Freight Report Week 37

Freight Report Week 37

Region: Russian River, Azov / Black Sea, Caspian
Trade: Coaster shipments

Low water levels are forecasted in Azov sea ports due to the looming high offshore winds. There is a possibility that many vessels will face the difficulties on exit from the ports after loading, since the water level will allow to berth in ballast, but to start a voyage fully loaded will be impossible. Moreover, the draft limitations will affect not only Rostov and Azov, but deeper-water ports such as Yeisk. At the moment the water level at Rostov/Azov varies from 3.7 to 3.9 m, in Yeisk – from 4.1 to 4.5 m, and according to forecasts, water can go further 1.5-2 m down.

We observed a similar situation this August, as some dry-cargo vessels spent several weeks idling in Rostov/Azov in anticipation of a proper water level that would allow them to sail out to sea.

Voyage delays lead to an accumulation of subsequent lots of cargo in the ports. As a result the increase of freight rates in the Azov region will continue, especially for cargo orders ex shallow ports of Azov and Rostov.

In order to avoid idle time, a lot of Ship Owners are changing their preferences in favour of deep-water ports, Temryuk, Taganrog, Yeisk, and freight rates particularly in that ports will possibly decrease to some extent as a consequence of the tonnage supply increase.

As of the end of September, there is a deficit of open tonnage – most of the fleet will be opening in the first half of October. Since Ship Owners have enough time until the opening dates, they are not in a hurry to conclude fixtures, counting on further growth of the market. As a lot of vessels will be opening at about the same time, Charterers are expecting that the market will possibly go down.

Freight rates in the Azov region are fluctuating approximately within the same figures as a week ago and depend on the specifics of particular negotiations. Fleet demand still does not exceed the amount of available supply, but Charterers decisevly refuse to improve their offers, explaining this by limitations set in sales contracts and by the existing opportunities to delay voyages.

According to operative information received from the port of Samsun, the problem of insufficient storage capacity has been resolved by enhanced cargo on-carriage from the port, which has allowed Charterers this week to actively offer short voyages to the Black Sea, so much sought by Ship Owners. Freight rates for Azov – Black Sea voyages have decreased a little due to the fact that Ship Owners prefer them above all others.

Due to a severe lack of Russian-flagged tonnage, the situation has most severely affected Charterers (or Sub-Charterers) of project and general cargoes shipping in transit via Russian rivers. As a rule, budgets for such voyages are drawn up long before their realization, therefore, taking into account last year’s situation with shipments, a lot of market players were seriously wrong in their budget calculations for logistics, since such
voyages had practically doubled in price. Furthermore, even a corrected budget not always helps to find a suitable fleet because most of it is currently employed either for Kavkaz transshipment or for carrying grain in the Volgo-Caspian region. It is expected that such Charterers will considerably increase their offers in order to ship arranged parcels before the closure of Don River locks.

On the eve of October, Ship Owners has already started to plan their fleet’s positions for wintering. Taking into account last year’s situation in the Caspian region, many Owners are trying to plan out the closest voyages so as to employ their fleet on winter jobs in the Azov area. Therefore transit voyages from the rivers and the Caspian Sea are expected to be possibly in big demand in the end of the navigation period.