10 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments
The Azov freight market continued to grow gradually due to a shortage of spot tonnage. Charterers expected that the elimination of ice restrictions will increase the tonnage supply in the region, but unfortunately for them this did not happen: Owners of such a fleet decided to make voyages from the Black Sea ports due to an extremely low freight level on Azov’s cargo orders. Charterers who needed to make shipments in the nearest dates were quite flexible during trading, which had significant impact on the freight market in whole. Many Owners who received more favorable offers for spot dates started to drive up their ideas for vessels opening in the second half of the month. Thus, the Azov freight market not only switched from stagnation to growth in the moment, but also formed a trend to increase.
Significant anxiety caused by the coronavirus began to affect the freight market as well. Israel has officially announced the imposition of 14-day quarantine for incomers from abroad, which de facto means an appropriate quarantine order for all the vessels entering Israeli ports. Most likely, this will lead to an astronomical rise in freight for voyages to Israel, as well as almost close the cargo flow to this country until the situation improves. Similar measures are currently being discussed for vessels that come from Italian and Iranian ports; this may also lead to difficulties with port calls to these countries.
OPEC’s failure has resulted in a fall in oil prices on foreign markets, which led to the devaluation of the ruble. A significant drop of the native currency commonly has a positive impact on exports, as local products become more competitive on foreign markets. Therefore, the number of new deals is expected to increase in the near future, and the demand for tonnage will rise accordingly. In this case, the freight will grow, despite the typical off-season for this time of year.
According to data from the Administration of the Azov-Don Basin, ice dues will be canceled starting from March 15. The locks in the Volga-Don Canal will start working on the commercial basis on March 24; they will work under normal conditions on April 1. The only open question is yet undetermined draft at canal.
In the Caspian region, the market has remained balanced for several weeks. Observations showed that Owners tried to put pressure on rates amid rumors about the introduction of a quarantine period for vessels arriving to Iran. These attempts however were warded off by weak cargo offer in the region, where activity is declining against the background of upcoming Iranian holidays. As a result, the rates remained at the same level as the week before.