The Ukrainian Danube Shipping Company (UDP) has put its entire maritime fleet up for auction as part of strategic restructuring. According to UDP, the decision comes as part of efforts to eliminate unprofitable, non-core assets and direct resources toward modernizing its river fleet, particularly focusing on cargo river transport opportunities.
All six vessels owned by UDP are being auctioned as a single lot. Among them, the vessels Vilkovo and Izmail, which are refurbished and ready for operations with proper documentation, are of particular interest to shipowners. However, the sale also includes Tatarbunar, Viana do Castelo, Kiliya, and Reni, which have been inactive for years.
Last year, UDP began efforts to revitalize its maritime fleet to address supply chain disruptions caused by the blockade of Odessa ports. The government prioritized the transportation of agricultural goods from the Danube ports, and given last year's freight rates, the fleet's recovery appeared profitable with a short payback period. However, the removal of the blockade has led to a significant drop in freight rates, leaving the Danube ports less active with little recovery expected.
Private companies continue to operate even at lower rates by optimizing taxes and managing hundreds of vessels across various markets with stable return cargo. In contrast, UDP, as a state-owned enterprise, must pay all taxes, making competition difficult given its limited working fleet of two active vessels. Four additional vessels are out of service.
While time charter agreements were considered to sustain income from the fleet, the profits would not offset future expenses associated with maintenance and repairs. This makes continued fleet maintenance an unprofitable venture. Keeping vessels idle is unsustainable, as maintaining these ships incurs significant monthly costs. Most of UDP's fleet is over 30 years old, with the potential for increased expenses related to renewing documentation soon.
The shareholder has approved the plan to offload the fleet, as the costs of maintaining and repairing the vessels are no longer feasible under current market conditions.
