How Ukraine broke Russia’s grip in the Black Sea

Maritime trade underpins Ukraine’s economy and the increase in seaborne exports via a newly established Black Sea corridor is giving Kyiv a badly needed financial boost and supporting its war effort.

“In September, we were in single digit ships transiting the port of Odesa and surrounding areas,” says Arsenio Dominguez, secretary-general of the International Maritime Organisation. “In December and January, it went up to the levels of over 200 ships arriving and the same number departing each month. That’s where it’s being maintained.”

The war with Russia is primarily land-based and it has not been going in Ukraine’s favour. Moscow’s forces are slowly pressing forward and the Russian air force has begun to exploit Kyiv’s shortage of air defences. Ukraine is in dire need of more men and the country faces a race against time to deploy the $60bn in US military aid passed in April.

But Ukraine’s Black Sea success is of strategic and economic importance.

Anti-ship missiles and sea drone attacks have had an outsized impact on Vladimir Putin’s fleet. Their combined threat has forced much of Russia’s navy to newly fortified ports on the eastern edge of the Black Sea, far from Ukraine’s coast, and shown that Kyiv can still operate aggressively.

“The Ukrainians have spooked the Russians in the Black Sea,” says Daniel Fiott, assistant professor at the Centre for Security, Diplomacy and Strategy at Brussels School of Governance, with Moscow’s navy pinned back to what he calls their “more secure maritime bastion”.

“That has really dented Russia’s ability to plan, coordinate and control transport routes [in the Black Sea]. I think that’s also one of the reasons why you have seen this uptick as well in grain deliveries.”

Concerns for their own cargo vessels may also have deterred Russian missile attacks on Ukrainian commercial shipping.

Both Russia and Ukraine have a vested interest in “having a Black Sea region that is safe for the traders to move shipments [of grain] in and out”, says Arnaud Petit, executive director of the International Grains Council, a London-based trade body, adding that grain exports provide “vital income” for Ukraine. “The Ukrainians have also shown that they could hurt the Russian shipping industry with these drones on the sea,” Petit adds. “I think each of them has understood that if there is trouble both of them will suffer.”

The loss of naval assets does not make up for Russia’s advances on the battlefield, says Samuel Bendett, Russia analyst at CNA, a US think-tank. But the fact that a section of the Black Sea is now clear is “a huge win for Ukraine”.

“Russia has one of the largest and supposedly more capable navies in the world. Yet it’s been pushed around by essentially commercial boats that are a fraction of the technological sophistication of a typical Russian naval vessel.”

Sea drones, first launched in October 2022 when two Russian warships were hit in the port of Sevastopol, have been key to denying Moscow control of the Black Sea.

The drones, or unmanned surface vessels (USVs), are fairly simple by modern warfare standards: small and uncrewed, they are filled with explosives and steered towards targets by controllers who watch live feeds via satellites.

Often attacking from multiple directions, the drones strike in “packs” to mitigate losses and increase damage: if one drone is able to blow a hole in a target, another can be steered towards the impact point.

Cruise missiles have also played a part. In April 2022, Ukraine’s Neptune anti-ship missiles sank the 186m long Moskva missile cruiser, Russia’s $750mn flagship in the Black Sea. Last month the Kommuna rescue ship was also damaged by Neptunes. Franco-British Storm Shadow and Scalp missiles have also been used in attacks.

In total, 27 of the 80 warships Russia had in the Black Sea before the invasion have been damaged or destroyed, according to Ukraine’s navy, including large landing ships, missile boats, a submarine and a patrol vessel. About 15 vessels remain out of action and are undergoing repairs.

Despite their simplicity, Ukraine’s sea drones tell a broader story about how innovation occurs within warfare, according to Fiott.

“In the west, the concept we’ve got used to is that innovation is something that happens in labs and then you bring it to the military dimension. Whereas I think the Ukrainians have really got us back to a much more traditional understanding of what innovation means.”

This is epitomised by the Magura V5, developed by Ukraine’s military intelligence directorate (GUR). Named after a Slavic goddess of war, the 5.5m long drone with a range of 800km emits little heat, Ukraine’s military intelligence agency told the BBC, making it difficult for thermal cameras to detect. It can carry 320kg of explosives and travels at 80km an hour.

In February, Russia’s 56m long, $70mn Ivanovets missile boat, intended for engaging combatant ships in the open sea, was destroyed after three direct hits by Magura drones. Six were involved in the sinking of the $60mn-$70mn Sergey Kotov patrol ship in March.

Ukraine also has the Sea Baby drone, developed by its domestic intelligence agency, the SBU. It has been used in several attacks in the Black Sea. The latest version can be used as a kamikaze drone, capable of carrying a payload of up to 1 tonne over 1,000km.

