[Goose]

I think the supposition that Ukraine is not a viable country without the territory that Russia holds is incorrect and unsupported. 

Well, I have asserted this and supported this many times in this thread. Unfortunately I can do it again :-). Russia presently holds most of the Ukrainian territory that contained legacy "smokestack" industry. That is what the Donbas is all about. While this industry was largely obsolete it did contribute considerably to the Ukraine GDP. The steel production at Mariupol is the major "poster child" of that.

Presently held Ukrainian territory has natural resources,

Which ones are you referring to? The iron, other minerals, salt and coal that are currently "exploited" are in Donbas. Much of the newly discovered oil and gas areas are within the Russian controlled Ukrainian territory. Not that it matters, because the "big oil" companies that were involved had already pulled out of any effort to exploit these resources. The cost is very large and the risk of having Russia seize/destroy it is just too high. This was BEFORE the current war. The risks, the costs, and the pressures to reduce fossil fuel use render the reserves Ukraine has non-viable.  Ukraine does have other natural resources of various types but they are generally not available in commercially exploitable quantities. That is why they are not already "in production". The Soviet Union would develop any resource that had promise, even sometimes things that were very marginal. The low hanging fruit is already picked.

plentiful agriculturally productive land,

This is true, and has been Ukraine's major asset for many years. Unfortunately, grains and agricultural are "low margin" commodities. They are also bulky. Their commercial viability is extremely sensitive to transportation costs. This is also true for commodities like unrefined ore, although their bulk to weight ratio is better than say grain. The generally accepted cost ratios for shipping via truck, rail, and barge (ship) is 12-4-1, i.e. truck is 12 times as expensive as shipping by barge. Ukraine is blessed with a very good water transport route. Historically it is the dominant form of transport. The commodities took the shortest possible route to the river, by barge to Crimea and then onto ships. After 2014 that became impossible. For a while Mykolaiv was viable, but after 2022 it was not. From 2014 on Odesa became much more important. As can be seen from https://reliefweb.int/map/ukraine/ukrain...5-mar-2022 Odesa is served by two rail lines. It is about as far from the agricultural areas as it could be. It is even further from barge traffic. When Ukraine could use the railway across the southern part of the country (Mariupol-Mykolaiv-Odesa) barge transport still could cover lots of the way. Now that isn't possible.

https://www.ams.usda.gov/sites/default/f...ne2024.pdf discusses in excruciating detail the current situation. Interestingly, it provides costs for shipping via Odesa, Izmail, and Constanta. The cost to a recipient in Alexandria Egypt was 40.5% transportation cost when shipped from Odesa, 48.2% from Izmail, 48.1% from Constanta to Tunis. Similar figures for US wheat are harder to find. However, the 60% of US wheat that moves on the Mississippi undoubtedly is at worst less than half that percentage. Canadian wheat that moves mostly by rail has numbers to China in the low to mid 30s. Obviously Ukraine is getting hammered by these noncompetitive transportation costs. This situation will not get better. The bottom line is that Ukraine took a big hit when they could no longer export from Crimean ports or Sea of Azov ports after 2014. Farmer's profits plummeted as the had to ship their products much further by rail. Four times the cost and longer distances. Today a significant part of the rail network is now inside Russian controlled territory. Ukraine was a very poor country BEFORE this all happened. Now, with much reduced industrial output and much higher transportation costs for their remaining export commodities it is hard to imagine how Ukraine can be viable. Yes, these commodities can be shipped. Can the farmers make enough money to stay in business? Those relatively close to rail transport and not too far from Odesa/Mykolaiv yes. The further away one is, things get worse. IMO it is  very doubtful most of the farmers far from the export points can survive. Some Ukrainian farms have already converted to growing seed oil crops, as they are cheaper to ship. Many farmers can't afford to do that or their land is ill suited for it.

several large Black Sea ports, and overland connections to multiple European countries.

