In recent months, several European export credit agencies (ECAs) have pledged to boost their market capacity in Ukraine, in a bid to drive up trade volumes and foreign direct investment in the war-torn nation.

French and Polish ECAs have said they will provide coverage for businesses seeking to invest in Ukrainian projects or companies, including protection against war risks.

And in Sweden and the Netherlands, agencies have committed to providing tens of millions of dollars in fresh capacity from next year onwards, with a primary focus on boosting exports linked to Ukrainian reconstruction projects.

Such commitments are part of plans to finance Ukraine’s rebuild which, according to World Bank projections, will cost US$410bn over the next decade.

Ukrainian officials have emphasised the need for strategic alliances and collaboration to ensure the successful realisation of these ambitious rebuilding plans.

GTR speaks with Oleksandr Gryban, investment team lead at Advantage Ukraine, an investment promotion initiative set up by the government last year, to understand the role that ECAs can play in helping to secure vital imports and exports and support the nation’s reconstruction efforts.

GTR: The World Bank’s cost estimates suggest substantial private and public capital will be required to help rebuild Ukraine. How advanced are Kyiv’s reconstruction plans currently, and how many deals has Advantage Ukraine secured with project developers or investors?

Gryban: Advantage Ukraine is actively working on filtering a pipeline of feasible projects to funnel capital in from international and development finance institutions. The International Finance Corporation has said it will invest over US$1bn in Ukraine, the US government’s International Development Finance Corporation (DFC) has vowed to mobilise US$1bn and the European Bank for Reconstruction and Development (EBRD) has pledged €3bn.

There are a number of institutions that have made public commitments, but when you get down to utilisation and absorption of the funds, we are saying to them: ‘Okay, where are these deals?’ These international financial institutions typically support existing clients, provide refinancing, or undertake risk-averse activities – despite the fact that feasible and bankable projects exist.

Our team understands which Ukrainian companies are solid and meet all the eligibility criteria of these financiers. For instance, are they producing financial statements, are they audited by the ‘big four’, or hold sound legal structures? Advantage Ukraine is working especially closely with the DFC, which treats us as an outsourced execution team capable of leading and generating the projects, while also analysing these deals.

GTR: Which ECAs have you been speaking to in the past year, and what specific requests have you made to them? Are we likely to see a significant increase in ECA-backed transactions in Ukraine this year?

Gryban: We are in close dialogue with most of the OECD ECAs. We keep a matrix of all these agencies and map what limits they hold in the Ukrainian market, and whether these limits are restricted to public sector projects, or if ECAs are open to backing private sector transactions.

We expect the first pile of buyer credit transactions involving commercial banks and ECAs will happen soon.

The Export and Investment Fund of Denmark is incredibly flexible and is providing direct finance as well as credit and political risk cover of up to 100%. Not only do they have a capacity limit of about DKr1bn (US$140mn), but they are flexible when treating the financials of potential clients in Ukraine. For instance, they are willing to analyse Ukrainian companies based on their performance five years ago, long before Russia’s full-scale invasion and even pre-Covid-19. This is a very positive move in terms of being less risk-averse and encouraging development.

UK Export Finance is mostly focusing on the public sector and is largely active in defence-related transactions, aimed at securing Ukraine’s military supplies. They hold private sector capacity and are offering political risk insurance, though not up to 100%. In such instances, we still need other partners to mobilise bank financing because commercial lenders will only extend funding if they have full coverage in Ukraine.

At the same time, there is a list of projects involving Japan and Germany’s agencies that are progressing well. In mid-October, Germany’s Euler Hermes agreed to provide investment cover for a domestic construction materials manufacturer, Fixit, to build a second plant in Ukraine. This was the first case of ECA investment insurance since the war.

GTR: What role is Ukraine’s own ECA going to play in the country’s reconstruction efforts? Are you expecting its activity to increase?