“It’s technology applied to winning wars,” says Fiott. “And if you see what the Ukrainians are doing in the naval dimension, I think that’s a really powerful example of this.”

“But I think the bigger problem for the Russians is that they haven’t yet found an effective way of deterring the method of which Ukraine attacks,” he says. “So there would be no point in Moscow putting more of a fleet in the Black Sea, because the likelihood is that they’ll be struck again.”

According to Bendett, Ukraine’s achievements have also been based on its flexibility. Upstarts can move a lot quicker than established navies, he says, which have to deal with a lot of bureaucracy. “Meanwhile, Ukraine is already on its sixth or seventh generation USV.”

All of this has been enabled by commercial technology that can now be assembled into a military system, says Bendett, citing Ukraine’s use of Starlink satellites to steer the drones.

“That’s completely unprecedented. Because 20 years ago, if we talked about war, we talked about military grade systems only. And now we have commercial systems which are not only enablers, but key components to conducting very advanced operations which, before this war, were in the purview of the military only.”

Shared risk

Russia’s retrenchment in the Black Sea is only one factor in the recent surge in seaborne trade. Another is the pioneering insurance deal that has given fresh confidence to the shipping sector.

The deal signed in November saw global insurers agree to provide affordable cover to ships carrying grain and other critical food supplies from Ukraine’s Black Sea ports.

The contract was updated in March to cover ships carrying all non-military cargo, such as iron ore, steel and containerised shipping. Marcus Baker, global head of marine, cargo and logistics at Marsh McLennan, says the deal has been of “enormous benefit” to Ukraine.

“If you wanted to take your ship up to Odesa to pick up cargo, it would have cost you about 4 per cent of the value of the ship. That’s quite significant when you’re looking at cargo values at around $10mn-$15mn. And that increased cost obviously goes on the cost of the cargo.”

“Now the rates are probably around net to the client of between 0.4 and 0.75 per cent, depending on the type of ship”, says Baker. “So you’ve gone from a 4 per cent rate to about a 0.4 per cent rate.”

The risk is shared between insurers and Kyiv, with the state bearing the first portion of any claims up to an undisclosed level.

“I don’t want to make insurance sound like it is some kind of saviour for Ukraine,” adds Baker. “But I don’t think it’s ever been done before where a country that is actually at war is taking the decision to invest in what is effectively an insurance facility.”

Ukraine’s new export corridor has allayed concerns that the collapse of the grain deal would endanger global food security. Ukraine is the world’s largest supplier of sunflower oil, while its grain exports account for a significant portion of the global market. “Prior to the outbreak of the full-scale war, Ukraine accounted for over 15 per cent of global corn exports, 10 per cent of wheat, 15-20 per cent of barley and over 50 per cent of sunflower oil,” according to Ukraine’s foreign ministry.

In 2021 Ukraine’s agricultural exports totalled $27.8bn, more than 40 per cent of the country’s overall export revenue. 90 per cent of these agricultural products were exported through ports on the Black Sea.

But Russia still poses a threat to seaborne traffic. In November a missile damaged a cargo ship entering the port of Odesa, killing a harbour pilot and injuring three of the crew. In April Russia struck two food export terminals in Yuzhny’s Pivdennyi port, destroying agricultural products destined for Asian and African countries.

It was the 39th Russian strike on the Odesa region’s port infrastructure since the war began. Russia’s targeting is an “attempt to disrupt Ukraine’s food exports to the global market”, Ukraine’s president Volodymyr Zelenskyy said. Russia also has submarines in the Black Sea, which can operate beyond the reach of drone and missile attacks.

Despite this turbulent environment, Ukraine’s newly established trade corridor has allowed the country to ship over 40mn tonnes of goods in little more than six months — more than the amount transported during the entire year the Black Sea Grain Initiative was in operation.

Baker believes Ukraine’s naval success has played a part. “If it was still a really hot spot, people wouldn’t be going out there,” he says. “We’ve seen how crews have reacted to trading through the Red Sea. They basically said, ‘no thanks, drop me off in Egypt’. And that’s not happened in Odesa and Chernomorsk and Yuzhny.”

“I think what the Ukrainians have been able to do in terms of damage to the Russian fleet and the lessening of attacks on port infrastructure — I mean, it still happens, but there’s much less of it — has given a huge amount of confidence to the shipping community.”

It has also given belief to western partners seeking evidence that Ukraine can still win the war. “Ukraine is demonstrating that . . . even when it’s got issues at home, with a lack of military systems, a lack of western support, it can still do things on its own, which are not only placing it ahead of the entire world, when it comes to the development and use of these technologies, but actually impacting Russia,” says Bendett.