AFAIK the only large Black Sea ports that will be available to Ukraine are Odesa and Mykolaiv. This assumes a "peace deal" that allows the port to re-open. Even if it does, it is still far from the source of many commodity production areas. https://gmk.center/en/news/the-resumptio...exporters/ is interesting. It states

The port of Mykolaiv acquired special importance for the company ArcelorMittal, which through it shipped its billets, wire rod and fittings. And 10 years before the start of the Russian invasion, in 2012, it itself became a stevedore and gradually increased transshipment at its terminal, which «in the best of times» reached 2 million tons, and ambitious plans provided for an increase in transshipment to 3 million tons in the future, «the report said.

Of course, the ArcelorMittal production facilities in Donbas are controlled by Russia. This reference must be to ArcelorMittal in Kryvyi Rih. Construction steel is pretty competitive. It isn't clear this facility has a future.

As far as overland connections to multiple European countries, they are mostly very unsuitable for commodity export (or anything really). The big problem is that the Ukraine rail network uses the Russian gauge of 1,520 mm. The "European" railroads use 1,435 mm. At Lviv, it can take up to five hours to replace the trucks on each car with the appropriate gauge (in each direction). It also takes labor, which is expensive. This is by the way a major problem with weapons shipment to Ukraine. Often the problem is "solved" by unloading the cargo from one train and reloading it into another. Kind of works with ammunition, not so much with grain. Getting the grain by rail to Lviv is the first expensive problem. The next expensive problem is that it is over 900 more km from Lviv to Gdansk by rail. Rotterdam is 1475 km from Lviv. The Ukrainian grain is then 4752 nautical miles from its destination in Alexandria. For reference, Odesa is 1393 nm from Alexandria. Pretty clear the Lviv route is not viable.

The routes into Hungary and Slovakia are in most ways worse. They have the same gauge change requirement. In general, they prefer transshipment, inappropriate for commodities. Most importantly, they don't go anywhere. They are both landlocked countries. During the current war Ukraine did ship commodities for local consumption inside these states, until the farmers blocked the lines in protest of being undercut by Ukrainian products. Obviously that isn't a viable long term solution. None of these routes are even considered in the USDA report, nor is Lviv. Pretty clear indication they are totally unsuited.

Romania is a different case. Ukraine can ship commodities via rail into Romania, where they are then loaded on ships and exported from Romania via Constanta. The exports via Izmail also use Romanian rail. Of course, this is a circuitous route, but it does work. It is 8% more expensive than Odesa. Capacity is also limited.

In an industry where margins are small, a 40% transportation cost is unsustainable, especially when competitors have costs that are a fraction of that. The difference comes out of Ukrainian farmer's profits. Many of them can't afford it. 

The territory that Russia holds is mostly a depopulated wasteland. For Ukraine to demine and rebuild it would be it's own costly undertaking.

Agree. It will be difficult and expensive whether Ukraine does it or Russia does it.

The long term viability of the Ukrainian state is a question, but I don't think that would change a single bit even if Ukraine regained all of the territory they held in February 2022.

I don't agree here. First, lots of the territory Russia gained was not actively fought over. It is pretty intact. Berdiansk for example. The M-14 and the railroad is in heavy use by Russia today. The port of Mariupol is open. All of these would be assets Ukraine could immediately take advantage of to lower their transportation costs. There are also areas where reconstruction can be done with little effort that would deliver disproportionate benefit. Reconstruction doesn't have to happen all at once. There are many areas in the Donbas that are not worth the effort. The facilities are obsolete and the mines played out. Not worth it, now or ever.

If Ukraine does not get appropriate security guarantees and aid in rebuilding, then many Ukrainians will try to emigrate and that could be a spiral that is hard to recover from.

True. IMO if Ukraine is reduced to a rump state with Russia retaining its ill-gotten gains there is no way any security guarantees will mean anything. The facts will speak for themselves. If nobody is willing to protect Ukraine's rights today, why will they do so tomorrow? They won't, and everybody, including Putin, will know that. Thus your spiral. The economics alone would probably do the same thing as well. The "west" must stand up for Ukraine now, or there will be no "tomorrow" to do it.