Gryban: On paper, the Ukrainian ECA has also been engaged to supply war risk insurance in Ukraine. This is predominantly for SMEs who cannot get direct insurance from Miga or DFC because of the scale of their business or capital volume. This function is currently awaiting a second reading and vote in the Ukraine Parliament, and if passed, would extend the agency’s mandate and enable it to offer war risk insurance.

Ukraine’s ECA does not conduct traditional export credit business. Instead, it offers short and mid-term products, as well as providing additional collateral to Ukrainian companies – typically SMEs – seeking local bank loans.

GTR: Another key area of focus for Kyiv has been securing cover for the ships, trucks or trains importing goods into Ukraine. To what extent is insurance or reinsurance capacity constrained for the transport sector and can ECAs or international financial institutions address this shortfall?

Gryban: The EBRD is rolling out an initiative aimed at trade facilitation. As part of this, the bank has created a trust fund and is doing fundraising to issue war risk insurance for short-term trade operations, insuring vehicles and cargos, as well as life insurance for the drivers.

The European Commission has pledged €50mn, while the Swiss and Norwegian governments have also committed funding to the programme. The EBRD operated a similar structure in Africa involving Munich Re as the reinsurance company. For the Ukraine initiative, they are running a tender to decide who the operator will be – likely one of the big (re)insurance companies.

The Polish ECA Kuke’s reinsurance plan will also bring benefits to Ukrainian firms. Currently, it is possible for Ukrainian importers to secure transport and cargo insurance, but prices are skyrocketing and businesses are overpaying. If we can decrease the price of operational expenses, to some extent, this will be a great initiative. Anything that can bring costs down and increase their margins, which are very, very narrow at the moment, will be hugely beneficial.

Kuke is also set to issue political risk insurance even if there is no Polish content. The initiative was only recently announced and hasn’t been tested yet. Their government took this decision right before the elections in October, but their new ministry is quite progressive and we are hopeful the offering will be extended by the new administration.

GTR: The OECD Arrangement’s country risk classification has placed Ukraine in category seven, its highest risk grouping. What challenges does this pose to Ukrainian businesses seeking export credit support?

Gryban: Being in category seven increases the cost of financing dramatically. Before the war, companies could expect to pay a premium of roughly 1% per annum; this has since increased to roughly 2 to 3% per annum. The OECD risk category is a big issue for Ukrainian businesses, but that’s where different financing instruments can help. For example, ECAs or their wider governments can supply a grant which compensates Ukrainian companies for the high premiums.

GTR: How is trade through Ukraine’s Black Sea grain corridor progressing? Are you hopeful the private insurance market will restart cover for these flows in the coming weeks?

Gryban: Since its launch in August this year, over 50 ships have passed through the Black Sea humanitarian corridor, bringing over 2 million tons of agricultural products and other cargo to the world.

The Black Sea Grain insurance plan is on the verge of being finalised. Talks have been ongoing for the past few months and currently the Ukrainian government is in the process of selecting an official vendor for the initiative. This has been the missing component in the overall structure of the plan that would trigger the involvement of the Ukrainian banks, who will provide letters of credit enabling the whole system to work.

The vendor will act as a backstop for the scheme and provide first loss cover, reimbursing Lloyd’s of London insurers for losses they may incur. There are two questions: who is this vendor going to be, and what guarantee instruments can they provide to give comfort to the insurance companies?

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Shorto, who is deputy head of aerospace at UKEF, won the 17th iteration of the awards after impressing judges with her “exceptional dedication and significant achievements” since joining the agency.

The 29-year-old played an “instrumental” role in delivering a £2bn sustainability-linked export development guarantee (EDG) to British Airways during the Covid-19 pandemic. At the time it was the largest EDG approved by UKEF and was also the first to be sustainability-linked.

Shorto has also played a leading role in driving ESG initiatives at UKEF, particularly with the creation of a mechanism to monitor the environmental footprint of the agency’s substantial aircraft portfolio.

