Azov freight market shows a significant decline. Rates for voyage from Russian ports continue its fall. The operating level on the route Yeisk-Samsun is at the level of the low 20s per ton of wheat / corn.
The price of wheat basis fob Azov ports still growths in the reporting week and reached its maximum values in the season. This led to a decrease in the number of export contracts concluded. As explained by market participants, the price is rising with the increased demand within the country. Many Charterers, in order to avoid signing contract, which potentially may occur unprofitable, they try to fix the vessels beforehand. But often, after failing on subs, the ship is cancelled due to absence of purchase.
As usual, long voyages are mostly demanded on the low market. In addition, back hauls from the Adriatic and the East Mediterranean have become much sought after. At such freight level, the fleet doesn’t hurry to return to the home region and may wait few days to meet laycan of back cargo.
Some terminals, located in Rostov after the bridge, arrange the commercial passage that reduces voyage costs for Shipowners and increases the attractiveness of loading after the bridge. Meanwhile, the long delays associated with the repair are not seen. The costs of the commercial passage is around 80 000 rubles and when divided among several ships, does not effect on the economy of the voyage.
The severe ice situation continues in Astrakhan and Volga-Caspian Channel. Normally, ships pass the channel within 1.5-2 days, while Shipowners try to avoid the most distant terminals, where the costs of tugs services and the risks of long waiting increase significantly. Due to this reason, the reduction of rates stopped, and even increased for loading on berths in the “deep rear”.
According to information from market participants, the Ministry of Agriculture plans to introduce regulation of the domestic grain market in the nearest future by resumption of state grain interventions. Previously, the transportation subsidy program of grain from remote regions of Russia was not as large-scale as expected, and had a little impact on the market.
Many Shipowners who did not hurry to fix their tonnage until the last moment, are forced to stand in Azov in the dead spot. The situation with “almost-firm” cargoes only worsen the owners’ distress. They are losing time to negotiate, getting failed on subs, and the vessel returns to the market. Some ships already idle for 5-7 days and the situation is not expected to be improved in the near future.
As practice shows, the waiting period for the passage of Kerch canal for ships proceeding for loading to Ukrainian ports of Azov sea does not exceed the standard waiting time for fleet, going to ports of Russian Federation. In spite of this, just to be sure, many Ship-owners continue to insist on incorporating “the Kerch clause” into fixture recap.
At the moment, ice restrictions have not been introduced in any of the sea ports of Ukraine. But, starting from 01.02.2019, disregarding the actual ice situation, ice dues will be introduced in Mariupol. This may slightly push up the freight rates for voyages from this port.