5 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments

5 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments

Freight market in the Azov region continued to go through difficult times during the 5th week. Extremely low trading activity created unfavorable conditions for removing vessels from the spot. At the beginning of the week, there was a lot of open tonnage; this fact leaned hard on freight rates, which sank by about USD 2 for spot positions during the reporting week. Discussed rates were at the level of USD 16 per ton of wheat on the basis of the voyage from Rostov to Marmara. Owners reckoned that the situation would not change much in the near future, and many of them tried to fix fleet in spot, holding prompt vessels out of market.

By the end of the week, major Charterers started to offer cargoes from the Azov ports, which were quickly fixed. Charterers tried to knock the rate down even more, but Owners bucked against it: current rates already are at the level of the voyage profitability, and it is easier for fleet to idle than to work. Next week, the tonnage supply will increase further due to vessels returning from long-distance voyages; this will additionally worsen the situation in the region. Due to the uncertainty on the commodity market, which will last at least until March, some shippers reckon that it is better to accumulate cargo volumes at river ports, as they see no reason to transport cargo to the Azov Sea ports due to unclear sail prospects.

Rumors are quickly circulating among Exporters that the quarantine services may soon stop issuing certificates for products intended for export to China, and thereby shipments to the quarantine zone will be suspended. This may have a positive impact on the coaster market, seeing as Exporters will have to reorient their products to open markets; this will increase cargo offer in the region.

The situation with shipments from Black Sea ports is similar. The high market in December was followed by a sharp drop in the number of shipments, and freight rates fell. There are no long-term contracts; vessels are mostly fixed in spot on the verge of profitability. Still Owners hope that the strengthening of the US dollar against the ruble will aid of the new contracts conclusion, despite weak demand from buyers’ side, and freight rates will start to grow again; at least their reduction potential has long been exhausted.

The freight market in the Caspian region continued its decline amid low variability in the choice of possible voyages. Shipments from Astrakhan are still complicated by the problem with cargo delivery to the port, seeing as vehicles are actually blocked at the entrances to the city due to overload, and the first rail cars with grain have not reached the terminal yet. Port Aktau remains congested; at Makhachkala port, shipments are performed in a very low rate. According to market insiders, the port remains highly corrupt, and many major players prefer not to work from there.

A wide response on the Caspian market was caused by the news that “Russian Railways” will provide discounts on railway tariffs for transporting grain up to 400 km starting from March 1. This will allow Exporters, focused on Astrakhan, to resolve the issue of cargo delivery to the port, which will eventually help to stabilize the falling Caspian market.