“It is interesting and rewarding to work with the UK’s aerospace industry and to be able to support its export financing requirements,” Shorto says. “I feel privileged to have had a front row seat for the developments in the sector over the past five years, and I look forward to continuing to collaborate with respect to the role UKEF can play in its future.”

“I am very grateful to BExA and GTR for this prestigious award recognising my contribution to the UK export market. Congratulations to all who were nominated as it truly is a team effort to support UK exports today and in the future.”

Geoffrey de Mowbray, vice-president of BExA (the British Exporters Association) and himself the recipient of the BExA-GTR Young Exporter of the Year Award in 2013, says Shorto “embodies the key traits of a dynamic export financier: resourcefulness, unwavering dedication and a genuine passion for her field”.

“Personally, it’s a moment of immense pride, especially considering it has been a decade since I was honoured with this award myself.”

De Mowbray points out that the ECA put forward several outstanding candidates to the judging panel, which includes representatives from BExA, which advocates on behalf of British exporters, and GTR.

As winner, Shorto receives a £1,000 cash prize and a one-year subscription to GTR.

The BExA-GTR award is open to individuals under 35 years old who work in the export or export finance department of a UK-registered trading or manufacturing company, as an “export enabler” in a financial institution, or in a role supporting UK export activities. The winner is chosen based on their contribution to securing significant orders or enhancing export competitiveness through innovative business processes.

Image – from left to right: Pete Gubbins (GTR CEO), Jordan Shorto (winner, Young Export Financier of the Year/UKEF), Carl Hunter (BExA chair/Ultrasonics), Deborah Bass (BExA vice-president/Crédit Agricole CIB).

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Founded in 2019 by banking veterans Sandra Nolasco and Carmen Marín, Twinco engages with large corporations, mostly in the retail and apparel sectors, and offers funding to their suppliers worldwide, advancing up to 60% of the purchase order value upfront and paying the remainder upon delivery.

The company will use the funds from BBVA Spark, the Spanish bank’s business unit for high-growth companies, to expand its lending activities.

“This facility will support the company’s portfolio growth, expanding both the number of customers and geographies,” says Nolasco, Twinco’s CEO.

To date, Twinco has provided over US$250mn in finance to more than 150 suppliers in 13 different countries, including Bangladesh, China, Indonesia, Pakistan, South Korea, Spain, Thailand, Turkey and Vietnam.

“We are very pleased to support Sandra and Carmen, two entrepreneurs who have reinvented, with Twinco, the way supply chains are financed on a global scale by incorporating innovative environmental and social criteria into their supplier financing model,” says Roberto Albaladejo, head of BBVA Spark.

To enable it to provide financing at the purchase order stage – rather than against invoices as is generally the case in supply chain finance programmes – Twinco has developed its own risk model that uses machine learning to analyse suppliers’ commercial performance and ESG data in addition to the more traditional financial metrics used in credit decisioning. As a result, it says that it is well-positioned to provide its customers not only with funding but also with data-based insights that can help SMEs produce products responsibly.

“The value added Twinco is providing to customers stems from the combination of its unique funding solution with business intelligence that provides a holistic overview of supply chain risk,” says Marín, Twinco’s COO. “Technology and machine learning provide invaluable data insights on commercial, financial and ESG suppliers’ performance, giving our customers a state-of-the-art supply chain risk management tool.”

This is the latest successful fundraising round for the company. In January this year, it raised US$12mn in an equity and debt round, with investors including Quona Capital, Working Capital Fund, Mundi Ventures and Finch Capital.

With this latest cash injection, Twinco says BBVA Spark now becomes one of its “key financial partners”, joining EBN Banco de Negocios and Zubi Capital.

The post Twinco lands bumper debt facility to expand sustainable supply chain finance appeared first on Global Trade Review (GTR).

In a policy scheduled to take effect from November 1, applicants for export credit support from the energy, transport and heavy industry sectors will be graded based on the alignment of their transactions to the Paris Agreement target of keeping global warming under 1.5 degrees Celsius.

