After a sales slump of 10.4 per cent in 2022 – when the overall economy collapsed by almost a third as war caused havoc – revenue rebounded by almost the same amount last year as domestic consumption recovered.

Now Metro faces a new test, as protests by Polish farmers blockading the borders with Ukraine disrupt supplies coming in – one of several challenges foreign and domestic firms face as they navigate doing business in a country at war.

“The war has taught us to respond flexibly,” Olena Vdowychenko, head of the supermarket giant’s Ukraine business, told Reuters.

According to Vdowychenko, around 18 of her company’s trucks have been stuck each week at the Polish border in recent months, sometimes for three to four days. “This is a big problem for Ukrainian businesses,” she said, explaining it was pushing up costs everywhere.

Capital controls restricting the movement of profits out of the country, difficulties in getting insurance and wavering U.S. financial and military support have been issues for corporate Ukraine for months, if not longer.

To make matters worse, border disruptions in 2023 by Polish truckers have been replaced by similar actions by farmers upset at cheap Ukrainian grain taking their market share.

Russia’s military also has the upper hand in the battlefield in the east and south, putting key mining operations out of action or at risk, and a new mobilization bill aimed at recruiting up to 500,000 more Ukrainians threatens staff levels.

Point of no return?

Some smaller companies say an accumulation of problems has brought operations in Ukraine to the brink of collapse.

The owner of one UK-based clothing manufacturer, who did not want to be named because of commercial sensitivities, said the business had been impacted by border protests, customer confidence and insurance issues to the point where operations in Ukraine were at risk.

“Now we are at the point where we don’t think we can continue,” said the owner, adding that the company had been active in Ukraine for 25 years. “We are still trying though.”

Others, mainly larger firms and foreign operators, are not sounding the alarm bells yet, although some have relocated away from the frontlines and there are major Ukrainian corporations who have defaulted on debt.

A recent American Chamber of Commerce in Ukraine study estimated that only two per cent of firms had closed and another 10 per cent had been severely affected since 2022, based on a survey of 125 members who are mostly larger multinationals and bigger Ukrainian companies.

“Multinationals are not leaving,” said Alfonso Garcia Mora, a regional vice president at the International Finance Corporation, which is part of the World Bank group, whose recent surveys tell a similar story. “They have really held in there as much as they can.”

He added that one reason was that some firms, especially the big agricultural companies, simply couldn’t do what they do outside of Ukraine.

The risk of missile strikes and collateral damage means firms and organizations need special war risk insurance although barely any have been able to secure it.

The clothes manufacturer said it had been unable to insure goods during transport, while Leverkusen-based Bayer, which is building a 60 million euros ($65 million) corn seed facility near Kyiv, is only finding cover now.

“We have a number of offers for war insurance and are looking at which one we take,” said Oliver Gierlichs, the company’s Managing Director of Ukraine, adding that it would be costly however.

Some development bankers grumble that there is no sign of a global or Europe-wide insurance backstop, although some governments are starting to step up.

Philipp Grushko a board member at the large TIS port near Odessa expects “small and brave” exporters to restart container shipping in the next few months, while private equity fund Horizon Capital says it is even starting to look at possible stock market floats for some of its firms next year.

“It is less of a crazy thought these days,” Horizon’s Vasile Tofan said.

Shifting front lines

Yuriy Ryzhenkov, chief executive of Ukrainian metals giant Metinvest, is watching the shifting frontlines carefully.

Russia’s seizure of Avdiivka in mid-February meant the loss of control over his company’s coke plant there, nearly two years after Metinvest’s sprawling Azovstal iron and steel works in Mariupol fell to Moscow’s forces after being badly damaged.

Battles are now raging within 40 km (25 miles) of two other big operations – Pokrovsk, where it runs Ukraine’s largest coal mine, and Zaporizhzhia to the south where its biggest steel plant is located.

Ukraine’s iron and steel sector employed some 600,000 people and contributed around 10 per cent of Ukraine’s GDP before the war. It still represents a huge share of the economy and contributes large amounts of tax.