[Goose]

I think the supposition that Ukraine is not a viable country without the territory that Russia holds is incorrect and unsupported. 

Well, I have asserted this and supported this many times in this thread. Unfortunately I can do it again :-). Russia presently holds most of the Ukrainian territory that contained legacy "smokestack" industry. That is what the Donbas is all about. While this industry was largely obsolete it did contribute considerably to the Ukraine GDP. The steel production at Mariupol is the major "poster child" of that.

Presently held Ukrainian territory has natural resources,

Which ones are you referring to? The iron, other minerals, salt and coal that are currently "exploited" are in Donbas. Much of the newly discovered oil and gas areas are within the Russian controlled Ukrainian territory. Not that it matters, because the "big oil" companies that were involved had already pulled out of any effort to exploit these resources. The cost is very large and the risk of having Russia seize/destroy it is just too high. This was BEFORE the current war. The risks, the costs, and the pressures to reduce fossil fuel use render the reserves Ukraine has non-viable.  Ukraine does have other natural resources of various types but they are generally not available in commercially exploitable quantities. That is why they are not already "in production". The Soviet Union would develop any resource that had promise, even sometimes things that were very marginal. The low hanging fruit is already picked.

plentiful agriculturally productive land,

This is true, and has been Ukraine's major asset for many years. Unfortunately, grains and agricultural are "low margin" commodities. They are also bulky. Their commercial viability is extremely sensitive to transportation costs. This is also true for commodities like unrefined ore, although their bulk to weight ratio is better than say grain. The generally accepted cost ratios for shipping via truck, rail, and barge (ship) is 12-4-1, i.e. truck is 12 times as expensive as shipping by barge. Ukraine is blessed with a very good water transport route. Historically it is the dominant form of transport. The commodities took the shortest possible route to the river, by barge to Crimea and then onto ships. After 2014 that became impossible. For a while Mykolaiv was viable, but after 2022 it was not. From 2014 on Odesa became much more important. As can be seen from https://reliefweb.int/map/ukraine/ukrain...5-mar-2022 Odesa is served by two rail lines. It is about as far from the agricultural areas as it could be. It is even further from barge traffic. When Ukraine could use the railway across the southern part of the country (Mariupol-Mykolaiv-Odesa) barge transport still could cover lots of the way. Now that isn't possible.

https://www.ams.usda.gov/sites/default/f...ne2024.pdf discusses in excruciating detail the current situation. Interestingly, it provides costs for shipping via Odesa, Izmail, and Constanta. The cost to a recipient in Alexandria Egypt was 40.5% transportation cost when shipped from Odesa, 48.2% from Izmail, 48.1% from Constanta to Tunis. Similar figures for US wheat are harder to find. However, the 60% of US wheat that moves on the Mississippi undoubtedly is at worst less than half that percentage. Canadian wheat that moves mostly by rail has numbers to China in the low to mid 30s. Obviously Ukraine is getting hammered by these noncompetitive transportation costs. This situation will not get better. The bottom line is that Ukraine took a big hit when they could no longer export from Crimean ports or Sea of Azov ports after 2014. Farmer's profits plummeted as the had to ship their products much further by rail. Four times the cost and longer distances. Today a significant part of the rail network is now inside Russian controlled territory. Ukraine was a very poor country BEFORE this all happened. Now, with much reduced industrial output and much higher transportation costs for their remaining export commodities it is hard to imagine how Ukraine can be viable. Yes, these commodities can be shipped. Can the farmers make enough money to stay in business? Those relatively close to rail transport and not too far from Odesa/Mykolaiv yes. The further away one is, things get worse. IMO it is  very doubtful most of the farmers far from the export points can survive. Some Ukrainian farms have already converted to growing seed oil crops, as they are cheaper to ship. Many farmers can't afford to do that or their land is ill suited for it.

several large Black Sea ports, and overland connections to multiple European countries.