Export credit guarantees, investment guarantees and untied loans will be cheaper for transactions that support the 1.5 degrees goal. The down payment on local costs will also be waived, government coverage will be boosted from 95% to 98%, and German content will only need to form 30% of the overall transaction.

Additionally, a surcharge on local currencies will be removed, meaning the premium paid will remain the same regardless of the currency used.

Current pricing and terms will apply to transactions classified as compliant with the global warming limitation target. Those that are not aligned will be refused cover.

Overall, the policy aims to make German export credit cover with developed countries climate-neutral by 2045 and with developing countries by 2050. Euler Hermes administers the export credit policy, overseen by Berlin’s climate and economy ministry.

An analysis of German export credit guarantees issued between January 2022 and June 2023 found that around 80% of the cover volume would have fallen under the purview of the new policy. Among these covered transactions, 80% were classified as Paris-aligned but not green, while just 4% would have been ineligible according to the policy criteria.

Transactions not in the three sectors and with a value of more than €15mn will be assessed according to the climate impact assessments of the EU’s taxonomy and the World Bank’s guidelines.

Along with several other key providers of state-backed export finance and insurance, Germany is a signatory to the 2021 Glasgow statement, in which it agreed to end all government financial support for unabated fossil fuels by the end of 2022.

But the country has been heavily criticised for missing that target and for its delayed publication of a pathway to end export credit support for fossil fuels.

Germany was the second-largest provider of export credits to fossil fuel projects between 2015 and 2020, extending €6.45bn of support to the sector, data published by the Export Finance for Future (E3F) coalition of export credit agencies (ECAs) last year showed.

But the country’s provision of €4.3bn in support to the renewable energy sector was also the second-largest of the E3F coalition during those five years, according to the same data.

Alongside the net-zero policy, Germany is also introducing untied financial loans for projects that “contribute to the supply of German industry with energy from sustainable energy sources” through long-term contracts, such as sourcing material for manufacturing batteries.

Such united loans were previously only available for raw material supply.

The Association of German Chambers of Commerce and Industry, which lobbies on behalf of exporters, welcomed the government’s latest policy and described it as “important support”, particularly for smaller companies.

“We understand that the instruments will have to be adapted over time to geopolitical circumstances and, of course, to the socio-ecological transformation,” says the association’s head of foreign trade Volker Treier. “In the end, of course, it is not the guidelines on paper that are relevant for companies, but the implementation.”

“With all the changes, it is important that Germany does not go it alone, but coordinates internationally through the OECD in order to maintain a level playing field,” he says.

Earlier this year the participants in the OECD Arrangement on export credits, which sets minimum standards for most developed countries, agreed to extend payment terms and allow greater flexibility in structuring export credit support for green projects.

Many individual ECAs have also launched products designed to stimulate climate-friendly exporters, such as Sweden’s EKN, UK Export Finance and Export Development Canada.

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Dutch development bank FMO is providing US$11mn, the Dutch infrastructure development fund Building Prospects and the Dutch Fund for Climate and Development (DFCD) are lending US$7.5mn each and French development bank Proparco is tipping in US$5mn.

Transoil specialises in grain handling, storage and processing. The commodities will be stored at Reni in Ukraine or in Moldova before being exported, typically through international commodity traders, according to the DFCD.

Transoil’s “well integrated distribution and export network in Moldova, as well as two grain terminals in the Reni port [in] Ukraine, enable increased business volumes from Ukraine”, the DFCD says. “The transaction will contribute to global food security, financing the origination from Ukraine and thereafter exporting to international markets”.

Prior to Russia’s invasion last year, Ukraine was a major exporter of several key agricultural commodities. Since the war, exports by sea have been severely curtailed by a Russian naval blockade of Ukraine’s Black Sea ports, and as a result international attention has turned to new export routes via Moldova and Romania.

The FMO says the deal will bring comfort to Transoil’s existing and potential lenders, at a time when most commercial financiers have sharply reduced their exposure to the region.