But Ryzhenkov and others are also worried about the government’s plans to mobilize up to 500,000 more people to replenish an exhausted and stretched army.

“We are hiring people, we are training them and then they are getting drafted before they even start working,” Ryzhenkov said, estimating that Metinvest was already 9,000-10,000 under-staffed.

“That is a big problem we are trying to convey to both the military guys and the politicians in Ukraine. Hopefully they will be able to find a way around it because otherwise the economy will not be able to function.”

–Edited Feb. 29, Corrects paragraph 15 to clarify IFC official’s view that capital controls drive firms to reinvest profits

–Additional reporting for Reuters by Helen Reid in London and Michael Kahn in Prague.

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At least initially, the corridor would apply to vessels such as container ships that have been stuck in Ukrainian ports since the February 2022 invasion, and were not covered by the deal that opened the ports for grain shipments last year.

But it could be a major test of Ukraine’s ability to reopen sea lanes at a time when Russia is trying to reimpose its de-facto blockade, having abandoned the grain deal last month. Shipping and insurance sources expressed concerns about safety.

In a statement, the Ukrainian navy said the routes had already been proposed by Ukraine directly to the International Maritime Organization (IMO).

The routes would “primarily be used for civilian ships which have been in the Ukrainian ports of Chornomorsk, Odesa, and Pivdenny since the beginning of the full-scale invasion by Russia on February 24, 2022.”

“Vessels whose owners/captains officially confirm that they are ready to sail in the current conditions will be allowed to pass through the routes,” the statement said, adding that risks remained from mines and the military threat from Russia.

Oleh Chalyk, a spokesperson for Ukraine’s navy, told Reuters: “The corridor will be very transparent, we will put cameras on the ships and there will be a broadcast to show that this is purely a humanitarian mission and has no military purpose.”

There was no immediate response to requests for comment from Moscow.

Deputy U.N. spokesperson Farhan Haq said: “Safe navigation for merchant shipping was one of the benefits of the Black Sea Initiative, which we hope can resume.

“The obligations of international humanitarian law on land and sea must be upheld.”

Shipping and insurance sources familiar with Ukraine said they were not informed about the new corridor and there were questions over its viability. It was unlikely most ships would agree to sail at the moment, they said.

“Insurers and their backing banks will have to agree and they may say we do not like the risks,” one insurance source said.

“The possibility of multiple seafarer deaths (in the event of a ship being hit) has not been addressed, so this is another major question,” a shipping industry source said.

Stuck in ports

Around 60 commercial ships have been stuck in the Ukrainian ports since Russia’s invasion, their fates unresolved by the deal that allowed grain exports to resume in July last year.

Many of the ships’ crews have been evacuated, leaving locally hired Ukrainian staff to help look after the vessels.

Since abandoning the grain deal, Russia has said it will treat any ships approaching Ukrainian ports as potential military vessels, and their flag countries as combatants on the Ukrainian side. Kyiv has responded with a similar threat to ships approaching Russian or Russian-held Ukrainian ports.

The United Nations has said Russia’s decision to quit the deal risks worsening a global food crisis, hurting poor countries the worst, by keeping grain from one of the world’s biggest exporters off the market.

Moscow says it will return to the grain deal only if it receives better terms for its own exports of food and fertilizer. Turkish President Tayyip Erdogan, co-sponsor of the grain deal alongside the U.N., says he hopes to persuade Russian President Vladimir Putin to rejoin it at talks this month.

“I think it will not be an exaggeration to say that President Erdogan is probably the only man in the world who can convince President Putin to return to the Black Sea Grain Initiative,” Ukrainian Foreign Minister Dmitro Kuleba told Reuters in an interview Thursday.

A German grain trader told Reuters: “People want more details about the Ukrainian temporary shipping channel announced today as it cannot work unless Russia gives a concrete commitment not to attack the ships.”

— Olena Harmash is Reuters’ Ukraine economics and finance correspondent in Kyiv; additional reporting by Jonathan Saul, Michelle Nichols, Tom Balmforth and Reuters bureaux; writing by Peter Graff.

