The Azov–Black Sea basin coaster segment pulled back slightly from the mid-60s to the low-60s (Rostov–Marmara basis).

The willingness of charterers to conclude deals is influenced not only by high rates, which shipowners are still trying to maintain, but also by the increase of export duties on certain exchange-traded goods. For example, since October 4, 2023, beans and coriander have been subject to a 7% export duty. As a result, traders are forced to renegotiate contracts. The floating duty (introduced 2 years ago) on wheat also remains in effect. Maintaining high rates is further supported by war risks and a shortage of tonnage – voyage economics for foreign shipowners do not add up when factoring in insurance costs and longer waiting times at the Kerch Strait. Vessels under foreign flags take longer to pass through Kerch than vessels under the Russian flag, which traders say has already become a pattern. In our view, freight rates on the main Rostov–Turkey trade route will remain high until the New Year. This is especially true given that Turkish importers are facing significant storage constraints against the backdrop of increasing shipments from Russia’s rich harvest.

Major Deep Sea Segments Are Still Considered to Have Relatively High Rates

In September, daily rates in the handy, supra, and ultra segments nearly doubled. At the start of autumn, supramax was observed at around $12,000/day, but now confidently trades at $22,000/day. Handysize fleet owners are currently asking around $17,000/day. Besides the impact of higher key rates, the completion of restructuring in key export and import markets (since 2022) has also contributed to growth. The market has changed: small parcels are being avoided, and demand for larger tonnage is rising.
For wheat, the main exchange-traded commodity, Russia is currently holding one of the largest carryovers in history. Even the closure of grain corridors has not affected pricing as much as traders expected. Total production this year is about 138 million tons with a carryover of 30 million, compared to last year’s 160 million. However, state restrictions remain: the floating duty introduced 2–3 years ago on wheat still applies, and the minimum floor price was set in July no lower than $240 FOB deep sea, now raised to $260. At these levels, Russia has struggled to compete with Romania and France, which showed tenders as low as $210 FOB. Nevertheless, as the quarter that began in September closes, there is still little sign of significant decreases in Handy and Supra rates before the New Year.

Stable Situation in the Caspian Basin

Locally, the Caspian freight market eased slightly in recent weeks, but over the past few years it has, in fact, nearly tripled. This is mainly due to Russia being virtually the only supplier of corn and barley to Iran. In late September, the market strengthened again, and rates rose. With the new harvest in Iran and a shortage of tonnage in tenders, upward pressure persists. Currently, rates stand at about $50–60 (Astrakhan–Iran basis). Nevertheless, problems remain, including currency restrictions and shallow guaranteed depths. Dependence on water levels and wind direction also causes delays. Shipowners include waiting time in their rates.
In October 2023, we expect rates to remain high due to limited tonnage and the large corn harvest, for which contracts have already been signed. Around 600,000 tons are expected to be shipped from Russia to Iran, mostly barley and corn to Northern and Southern Iran by vessels of 3,000–5,000 DWT.

Sincerely, Konstantin Grinevich and Glogos Project