A Transoil representative did not respond to questions about the facility.

FMO is a long-standing lender to Transoil, having first partnered with the firm in 2011. Last year it took part in an ING-led US$117mn pre-export facility also partly aimed at facilitating Ukrainian commodity exports.

It is also a participant in Transoil’s US$200mn borrowing base facility signed in July.

The post Development banks finance Transoil’s Ukraine commodities appeared first on Global Trade Review (GTR).

Under the partnership agreement, Accelerated Payments will leverage Funding Friends’ referral network to roll out its invoice finance services to small and medium-sized enterprises (SMEs) and mid-cap companies in the UK, with funding lines ranging from €0.5mn-€10mn on a non-recourse basis.

“The partnership with Funding Friends highlights the broadening of our referral partner network, now working with brokers, banks, and financial and debt advisory firms with a clear focus on fostering an ecosystem where UK businesses can grow internationally – offering flexible working capital solutions that can be tailored to suit their needs,” says Lee Baty, Accelerated Payments’ head of UK.

“We are excited about this partnership as both firms have a solid approach to helping businesses grow globally,” adds Damian McGann, executive chair at Funding Friends.

Since its launch in 2017, Accelerated Payments has provided €1.5bn in financing for over 120,000 invoices, covering 450 clients and 1,800 debtors across 45 countries.

In April this year, it set up an inventory finance arm aimed at providing financing for SMEs to purchase goods from international suppliers, with a particular focus on companies operating in the US, UK, Ireland and Canada as well as the Americas trade corridor.

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Maritime analytics firm Windward says the number of such vessels calling at EU ports dropped by around a quarter in Q3 of 2023 compared to Q2, but says this decline is “not as high as expected given the many restrictions imposed”. 

The EU’s 11th package of sanctions against Russia, adopted in June this year, requires member state ports to deny access to vessels that have loaded crude oil or petroleum from another tanker on the high seas, or that have manipulated location transmission signals. 

The reforms followed warnings from several authorities that ship-to-ship transfers were being widely used to circumvent sanctions on Russian oil, but according to Tel Aviv-headquartered Windward, the practice has not completely stopped. 

“This is exactly the issue the 11th package (released relatively recently) is meant to solve, with a greater focus on such illicit ship-to-ship operations,” its Q3 risk report says. 

Ship-to-ship transfers are common and only rarely indicative of sanctions evasion, Windward says. It estimates that of more than 50,000 tanker-to-tanker meetings in Q3, just 1.6% were flagged as illicit activity. 

But changes in the locations of ship-to-ship transfers suggest a greater risk of Russian involvement, notes Byron McKinney, product management director for trade finance and compliance solutions at S&P Global Market Intelligence. 

He says vessels have “pretty much moved away from Q1 and Q2 hubs”, such as Gibraltar, and are now preferring the Baltic Sea and Black Sea. 

“Russian-owned firms are more likely now to be involved in this activity,” he tells GTR. 

At the same time, overall suspicious activity – including switching off or manipulating ships’ reported locations – has soared by 550% in the Baltic Sea in Q3, Windward’s report adds. 

The company also reports a 27% jump in so-called dark activity following a port call in Russia. 

The EU’s 11th sanctions package also banned the transit of cargo through Russian territorial waters, yet Windward’s data shows a slight increase in both transits and port calls for vessels leaving member state ports. 

It describes this finding as “an indication that the 11th package has not yet made the impact regulators were hoping for”. 

Outside Europe, the report finds that Egypt’s waters have emerged as a “new hub” for location signal manipulation by vessels, and that a previous hotspot for dark activity close to the Maldives has shifted towards India and Pakistan. 

Two of three ports most commonly visited after signal manipulation are in the UAE, along with Iraq’s Khor Al Zubair, it says. 

The report adds that China has now surpassed the UAE as the top destination for Russia’s shadow fleet of vessels, used to transport goods without the involvement of western companies. Q3 also saw a 33% rise in these ships calling at ports in Singapore. 

