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Glogos Freight Report Week 45

Region: Russian River, Azov / Black Sea, Caspian

Trade: Coaster shipments

Forthcoming closure of river navigation highlights the question of ice campaign introduction in Azov’s sea for many Ship Owners. According to local port agents, Authorities of Volgo-Don basin are yet to announce the exact dates of campaign. Nevertheless, Owners of fleet w/o RMRS permission to work under ice conditions have already been advised not to complete with ‘back’ cargoes to Azov ports after second half of November. We expect soonest rates growth for such voyages.

Market decline in Azov area has provoked freight decrease for back hauls ex Adriatic and West Med. Few weeks ago Owners of sea-river tonnage were not willing to start negotiating cargo orders without prior confirmation of their desirable freight level, as it was more preferable to revert rapidly to Azov ports for main cargo. Currently the situation has changed so that back hauls are getting more sought-after to such extent that Owners are readily idle their vessels for couple of days only to meet the laycan.

Direct participants of Kavkaz roads’ lighterage consider that with good chances cargo throughput may shrink dramatically even from the start of December. A number of Ship Owners have already decided to work their tonnage on the market as their contract employment is at the end. This gives ground to expect conservation or even decrease of freight rates during December despite the introduction of ice restrictions and reduction of tonnage supply.

The ongoing rates decline on Azov’s sea is a result of weak demand for Russian wheat, which is not positive for some time now. Wheat prices FOB Azov ports have started to drop, following the inner market, where during the previous week prices shown gradual reduction with RUR 200-300 pmt steps. Still, freight decline is not so sharp, owing to several factors. Major part of tonnage shall open in mid-November and, in case till those dates, there will remain a substantial number of spot positions, market will go down. Otherwise, if fleet shall be fixed prior to spot dates, rates downfall is unlikely to happen.

Amount of sales contracts concluding on Black Sea commodity market has reduced notably, mirrored by according change of firm cargo orders. Turkish direction, in the absence of decent wheat flow, mainly retained by feedstuff. Lira continues to weaken and Exporters are looking towards further directions, such as Lebanon, Egypt, Greece, and Italy. Those who are able to execute sale to Turkey are now embracing ‘wait-and-see’ approach, as they expect rates to decline so that not the best sale may be compensated by winning of better freight.

Noted by several Traders, tonnage demand reduction in Azov’s region has been impacted by receivers, based in east Europe, which traditionally transship goods on river barges to further deliver it inland via Danube River. Latest sharp decrease of water level in Danube prevents normal work on such route. Currently warehouses at Constanta port are full which leaves no other option to the buyers but to decline any new shipments.

As it has been announced earlier by Authorities of Azov-Don basin, the Kochetovskiy waterworks shall be locked starting from 28 of November due to repair jobs. Therefore in order to pass Kochetovka, vessels must enter 1-st water lock from Volgograd side not later than 24 of November. Owners are planning their fleet positions accordingly. Another meeting of Authorities shall be held on 15 of November, where they decide final dates of navigation closure.