28/10/2020

On the 44th week in the Azov sea region the level of freight rates has increased significantly. Cancellation of import duty of some grains from the Turkey side has permitted owners to raise their rates for shipments and freight for transportation 3k wheat from Azov to Marmara sea ports has reached the level of USD 27 per metric ton.

However, not all charterers were able to meet shipowners level. The majority of them preferred to wait, expecting soon drop in rates. This is mainly due to the strong growth in purchase prices for wheat, which does not allow concluding new contracts at this level of freight.

The reason for the decrease in the growth of rates next week may also be yesterday’s fall in grain futures and a record drop in the lira exchange rate. For the first time in history, the lira dropped below 8 lira per dollar, which of course makes the Turkish side to postpone the conclusion of new contracts.

There is still a high demand for the Russian flag fleet for shipments from river ports. At the moment, shipowners choose cargoes based not only on the rate, but mainly on the port of unloading, since in connection with the approaching end of river navigation, shipowners decide in which region to leave their fleet for the winter period: in the Azov or Caspian Sea.

As for the Caspian region, despite a slight increase in activity last week, there are still not many grain shipments on the market. Freight rates remain roughly the same. Most of the contracts remain at the negotiation stage, since the Iranian side is not ready for high prices for Russian grain.

In cabotage shipments, there is a slight increase in fleet offers, since many shipowners operating in the northern regions of Russia want to launch their fleet to the Azov region for the winter period. In addition, after a short queue for unloading in the port of Kavkaz, the shipowners were finally able to offer their fleet for the next voyages.

The situation in the Baltic region is stable. There is a fairly large number of cargoes on the market at good rates. In this regard, many shipowners prefer not to go beyond the Danish straits, since finding back cargo from the Continent is often quite problematic, and they can earn good money on rather short voyages within the Baltic Sea. This is also due to the fact that a fairly large volume of the fleet has been signed under long-term contracts and a long ballast transition is not profitable for shipowners.

On the deep sea market, it is still a problem to find a vessel to the Southeast Asia ports, since the freight rates in this region are lower than shipowners can earn from cargoes in the Atlantic. This forces many charterers to raise their freight rates by USD 7-10 to meet contractual obligations or reschedule shipping dates waiting for a change in this situation.