And Windward says Q3 “marked a new all-time high” of Russian oil exports to Latin America. 

“This is interesting, as we identified this continuous increase coming from one specific country – Brazil,” it says. “Since the beginning of 2023, the number of direct voyages of Russian oil to Brazil has increased by 186%.” 

Although Brazil has not imposed sanctions on Russia, Windward says there appears to be an upsurge in ship-to-ship transfers from a vessel leaving Russia to a vessel heading to Latin America. 

“Latam has seen a spike in such voyages in Q3, with an increase of 350%,” it says. 

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Last week, the Netherlands announced a €102mn package for Ukraine, which included fresh export credit support and funding to help Kyiv purchase gas and build up reserves ahead of the coming winter.

In total, the deal allocates an additional €60mn in export credits for Ukraine’s reconstruction and will encourage Dutch companies to contribute to projects by covering investment and transaction payment risks.

Support will be provided through the Dutch ECA, Atradius DSB, and doubles the agency’s coverage in Ukraine.

“The country has enormous investments needs in the area of infrastructure, transport, bridges, energy, housing, agriculture, [and] food security,” says Niek van der Beek, deputy head of SMEs and business development at the ECA.

“Our current perception is that private insurance capacity is fairly limited at the moment,” he tells GTR.

Meanwhile, the Swedish government announced last month it would create a special guarantee for exports to Ukraine.

The Swedish agency, EKN, says the scheme is expected to have capacity of SEK333mn (US$30mn) and premiums “will not reflect risk, which is otherwise a requirement according to EKN’s regulation”.

An EKN spokesperson tells GTR that Sweden’s government is still ironing out the details, though the aim is for the guarantee, which could boost construction, infrastructure and transport exports, to be available next year.

If approved, the scheme promises to dramatically boost Sweden’s ECA support in the market. Since February 2022, EKN’s guarantee volumes for Ukraine have amounted to about SEK41mn (US$3.3mn).

Other ECAs are also getting in on the act, such as BpiFrance, which has committed to insure corporate and bank investments in Ukraine for war, credit and political risks and can cover up to 95% of losses.

In a statement, Yulia Svyrydenko, Ukraine’s economy minister, said the move comes on the back of “renewed interest” in Ukraine from France’s private sector. “This decision is a signal to French companies that they can enter the Ukrainian market more actively,” she added.

In late September, Poland’s government formalised an amendment to its law on state-guaranteed export insurance to allow its ECA, Kuke, to provide 100% coverage of investments made by Polish companies in Ukraine.

The developments come just a few months after Ukraine’s central bank lifted restrictions on domestic firms’ repayments on loans backed by foreign ECAs in a bid to attract funding for imports as well as efforts to rebuild the war-torn country.

According to World Bank estimates, Ukraine’s current reconstruction bill is US$350bn, over 1.5 times larger than its GDP in 2021.

In recent months, Kyiv has initiated conversations about how western companies, financiers and insurers can help rebuild Ukrainian roads, bridges and buildings – though private insurance remains limited.

Oleksandr Gryban, Ukraine’s deputy minister of economy, said in a March op-ed – published in Tech EU – that while aid is Ukraine’s main source of foreign capital, Kyiv is keen to create an environment where private investors want to “come, stay and work for the country long-term, rather than depend on financial infusions”.

He touted the need to de-risk private investments in Ukraine and highlighted the role of the World Bank’s Multilateral Investment Guarantee Agency (MIGA), as well as ECA guarantees, in achieving these aims.

MIGA – which provides political risk cover for investments in developing countries – launched its Ukraine Reconstruction and Economy Trust Fund (Sure TF) in February to boost its insurance capacity.

Japan has contributed US$23mn to the Sure fund and several other countries have pledged to donate, GTR understands, though for now the agency is still short of its overall funding target of US$300mn.

The road to Kyiv

There is also a growing push among public and private insurers to cover ships, trucks and trains ferrying goods to and from Ukraine.

