The freight market for grain shipments from the Black Sea has dropped to its lowest point, with rates falling below operational costs, forcing shipowners to essentially subsidize trade.
This was stated by the director and co-founder of BPG Shipping, Gennady Ivanov, according to ASAP Agri.
He noted that as the export season comes to an end, trade activity is likely to decrease further, which could exert additional, albeit minor, pressure on freight rates in the short term. However, in the medium- and long-term, rates may increase as older vessels exit the market. Some shipowners may send outdated fleets for scrapping or redirect them to other routes, while others may prefer to leave ships idle rather than operate under unprofitable rates.
It is expected that insurance costs will gradually decrease, while additional premiums for war risks currently fluctuate between 0.5% and 0.85%. Meanwhile, transnational companies are returning to the Black Sea, particularly to Ukrainian grain trade, and their stronger financial positions could intensify competition, potentially pushing smaller Ukrainian exporters out of the CIF market and forcing them to switch to FOB contracts, Ivanov added.
He believes that if the situation in the Red Sea improves, the 2025/26 marketing year may see increased exports to Asian markets via the Suez Canal, provided there is no further geopolitical escalation in the region.
At the same time, analyst Pavel Lysenko from ASAP Agri and freight broker Atria Brokers noted that, despite the lack of significant increases in grain transportation requests from Ukraine and limited fleet activity, market initiative shifted in favor of shipowners in the last week of February.
In the coaster segment, shipowners are firmly holding their positions amid rising tariffs for passing the river channel and delays in Sulina. Meanwhile, owners of handysize vessels, buoyed by positive shifts in the Atlantic market, are not considering further rate reductions when operating from Ukraine, which forces charterers to concede when cargo needs to be booked.
The freight department at Atria Brokers estimates current rates for transporting a panamax load of corn from Ukrainian deepwater ports to South China at $33-34/ton (+$2/ton week-on-week).
In the handysize segment, freight rates for transporting corn from Ukrainian deepwater ports to the east coast of Italy have increased by $1/ton to $16-17/ton.
In the coaster segment, rates for transporting 6,000 tons of corn from Ukrainian Danube ports to the east coast of Italy are $28-30/ton (+$2/ton).
Meanwhile, there are no positive changes for barge owners yet. Freight for spot shipments of 1,000-3,000 tons of corn from Izmail or Reni to Constanta is estimated at €8-9/ton.
