Freight Report Week 41 – Russian River, Azov / Black Sea, Caspian

Freight Report Week 41 – Russian River, Azov / Black Sea, Caspian

Due to the introduction by the Turkish officials of the complicated documentary procedure for importing Russian grain by the Turkish officials, some Charterers has started to doubt if they will be able to make their shipments.

When a vessel with grain passes into Turkish ports with the bill of lading dated later then 09.10.2017 and Customs authorities do not give a permission for discharge, it turns into “a floating grain silo”. To be able to discharge the cargo a Charterer needs an officially approved invoice, which can be obtained through company’s accreditation for export operations.
To pass such accreditation it is required to file a package of documents and have it approved by a Turkish consulate/office, but there are no clear instructions from the Turkish Government’s side in this regard.

Many Ship Owners have found themselves a state of uncertainty, not understanding whether the present voyage is going to happen or will be cancelled. As a result, they start to work with the next cargo, and then it turns out that the vessel will not be cancelled. All of this leads to mutual misunderstanding and financial losses for Charterers.
FORECAST. In the Ship Owners’ opinion, freight rates will go up, since the supply of cargoes for different destinations is remaining in surplus. Ship Owners are sure that even if the number of voyages decreases, they will be able to find alternative offers at high rates.

Charterers argue that freight rates will inevitably decrease, as the amount of voyages to Turkey will be declining and the resale to third countries of grain originally meant to be delivered to Turkey is associated with additional difficulties and expenses. The amount of cargo ready for shipment will be shrinking, the number of free tonnage growing, and the freight rates will respectively go down.

According to information received from Traders, within one and a half weeks after the announcement of the new document registration rules for grain going to Turkey, Turkish importers have managed to contract 600 000 tonnes of wheat from alternative suppliers (Ukraine, Romania, France), which is equivalent to a 2-month norm of shipments from Russian ports. This means that during the next 2 months, even in case of the new documentation requirements, Turkish Importers’ activity will lessen substantively, which will have a direct effect on the freight rates’ decrease in the region.