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Last week’s attacks mostly struck the sea ports of Odesa but Monday’s pre-dawn strikes hit infrastructure along the Danube, an export route whose importance has grown since the demise of the deal allowing Ukrainian grain transit via the Black Sea.

“The Russian terrorists have again attacked the Odesa region overnight. Port infrastructure on the Danube river is the target this time,” regional governor Oleh Kiper wrote on the Telegram messaging app.

Global wheat and corn futures rose sharply on fears that Russian attacks and more fighting, including an overnight drone strike on Moscow, could threaten grain exports and shipping.

News website Reni-Odesa cited a local official as saying three grain warehouses had been destroyed in the Danube port city of Reni during a drone attack.

Video footage obtained and verified by Reuters showed a man cursing in disbelief at several damaged grain warehouses at Reni, an important transport hub across the Danube to NATO and European Union member Romania.

“This recent escalation poses serious risks to the security in the Black Sea,” Romanian President Klaus Iohannis said on Twitter, drawing attention to the proximity of the attack to Romania’s border.

Since Russia’s full-scale invasion in February 2022, Ukraine has expanded grain exports overland via the EU to about 1 million tons a month, with large volumes being exported from Romanian ports and along the Danube.

“Russia has in the past months not attacked Ukraine’s overland and inland waterways grain infrastructure,” one European trader said. “Any interruption of this traffic could quickly hit international grain supplies.

A French trader called it a “major development and a major blow” to Ukrainian exports, adding: “Without the Black Sea corridor and now with attacks on alternative routes, it will be hard to take Ukrainian grains out of the country.”

Kiper said: “Russia is trying to fully block the export of our grain and make the world starve.”

‘Food terrorism’

Ukrainian officials gave few details but police said warehouses storing grain crops had been hit along with tanks for storing other types of cargo, causing a fire.

Seven people were wounded and one of them was in a critical condition, Kiper said.

Police published photographs showing the damaged facilities, and containers marked with the logo of Maersk Group could be seen in one of the images.

Some Ukrainian news outlets reported explosions overnight in the area of Izmail, another important Ukrainian Danube port, but no firm reports of damage followed.

“It (Russia) tries to extract concessions by holding 400 million people hostage,” Ukrainian Foreign Minister Dmytro Kuleba wrote on Twitter. “I urge all nations, particularly those in Africa and Asia who are most affected by rising food prices, to mount a united global response to food terrorism.”

Russian wheat prices jump

Last week, Russian wheat export prices jumped along with global prices after Russia’s withdrawal from the Black Sea grain deal and amid restrictions on navigation in the Kerch Strait, analysts said.

According to the IKAR agriculture consultancy, the price of 12.5% protein Russian wheat scheduled for free-on-board (FOB) delivery in the second half of August jumped to $242 a ton at the end of last week from $228 a ton the week before.

Russia-focused agricultural consultancy Sovecon estimates total Russian wheat exports in July at 4.3 million tons, compared to 2.5 million tons in July 2022 and 2.8 million tons on average historically for the month of July. Russian wheat exports have been at record highs in recent months due to large stocks and high yields.

Russia exported 1.2 million tons of grain last week compared to 960,000 tons a week earlier, including 1.1 million tons of wheat compared to 820,000 tons a week earlier, Sovecon wrote in its weekly note, citing port data.

–Reporting for Reuters by Olena Harmash, Tom Balmforth, Olga Popova and others.

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Russia attacked the Odesa region for the second consecutive night after quitting on Monday a year-old deal allowing the safe passage of Ukrainian grain through the Black Sea, a decision that prompted the United Nations to warn it risked creating hunger around the world.

Ukraine, which wants to try to continue Black Sea grain shipments vital to global food supplies, said on Wednesday it was setting up a temporary shipping route via Romania.

“Russian terrorists absolutely deliberately targeted the infrastructure of the grain deal,” Ukrainian President Volodymyr Zelenskiy said on the Telegram messaging app. “Every Russian missile — is a strike not only on Ukraine but on everyone in the world who wants normal and safe life.”

Ukraine’s prosecutor general’s office said 10 civilians, including a nine-year-old boy, were wounded. Grains terminals were damaged as well as an industrial facility, warehouses, shopping malls, residential and administrative buildings and cars.

