks exporters is chilled/frozen shipments when less than full loads. K&N advised that cold chains are possible via the right partners in Warsaw while others during the webinar cited the increased costs as significant considerations when moving chilled/frozen items from Ukraine.

NB: Refer to Useful Links below to speak directly with these supply-chain partners

Consolidation + Distribution

One of the most frequently mentioned recommendations during Kwayga’s recent webinar was the concept of freight consolidation, so as multiple individual orders/pallets are grouped into a single load to form a larger transportation unit. Consolidating within Ukraine, or within the EU close to the suppliers, will avoid fragmented shipments and Ukrainian food and drinks producers can maximise cargo space and cut down on distribution costs. However, this requires lots of collaboration and shared data, which is currently lacking amongst Ukrainian exporters. This collaboration may even be required with competitors so the formalities of this relationship need to be carefully considered from the outset.

Similarly, it was highlighted during the webinar that producers will typically require distribution partners close to their customers, especially at the outset of their exporting journey. To support warehousing, merchandising, distribution and customer engagement, distribution partners will resolve many conversations between producers and supermarket buyers. These distribution partners will need to know sales forecasts, storage requirements, high-level commercial details and they will expect a guarantee on shipment. For Ukranian exporters, it is important to appoint distribution partners that have Tier 1 access into Supermarket Distribution Centres (or similar relationships with your target customers).

Finally, one possible solution which is relevant to Ireland and the UK, is that following Brexit, a proactive exporter could consider setting up as an Importer of Record in Northern Ireland to have equal unfettered access to UK and Ireland, but this would require careful planning with your professional advisors.

Summary

From the backdrop of a warzone, it was heartwarming to learn during Kwayga’s logistics webinar of the many supply-chain routes possible for Ukrainian food and drinks exporters. Undoubtedly this is an evolving landscape with new routes emerging overtime to meet the large European demands for unique high-quality Ukrainian produce. With the continuation of free trade agreements, simplification of customs procedures and stepping stones towards Ukraine’s membership of the EU, we can expect many more improvements to come in supply-chains between the “breadbasket of Europe” to the entire EU + UK.