Black Sea, Azov & Caspian Sea Coasters: Freight Report Week #37

Fixtures List: Glogos_Freight_Report_Week_37

Comments:

Low water levels are forecast 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 negotiations. Fleet demand still does not exceed the amount of available supply, but Charterers decisively 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 since 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, considering 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 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 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.

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Freight Market: Report on Coasters Market in Black & Azov Sea

Summary by Glogos Shipping: The Azov region is experiencing a period of uncertainty. Due to the strengthened ruble and current freight rates level Traders have suspended sales and new contract conclusions. As reported by some Exporters, for normal cargo turnover to recover, either the rates must go approximately 5$ down, or the dollar must stabilize at a level higher than 59 rubles. Since Ship Owners have been forcing Charterers to focus on voyages to the Turkish Black Sea coast, local warehouses at the Port of Samsun with the total storage capacity of 300 000 tonnes cannot receive any more goods, and the market participants has been faced with a problem of slow discharge at this particular port. In order to avoid further demurrages, cargo receivers are relocating their port of delivery to Marmara.

Some Traders are showing confidence that freight rates will decrease soon, expecting a substantial number of vessels to open simultaneously after the long idle time in Turkish ports. Traders in the Azov region are trying to evade CIF sales, preferring to ship their goods on a FOB basis, with a view to reduce risks associated with searching for proper vessels.
The shortage of fleet remains critical in the most remote river ports on the Volga. Since the opening of navigation, voyages there have been relatively rare, which led to an accumulation of significant cargo volumes at river silos. Charterers keep increasing their ideas for freight rates, but this has little impact on the actual amount of shipments.

According to some Exporters, tariffs for railway delivery to sea ports have reached parity with the cost of analogical transportation by water, which reduces the possibility of further rates increase for voyages from river ports.

Report of Fixtures: Glogos_Freight_Report_Week_36 (1)

Source: Glogos

Report on Coaster Freight Market in Black Sea & Azov

Freight rates in Azov area have continued to firm up in past week, owing to appearance of regular ‘autumn’ cargoes on the market, such as sbpp, sfs meal and corn in addition to usual wheat and barley. The excess of grain parcels accumulated at ports’ silos during the relatively calm week caused by Kurban Eid Holidays and the passage restrictions at Kerch, are now in high demand, adding up to the rates increase. Ship Owners prefer short voyages to TBS above all others. Risks related to idling have disappeared, and while Owners are trying to employ their fleet on short trips, Charterers have to pay some extra money for long voyages. Problematic voyages (Egypt or Lebanon, for instance) have become difficult to even negotiate..(Glogos – Edited)

Overview of Fixtures for Week #35:

Glogos Freight Report – Week #35

 

The New Kerch Bridge: Implications for Shipping & The Grain Trade

Despite international sanctions against the Kremlin, the bridge construction between the Kertch strait has started and the first arch has been built. This bridge will connect Russia and Crimea, will be 19 Km long and should be finished in 2019. The construction of this bridge, is creating important logistical problems for Ukraine. Indeed, navigation for cargoes between the Azov sea and the Black sea has been suspended during certain days at the end of August and this could occasionally continue in September and October.  This situation could also penalize exports since the Azov sea is an important crossing point for Russian grains departing from Rostov on the don. On the long term, the bridge could be a real problem for cargoes because besides being constructed in low water depth, maximal heights is limited at 33 meters. The agricultural ministry is estimating that once the bridge is constructed 33% of Ukrainian cargoes won’t be able to cross. In this context, exporters have already planned to move from the port of Mariupol in Ukraine directly onto the Black sea.

Source: Agritel