In the recent report by Reuters, published on Nasdaq, as a strategic move indicative of its resilience and growth-oriented mindset, Palmali, spearheaded by its Azeri-born founder, has announced an expansion in the Black Sea region. This includes the acquisition of 10 new cargo carriers and the initiation of trading operations in Ukraine, starting next year.
The decision comes amidst heightened tensions in the region. Following Russia’s withdrawal from a UN-brokered deal ensuring the safe transport of Ukrainian agricultural products, there has been an increase in attacks on Ukrainian ports, essential for the country’s exports. Despite these challenges, Palmali is determined to strengthen its maritime operations.
“We signed an exclusivity agreement with top sunflower and grains trader Potoky for 2024, meaning extra volume. Palmali aims to ship 90% of Ukraine’s sunflower oil exports from the Danube. And after attacks, we could see fewer ships calling at Ukraine’s ports,” Mansimov stated, highlighting the company’s strategic plans and potential challenges.
Despite the ongoing conflict, Ukraine has managed to maintain its leading role in the global sunflower oil market. The U.S. Department of Agriculture predicts Ukraine will export 5.6 million metric tons of sunflower oil in the 2023/24 season, representing about 40% of the global trade.
Palmali’s operations are diverse, encompassing the shipment of sunflower oil and grain primarily from Ukraine, as well as coal and grain from Russia. The company also plays a critical role in delivering diesel fuel to Ukrainian power plants. Mansimov elaborated on the challenges faced, “The risk of mines is ever present, and war-risk insurance makes shipping costly, though without the long inspection times imposed by a UN-brokered corridor.”
In terms of risk management and transparency, Palmali distinguishes itself. “We operate our ships transparently. Other operators turn their transponders off, we don’t. We notify the Russian side of our passage. Palmali shares both Russia’s and Ukraine’s shipping risks. It is an indispensable partner to both countries,” Mansimov explained, emphasizing the company’s commitment to ethical practices and risk sharing.
Sunflower oil is a significant part of Palmali’s shipments from Ukraine, with Mansimov noting, “We now ship about 65 to 75% of Ukraine’s sunflower oil exports through the Danube, with minimum monthly loading at 100,000 tons,” estimating Ukraine’s Danube exports at 160,000 to 170,000 tons per month.
Looking ahead, Palmali plans to start trading operations in January, catering mainly to European and Asian customers. The company is responsible for about three-quarters of Turkey’s sunflower oil imports, and much of the Russian coal and grain it transports also goes to Turkey.
Palmali operates about 30 ships, mostly chemical tankers between 6,000 and 20,000 tons, and plans to order 10 more early next year. The 15,000-ton mixed cargo carriers will be able to carry both wet and dry cargo. “That way we will be able to deliver Ukrainian oil directly to Asia and ship palm oil back to Turkey or Ukraine on the way back,” Mansimov said, outlining the company’s strategic vision.
Mansimov added that Palmali has ceased shipping crude oil and now focuses solely on non-sanctioned goods, aligning with international regulations and ethical business practices. As Palmali embarks on this new phase, it continues to navigate the complexities of maritime trade in the Black Sea with expertise and a forward-looking strategy.
Source: Reuters
