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Glogos Freight Report Week 48

Region: Russian River, Azov / Black Sea, Caspian

Trade: Coaster shipments

Climatic and geopolitical factors continue to influence the dynamics of freight in the Azov basin. The deterioration of weather conditions - typical for this time of the year - led to the long-term closure of the Kerch Strait, resulting in lots of vessels were locked on approaches of the Strait. Such delays, as a rule, provoke an increase in rates. The Exporters tried to charter vessels at the current market as quickly as possible, until the further freight increase will not come. Ship Owners, on the contrary, postponed the conclusion of new contracts, as they predicted a future growth of freight on week 50. At the same time, it is hard to tell that this situation will lead to a speedy jump in rates in the region. After improving the weather conditions ships were stuck in Kerch will begin to make voyages almost simultaneously, and come back about even dates. A great numbers of spot tonnage can provoke a drop in freight.

In addition, offshore winds in the area of the Rostov port resulted in a freight increase. Due to the water-level decline in Rostov, only Omsky type vessels could approach the port which made them the much-in-demand on the market last week. Therefore, some Ship Owners realized this advantage and overstated the rates for some voyages.

After the incident with the Ukrainian war-ships in the Kerch Strait and the subsequent introduction of military emergency in Ukraine, many Ship Owners began to include additional risks in the cost of insurance, and in such a manner, raise the freight. Also, according to the information of the Azov traders, the Ship Owners, whose fleet was going for loading to the Ukrainian ports of the Azov Sea (Mariupol, Berdyansk), unilaterally canceled contracts, therefore the rates from these ports had grown significantly.

Despite the fact that the Master of the Azov port issued a decree on the entering into force of ice restrictions, many Owners of vessels without ice class continue to work from there. The matter is that nowadays the requirements for the compulsive ice class to the ships are not spelled out in the order, as well as there are no age restrictions of the vessels. This fact allows to restrain the freight from more rapid increase, which was predicted last week. Currently, the rate reached USD 31 pmt of wheat basis Rostov – Marmara.

The freight market has tailed away in the Caspian. This is largely due to the fact that a lot of Exporters have already contracted the necessary amount of vessels for the winter period and do not need to attract an additional fleet. Moreover, with the closure of navigation agiotage around the tonnage had fallen. Most of the Charterers have carried out urgent shipments earlier and come to the problems of vessel choice more rationally. At the same time, the market remains highly volatile in Caspian basin, and freight difference has reached USD 12 per ton of barley (from USD 40 to USD 52).

There was an official closing of navigation in the Volgodonsk water area this week. Some ships might have time to complete the voyage in transit from the Caspian Sea to the Azov Sea. However, owing to bad weather conditions, navigation was stopped earlier. It was used as a return reason of ships to the ports of loading and further wintering in the Caspian region.

It is expected that the Poti port will be the most popular as a transiter for vessels are bounded for Azerbaijan, Turkmenistan, Kazakhstan and back during the winter period. First of all, it concerns shipments of nitrogen fertilizers from Turkmenistan, where a new urea factory should start to work in December. Market participants are confident that the Poti port cannot yet provide competition to the largest ports of the Black Sea, but majority experts agree that the freight nomenclature will expand in the region. This circumstance will affect the growth of rates in the Black Sea region.