35 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments
On the 35th week, the Azov region freight market has got the full impact of the new crop grain inflow, and the rates reached the level of USD 18-19 per ton of wheat at a moment’s notice. The number of shipments of cheap grain from the elevators of the Middle Volga has sharply increased for the first half of September. The rates growth is also may be explained by the fact that deliveries under won tenders will be performed from the Kavkaz roads, where grain will be shipped by coasters. Thus, both Novorossiysk and Taman do not buy grains on the CPT basis at a high price, as it used to be. Interest in the use of inland waterways is also fueled by restrictions on transport by road; the latter is only cost-effective over short distances subject to standard load. On more distant leg, the high prime cost of transportation is imposed on the grain price; it reduces the competitiveness of the offer.
In general, the freight market of the Black Sea and Azov regions shows positive growth dynamics. Rates from the deep-water ports of Ukraine rose; thus, rates on the basis of the voyage from Odessa or Nikolaev to Egypt is around the level of USD 16-17 per ton subject to shipment of parcels of 10-11 thousand tons. Owners who work from deep-sea ports are trying to fix for long-distance voyages on the growing market. Thus, shipments to the Black Sea Turkey, Marmara and Izmir are likely to be performed in small parcels by coasters from Russia.
It is possible to evaluate market prospects and make any forecasts only for a short period of time. The factors that influence the formation of both commodity and freight markets are very unstable, and the development vector may change quite quickly. On the one hand, there are observed low yields in Romania, as well as a fall in the ruble and hryvnia exchange rates, which makes Russian and Ukrainian grain prices very competitive. On the other hand, the commodity market of these countries is very sensitive to changes on the world commodity exchanges; this may clearly be seen in the increased grain price on FOB basis from Ukraine.
The growth of freight rates for cabotage transportation has reached its peak. At the moment, the rates for voyages from the Middle and Upper Volga exceed the cost of rail transportation to the Azov Sea ports and Novorossiysk, and their further growth is beyond the verge of profitability. Considering the fact that vessels will have time to perform two or three voyages before the end of river navigation, September is fixed for many Owners; thus, October dates will be discussed. In view of this, the rates for cabotage transportation are unlikely to rise higher; though, in the export direction, the rates still have room for growth.