ANALISYS FOR PROJECT CARGOES TO RUSSIAN RIVER PORTS AND CASPIAN SEA
FREIGHT MARKET ANALISYS FOR PROJECT CARGOES TO RUSSIAN RIVER PORTS AND CASPIAN SEA
Dear Colleagues
Meanwhile many of you already get known to shipping of project and oversized cargoes to Russia and CIS destinations, it is worth to remind that, despite many rumors, Russian rivers are still closed for vessels hoisting foreign flags (except very seldom exclusions when sailing in ballast or LPG projects). Since shipping and freight market is much derived demand, it is worth to determine how big is an offer of the tonnage and what are main drivers for demand.
90 % of Russian flagged fleet consist of vessel projected and build in former USSR and neighbor countries in the period 1960-1990 years. Since that period very seldom companies with share government capital encouraged to lay down new series of sea-river tonnage. Owing to severe crisis of 2009 investors lost interest to the region, lack of support from government and bank sectors blocked such programs at all, almost buildings are coming and offer is continuously decreasing.
There are several reasons why European owners can’t just change a flag and break into the market.
First, natural restrictions, such as draft limitation max to 4.2 and 3.6 in average and length restrictions owing to curviness of rivers and length of locks in rivers. EU build vessels are more likely to be sea-river rather than river-sea and have bigger drafts.
Second, owing to special regulations of Russian Maritime Register and State all crew must have river diplomas. Most of seafarers knowing English prefer to work on ocean vessels, rest can’t speak English and have no skills to operate modern sophisticates vessels control systems.
Third, working in Russian rivers requires such contractual elements as lowerable superstructure or mast to reduce airdraft and anchor on the stern and other. Eventually, in most cases making such construction changes are not moneywise.
Since each year considerable amount of tonnage is scrapped and we don’t see new buildings, tonnage offer is permanently reducing. They only source may be change of originally USSR built tonnage back into Russian Register and Flag. However, we do not see much effect owing to negligible annual numbers.
Below you can find numbers of Rus flagged fleet available on the market:
- Baltic region and Northern region – 2015 year – 56 vessels
- Mediterranean, Black Sea and Volga, Don region - 2015 year – 124 vessels
- Caspian Sea - 2015– 68 vessels
- Far East - - 2015– 38 vessels
Scary numbers, I would say, for the country having more than 50 river and shall ports.
That is why prices on the market and seasonal changing are very sensible to cargo offer and seasonal demand in shipping like grain crop, changing of transport corridors owing to political and economic reasons, strength of exporters and competition with railway tariffs. The really one remarkable thing is that each navigation season markets starts from the bottom and makes significant growth from the second half of summer being driven by over 20 million tons demand from grain exporters. This year we expect the same tendency.
I am going to put on the paper more precise analysis during next week or two. It is going to put a light on demand vs supply in each region and special demand for barges and vessel most suitable for OOG pieces and industrial general cargoes.
Shall you have any precise question– please feel free to ask.
All the best and keep you posted
Konstantin Grinevich, MISC
Glogos project LLC