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Freight Report Week 49

Region: Russian River, Azov / Black Sea, Caspian

Trade: Coaster shipments

The freight market continues to go up slowly in the Azov region. First of all, it is connected with the New Year holidays are coming. Exporters try to send as much cargo as possible before the New Year in order to avoid dealing with problems for weekend. According to information of the Azov Charterers, customs offices and ports in the Azov Sea will not work from December 31 to January 2. At the same time, taking into account the experience of previous years, until 8th January, as a rule, new contracts are not concluded. During new-year time due to the low demand for tonnage, the rates are decreasing, and lots of tonnage will accumulate in the Azov basin by the beginning of the first working week in the new year (8 January).

The expectations of the Charterers, who were going to work from Temryuk with the Owners of fleet without ice class at low rates, are not yet materialized. Officially, ice restrictions have not been introduced, so the rates from Temryuk keep the same level. The requirements of local phytosanitary services for ships made additional problems to Exporters. There are a lot of refuses for full fumigation in Temryuk even if ships have technical features to carry out this procedure. As a result of this, the rates in Temryuk port do not increase.

Due to the incident at the Kerch Strait, some Ship Owners, who work from the Ukrainian ports of the Azov Sea, lost much time passing through the canal (about 5-7 days) owing to reinforced control at the border. In this regard, the Ship Owners insist on the introduction of a “Kerch” clause in the terms of the contract. According to new mark all the time spent standing by the Strait should be counted as laytime. Despite the fact that many Traders agree to this practice, there are very few Owners who want to do voyages from Mariupol / Berdyansk.

After the imposition of military emergency in Ukraine (week 48), some large foreign companies and banks investing in the agroindustrial sector of Ukraine consider a temporary suspension of funding. This may adversely impact the credit opportunities of Ukrainian agrarians and the demand for Ukrainian grain all over the world. In this context Russian grain may look more rival and attractive on the world market. If the situation evolves for the worse scenario, Russia will lose a serious competitor in the field of grain exports.

Experts predict major changes in the Caspian freight market in the near future. After a period of strong growth during November, rates started back at week 49. Thus, freight on the basis of Astrakhan - Iran reached USD 50 per ton of barley. This is by reason of a large number of tonnage, which was accumulated in the basin, poor freight nomenclature and volume of trade are typical for Caspian region. The pace of shipments is reducing, the market has stopped in tracks.

In addition, nowadays Charterers are reluctant to dispatch grain shipments from Astrakhan, being confident that the freight market will begin to decline rapidly in near time. It is expected that by mid-December, freight will reach the level of 40 USD. Ship Owners, on the contrary, understand the advantages and try to conclude new contracts for 2-3 months at current rates.