41 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments
In the 41st week freight rates in the Azov region rose by USD 1 per ton, thereby predictably showing a positive trend. The minimum rate on the basis of voyage from Rostov (Azov) to Samsun is at the level of USD 20 per ton of wheat. Some Owners fixed at the rates USD 1-2 higher for Charterers’ account, who did not have time to ship the goods earlier in expectation of low rates on the growing market. Now they had to pay more in an effort to fulfil the obligations under their contracts.
Experts agree that the grain market has rebounded from the bottom and it is expected to grow in the near future. The export grain price continued to go up, and importers are behaving much more aggressively than two or three weeks ago. As a consequence, spot tonnage was fully fixed in the region, which resulted in a shortage of vessels due to the fact that the major part of the fleet switched to other regions or works on Kavkaz roads transshipment.
In conditions of fleet shortage most of Owners do not hurry to fix their vessels for far dates, waiting for the most favorable cargo offers in spot. At the same time, if Charterers confirm the rate of USD 1-2 above the market, Owners are ready to switch the vessel from transshipment for the voyage.
Freight rates for grain from the river increased by USD 5-6 per ton on the Volga River and USD 3 from Astrakhan. Shippers are ready to pay, the most important thing for them is to ship the entire agreed volume and close the current contracts. All in all, the market shifted in favor of Owners. Despite the rather high rates from river ports at the moment, experts agree that they will continue to grow until the end of the river navigation, amid an acute fleet shortage and a large number of offers. Shipments to be made before the end of navigation will go up in rate by another USD 3-4.
Some Owners already refuse from long-distance passages to the river due to weather worsening, and those who work at the river, traditionally switch their tonnage from North to South upon the end of navigation. Considering this, over the end of October to the beginning of November period, the last opportunity for fixing in the current calendar year will open for Shippers from hard-to-reach river elevators of the middle Volga.
Navigation on the Volga-Don Canal is planned to be closed on the 27th of November. Therefore Owners of the Russian-flagged fleet greatly drive up the rates for upcoming voyages and try to exclude from the options loading at Rostov above the railway bridge to avoid long delays due to water level fluctuations. Such ports as Yeisk, Taganrog and Temryuk are in great demand as the draft there allows to load up to full capacity and to start a voyage without any issues.
The sharp increase in rates is restrained by competition on the commodity market from the side of Ukraine, where the hryvnia has weakened significantly against the US dollar and gave a boost the growth of Ukrainian exports. This has a positive impact on the market of sea transportation from deep-water ports. There is also being observed an increase in freight rates by an average of USD 2-3 at these ports.
In keeping with the growth of rates on the river, the Caspian market continued its rapid growth during the reporting week. Although traders have not yet felt relief in making payments from Iran, the approach of the navigation end is seriously pushing shippers to sell the accumulated goods and makes it easier for Iranian importers to negotiate cargo payments. If at the beginning of the reporting week, the workable rate was at the level of USD 29 per ton of corn from Astrakhan to Iran, then at the end of the week Owners negotiated the rates by USD 3-4 higher. Experts consider that growth will continue, and Owners will wait till the last minute before vessel fixing.