AFAIK the only large Black Sea ports that will be available to Ukraine are Odesa and Mykolaiv. This assumes a "peace deal" that allows the port to re-open. Even if it does, it is still far from the source of many commodity production areas. https://gmk.center/en/news/the-resumptio...exporters/ is interesting. It states

The port of Mykolaiv acquired special importance for the company ArcelorMittal, which through it shipped its billets, wire rod and fittings. And 10 years before the start of the Russian invasion, in 2012, it itself became a stevedore and gradually increased transshipment at its terminal, which «in the best of times» reached 2 million tons, and ambitious plans provided for an increase in transshipment to 3 million tons in the future, «the report said.

Of course, the ArcelorMittal production facilities in Donbas are controlled by Russia. This reference must be to ArcelorMittal in Kryvyi Rih. Construction steel is pretty competitive. It isn't clear this facility has a future.

As far as overland connections to multiple European countries, they are mostly very unsuitable for commodity export (or anything really). The big problem is that the Ukraine rail network uses the Russian gauge of 1,520 mm. The "European" railroads use 1,435 mm. At Lviv, it can take up to five hours to replace the trucks on each car with the appropriate gauge (in each direction). It also takes labor, which is expensive. This is by the way a major problem with weapons shipment to Ukraine. Often the problem is "solved" by unloading the cargo from one train and reloading it into another. Kind of works with ammunition, not so much with grain. Getting the grain by rail to Lviv is the first expensive problem. The next expensive problem is that it is over 900 more km from Lviv to Gdansk by rail. Rotterdam is 1475 km from Lviv. The Ukrainian grain is then 4752 nautical miles from its destination in Alexandria. For reference, Odesa is 1393 nm from Alexandria. Pretty clear the Lviv route is not viable.

The routes into Hungary and Slovakia are in most ways worse. They have the same gauge change requirement. In general, they prefer transshipment, inappropriate for commodities. Most importantly, they don't go anywhere. They are both landlocked countries. During the current war Ukraine did ship commodities for local consumption inside these states, until the farmers blocked the lines in protest of being undercut by Ukrainian products. Obviously that isn't a viable long term solution. None of these routes are even considered in the USDA report, nor is Lviv. Pretty clear indication they are totally unsuited.

Romania is a different case. Ukraine can ship commodities via rail into Romania, where they are then loaded on ships and exported from Romania via Constanta. The exports via Izmail also use Romanian rail. Of course, this is a circuitous route, but it does work. It is 8% more expensive than Odesa. Capacity is also limited.

In an industry where margins are small, a 40% transportation cost is unsustainable, especially when competitors have costs that are a fraction of that. The difference comes out of Ukrainian farmer's profits. Many of them can't afford it. 

The territory that Russia holds is mostly a depopulated wasteland. For Ukraine to demine and rebuild it would be it's own costly undertaking.

Agree. It will be difficult and expensive whether Ukraine does it or Russia does it.

The long term viability of the Ukrainian state is a question, but I don't think that would change a single bit even if Ukraine regained all of the territory they held in February 2022.

I don't agree here. First, lots of the territory Russia gained was not actively fought over. It is pretty intact. Berdiansk for example. The M-14 and the railroad is in heavy use by Russia today. The port of Mariupol is open. All of these would be assets Ukraine could immediately take advantage of to lower their transportation costs. There are also areas where reconstruction can be done with little effort that would deliver disproportionate benefit. Reconstruction doesn't have to happen all at once. There are many areas in the Donbas that are not worth the effort. The facilities are obsolete and the mines played out. Not worth it, now or ever.

If Ukraine does not get appropriate security guarantees and aid in rebuilding, then many Ukrainians will try to emigrate and that could be a spiral that is hard to recover from.

True. IMO if Ukraine is reduced to a rump state with Russia retaining its ill-gotten gains there is no way any security guarantees will mean anything. The facts will speak for themselves. If nobody is willing to protect Ukraine's rights today, why will they do so tomorrow? They won't, and everybody, including Putin, will know that. Thus your spiral. The economics alone would probably do the same thing as well. The "west" must stand up for Ukraine now, or there will be no "tomorrow" to do it.