In the Black Sea, the Ukrainian government has carved out a temporary corridor to allow commercial vessels to load and export grain from terminals in the region, namely Chornomorsk, Odesa and Pivdennyi.

In late September, London-headquartered broker Miller said it had helped set up a new marine insurance facility for Ukraine exports using the Black Sea passage, covering both the cargo and the ship.

To support its short-term export insurance business, Kuke CEO, Janusz Władyczak says the agency is also developing a reinsurance programme for Poland’s transport sector to deliver goods – by land, sea, air or rail – to importers in Ukraine.

“Since the beginning of the war… only the Ukrainian companies are able to transport the goods, because the private insurance market is not able to insure the transportation means and the cargo [of Polish companies],” he says.

Kuke is seeking to reinsure Polish insurance companies who in turn could provide a contractual clause to their transport clients covering them against losses stemming from war hazards, such as missile strikes.

The Polish agency needs approval from the European Commission for the new programme, which Władyczak hopes could be granted within the coming three to six months – though admits could take longer.

“As far as we know, Kuke is the first to broach this type of subject and so it presents a new type of situation for the Commission,” he says. “In the rebuilding of Ukraine, somebody needs to transport those goods, so there is a clear need to secure the transportation means and the goods themselves,” he adds.

Kuke briefly paused coverage for Ukraine between March and June 2022, but in the past 18 months has covered roughly PLN2bn (US$460mn) worth of exports to the country, insuring trade receivables and bank letters of credit (LCs).

Such support is roughly equivalent to the monthly levels of cover provided before the Ukraine crisis, Władyczak says, while noting the agency has experienced practically zero losses.

Food accounted for 20% of Kuke’s portfolio vis-à-vis Ukraine, plastics around 15%, chemical and construction 10% and metals 6%. Companies from the fuel, pharmaceutical, automotive and clothing sectors also hold a significant share.

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Instead, the IoD, a London-based association of company leaders, is calling for a “chained-volume target of £900bn of exports in 2019 prices by 2030” and “15% of all businesses exporting either goods or services by 2030”, equivalent to an additional 90,000 firms.

In a policy paper released earlier this week, the IoD says that because of inflation and other global economic trends, a more appropriate target would be linked to trade volume.

Data from the Office for National Statistics shows the total value of exports in goods and services in 2022 was £815bn in current prices, up from £700bn in 2019. The IoD contends that the target of £1tn in exports at current prices will be “met naturally” by 2030 due to expected inflation.

“In other words, the government has picked a target that can be met as prices alter even if the number of actual items being exported stays the same,” it says.

Emma Rowland, policy advisor at the IoD, says the organisation would like to see “a volume-based target and also a second target to increase the proportion of companies that export”.

This is achieved using the chained-volume measure, which “removes the effect of inflation by capturing the volume rather than the value of goods exported, and then expressing that in 2019 prices”.

Using this method, the IoD suggests that the value of exports in goods and services for 2022 is £691bn, not £815bn.

The £900bn target by 2030 is reached by applying yearly increases of 3.2%, which is the average growth rate of export volumes between 1997 and 2019, resulting in a target of £890bn at 2019 prices.

“Stretching this to £900bn by 2030 would therefore feel like a reasonable target,” it says.

Rowland adds that more focus is needed on individual regions and nations in the UK, with trade data revealing “considerable discrepancies in exporting output across the country”, particularly between London and the South East and the rest of the country. The pressures posed by Brexit and the pandemic have led to around one in 10 businesses ceasing to engage in exports, she says.

A Department of Business and Trade spokesperson tells GTR in a written statement: “We want to see more businesses exporting, which is why we set the ambitious £1tn milestone, and we’re delighted that UK exports hit £849bn in the 12 months to the end of July 2023. 2022 was also a record year for our world-class services exports, hitting over £400bn for the first time.”

They add that the UK government is also “resolving trade barriers, signing new trade deals and providing a network of advice” via its export support service and funding through UK Export Finance.