Flames and smoke rose from shattered warehouses in video released by the emergencies ministry, which also showed a residential block with shattered windows.

Russia on Wednesday said it would consider all ships travelling to Ukraine’s Black Sea ports as potential carriers of military cargoes from midnight Moscow time following the end of the grain deal.

Russia’s defence ministry said flag states of ships travelling to Ukrainian ports would be considered parties to the conflict on the Ukrainian side. The ministry did not say what actions it might take. It said Russia was also declaring southeastern and northwestern parts of the Black Sea’s international waters to be temporarily unsafe for navigation.

The International Monetary Fund on Wednesday said Russia’s exit from the deal threatens to increase global food insecurity and could raise food prices, especially in poor countries. In Chicago, U.S. wheat prices soared on the latest developments in the war.

President Vladimir Putin said Western nations had “completely distorted” the expired deal, but said Russia would immediately return to it if all its conditions for doing so were met.

‘Mass revenge strike’

On Tuesday, Russia said it had hit military targets in two Ukrainian port cities overnight as “a mass revenge strike” for a blast that damaged its bridge to Crimea, the peninsula it seized from Ukraine in 2014.

Ukraine’s air force said on Wednesday 63 missiles and drones had been launched across the country by Russia, mainly focused on infrastructure and military facilities in the Odesa region.

Air defences had shot down 37 of them, it said, a lower proportion than it has usually reported over months of attacks.

A considerable part of the grain export infrastructure at Chornomorsk port southwest of Odesa was damaged, Agriculture Minister Mykola Solsky said, adding that 60,000 tons of grain had been destroyed.

The attack was “very powerful, truly massive,” Serhiy Bratchuk, spokesperson for the Odesa military administration, said in a voice message on his Telegram channel on Wednesday.

“It was a hellish night,” he said.

Ukraine’s southern military command said Russia had used supersonic missiles, including the Kh-22 that was designed to take out aircraft carriers, to hit Odesa’s port infrastructure.

Crimea fire

The Odesa region’s three ports were the only ones operating in Ukraine during the war under the UN-brokered Black Sea Grain Initiative that allowed Ukrainian grain exports through a Russian blockade of Ukraine’s ports.

In Crimea a fire at a military training ground in the Kirovske district forced the evacuation of more than 2,000 people from four settlements, said Russian-installed Crimea governor Sergei Aksyonov, who did not give a reason for the blaze.

Telegram channels linked to Russian security services and Ukrainian media said an ammunition depot was on fire at the base after a Ukrainian overnight air attack.

Odesa’s military administration spokesman Bratchuk posted two videos of a fire in an uninhabited area, saying, “Enemy ammunition depot. Staryi Krym.”

Staryi Krym is a small town in Crimea’s Kirovske district.

Ukrainian forces launched a counteroffensive last month to try to drive Russian forces out of its south and east, where they have dug in along a heavily-fortified front line after failing to capture Kyiv in the early days of the invasion.

UN works on ideas for grain exports

In Washington, the Pentagon announced additional security assistance for Ukraine, totalling about US$1.3 billion, with the package including air defence capabilities and munitions.

The United Nations has said there were a “number of ideas being floated” to help get Ukrainian grain and Russian grain and fertilizer to global markets.

The Black Sea deal was brokered by the U.N. and Turkey in July last year to combat a global food crisis worsened by Russia’s February 2022 invasion of Ukraine. The two countries are among the world’s top grain exporters.

Russia says it could return to the grain deal, but only if its demands are met for rules to be eased for its own exports of food and fertilizer. Western countries call that an attempt to use leverage over food supplies to force a weakening in financial sanctions, which already allow Russia to sell food.

— Reporting for Reuters by Max Hunder and Olena Harmash; additional reporting by Gleb Garanich and Valentyn Ogirenko in Kyiv, Jonathan Saul in London, Lidia Kelly in Melbourne and Ron Popeski in Winnipeg; writing by Lidia Kelly and Philippa Fletcher, and William Maclean.

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