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Freight Report Week 41

Region: Russian River, Azov / Black Sea, Caspian
Trade: Coaster shipments

Due to the introduction by the Turkish officials of the complicated documentary procedure for importing Russian grain by the Turkish Authorities, some Charterers has started to doubt if they will be able to make their shipments.

When a vessel with grain passes into Turkish ports with the bill of lading dated later then 09.10.2017 and Customs authorities do not give a permission for discharge, it turns into “a floating grain silo”. To be able to discharge the cargo a Charterer needs an officially approved invoice, which can be obtained through company’s accreditation for export operations.

To pass such accreditation it is required to file a package of documents and have it approved by a Turkish consulate/office, but there are no clear instructions from the Turkish Government in this regard.

Many Ship Owners have found themselves a state of uncertainty, not understanding whether the present voyage is going to happen or will be cancelled. As a result, they start to work with the next cargo, and then it turns out that the vessel will not be cancelled. All of this leads to mutual misunderstanding and financial losses for Charterers.

FORECAST. In the Ship Owners’ opinion, freight rates will go up, since the supply of cargoes for different destinations is remaining in surplus. Ship Owners are sure that even if the number of voyages decreases, they will be able to find alternative offers at high rates.

Charterers argue that freight rates will inevitably decrease, as the amount of voyages to Turkey will be declining and the resale to third countries of grain originally meant to be delivered to Turkey is associated with additional difficulties and expenses. The amount of cargo ready for shipment will be shrinking, the number of free tonnage growing, and the freight rates will respectively go down.

According to information received from Traders, within one and a half weeks after the announcement of the new document registration rules for grain going to Turkey, Turkish importers have managed to contract 600 000 tonnes of wheat from alternative suppliers (Ukraine, Romania, France), which is equivalent to a 2-month norm of shipments from Russian ports. This means that during the next 2 months, even in case of cancellation of the new documentation requirements, Turkish Importers’ activity will lessen substantially, which will have a direct effect on the freight rates’ decrease in the region.

Region: Baltic / ARAG
Trade: Coaster shipments, Handy-size

The freight market situation in the Baltic/Continent region is retaining the tendencies of the last weeks. Regardless of the decrease in spot tonnage, freight rates are staying at the same level.

Some Ship Owners are demonstrating prompt positions in the hope for fixing their fleet at the most profitable rate. This is especially the case with regard to tonnages up to 5000 DWCC because Charterers prefer to ship bigger lots in order to reduce the cost of chartering to an acceptable level.

Fertilizer Traders report a growth in sales and shipments, which is also confirmed by the usage of vessels with bigger carrying capacity.

According to Baltic Exporters, part of grain is remaining on fields, owing to rainy weather. An improvement in weather conditions is forecasted to occur by the beginning of week 42, therefore after harvesting and shipping the rests of the crop, volumes of grains transported by sea from Baltic ports will remain at the present level, no considerable decrease in freight rates is expected to take place.

Source: «Глогос проект»