The UK’s post-Brexit approach to trade has been closely scrutinised, with some claiming the country lacks an ambitious strategy.

The number of exporting businesses declined in the year after the UK left the EU, according to data from Coriolis Technologies and the Institute of Export and International Trade.

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In recent days, a second wave of cargo ships has reached Ukraine’s Black Sea ports, having sailed via a passage established by Ukraine’s navy following the collapse of a UN-brokered deal with Russia in July.

Oleksandr Kubrakov, Ukraine’s minister for communities, territories and infrastructure development, wrote on the social media platform X that the trio of bulk carriers, Azara, Ying Hao 01 and Eneida, would export 127,000 tonnes of agriproducts and iron ore to buyers in China, Egypt and Spain.

The arrival of the ships follows the successful loading and departure of two other vessels at the port of Chornomorsk last week, which collectively loaded a total of 20,000 tonnes of Ukrainian wheat destined for Egypt and Asia.

The development highlights an evolution in Kyiv’s Black Sea corridor, which hugs the coasts of Ukraine, Romania and Bulgaria and was initially established in August to facilitate the safe departure of vessels that had been trapped in Ukrainian ports – namely Chornomorsk, Odesa and Pivdennyi – since early 2022.

But significant dangers remain for ships looking to traverse the Black Sea enroute to Ukraine. And, according to analysts, Ukraine’s export volumes under the initiative will likely be constrained in the months ahead.

“In no way is this the same type of activity, in terms of volume and frequency,” says Frédéric Denèfle, president of the International Union of Marine Insurance (IUMI), in reference to the previous Black Sea grain agreement. “Very few shipowners are prepared to use the corridor,” he adds.

Insurance remains a key sticking point for shippers who are currently unable to secure war cover for Black Sea voyages, he tells GTR, while finding crews willing to sail into a battle zone is another major challenge.

While Russia is unlikely to risk a diplomatic incident by firing upon a cargo ship, Denèfle says, he notes that accidents are possible, and that there are sizeable commercial risks involved given Moscow’s push to destroy Ukrainian Black Sea infrastructure.

“If local structures are not able to deliver as agreed according to your contractual plan… then you have a problem. Your vessel could be stuck outside the port for days, or weeks, with the fear of being bombed.”

On September 25, Russia launched yet another assault on Odesa, firing drones and missiles at the Black Sea port, reportedly causing significant damage to granaries and the port itself.

There are hopes, however, that Ukraine and Russia could reboot their Black Sea grain deal by the end of the year.

Under the previous agreement, more than 1,000 ships loaded with grain and other foodstuffs left Ukraine’s ports over a 12-month period, averaging about 20 vessels a week. As of July 2023, almost 33 million tonnes of grain and foodstuffs had been exported via the Black Sea Grain Initiative, according to the EU .

Tan Albayrak, an associate at law firm Reed Smith, says he anticipates a new pact between Russia and Ukraine will be reached in the “coming months”.

“The fact of the matter is, neither Russia nor the West is happy with the current situation,” with Ukraine currently unable to ramp up wheat exports and Russia cut out of the global financial system, he tells GTR.

“It would not be surprising if UN proposals met at least some of Russia’s demands, such as providing the Russian Agricultural Bank with Swift access,” Albayrak says.

When Moscow pulled out of the Black Sea arrangement in July, Russia’s foreign ministry said it would only consider restoring the deal if western governments exempted the country’s fertilisers and food from sanctions, arguing that such exports were still being hampered by payments, insurance and logistics issues.

Ukrainian grain has also sparked political tension in the EU, with Ukraine having ramped up food exports over land – through five main Eastern Europe markets – due to plunging Black Sea exports.

Earlier this month, Kyiv filed a complaint at the World Trade Organization against Hungary, Poland and Slovakia after they banned Ukrainian grain and other food imports amid fears low prices would undercut their farmers. Slovakia and Ukraine have since found a resolution and agreed a licensing system for trading grain.

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