In Russia, the cost of transporting agricultural goods by sea has decreased by 18–49% in a year
In Russia, the cost of shipping agricultural cargo by sea has decreased by 18-49% in a year. The reasons are the embargo on imported wheat to Turkey and the decrease in cargo flow. Ship owners were not ready to change routes and were forced to offer discounts to shippers. This may reduce the logistical shoulder for Russian exports, but is unlikely to lead to an increase in their volume.
Average freight rates for Coaster class vessels (small sizes) for transporting grain from the Azov Sea to Turkey at the end of August amounted to $26 per ton when going to the ports of the Sea of Marmara and $43 per ton to Mersin, having decreased by 49% and 46% respectively over the year, according to data from the Price Index Center (PIC). Average freight costs for sending grain from the ports of the Azov Sea to Egypt have decreased by 44.7% over the year, to $47 per ton. Freight rates for Handysize vessels (large sizes) have also become cheaper since the beginning of this year, but the PIC did not provide specific figures.
The AGS agricultural trading company notes that the cost of sea container transportation of agricultural products to Turkey has decreased by 33-42% over the year, to $35-40 per ton, to Pakistan - by 18.8%, to $65 per ton, to Bangladesh - by 20%, to $120 per ton. Sending chickpeas to Jordan has become cheaper by 30%, to $80 per ton. Sea logistics to China, according to AGS, has become cheaper by 30-40%, to $40 per ton.
AGS CEO Ruslan Barashyan notes that there was a price jump in the container shipping market in the second half of 2022 and a correction is currently being observed. CCI Director Roman Sokolov cites the general reduction in the cargo base as the main reason for the decrease in freight costs, dictated, in particular, by Turkey's temporary embargo on imported wheat supplies from June 2024. According to Rusagrotrans, supplies to Israel and Algeria also showed negative dynamics, while shipments to Egypt increased less significantly — by 7.7% year-on-year, to 1.4 million tons. In total, wheat exports in July-August decreased by 2.1% year-on-year, to 9.4 million tons.
A Kommersant source in the agricultural market recalls that last year, at the end of July, the grain deal between Russia, Ukraine and Turkey, which provided for safe corridors for agricultural cargo from Ukraine's Black Sea ports, expired. This affected the entire region. "Previously, Turkish, Greek and other carriers had more opportunities to ensure loading," said a Kommersant source.
SovEcon Director Andrey Sizov points out that global freight rates are now 10-30% higher than a year ago. In his opinion, the reduction in deliveries to Turkey cannot significantly correct the picture, "freight is a global market, and vessels not subject to sanctions can be transferred to other lines." Although Mikhail Burmistrov, CEO of Infoline-Analytics, notes that fleet owners are not always ready to quickly reorient vessels to new routes in other regions. "There is turbulence, and it is difficult to predict how long the restrictions on grain deliveries to Turkey will last, after October 15 the ban may be lifted or extended," he does not rule out. At the moment, according to the expert, operators may offer discounts.
The sea is the main channel for Russian agricultural exports, accounting for 95% of deliveries, according to Andrey Sizov. The share of the logistics shoulder in the cost of products, according to him, varies depending on the destination and cargo. For example, when sending wheat to Egypt, the figure can be 8-10%. Transportation costs are usually divided between the buyer and seller and can be a subject of bargaining when determining the price of the product, explains Mr. Sizov.
Vladimir Petrichenko, CEO of Prozerno, calls low freight rates a plus for the commodity market, but doubts that they will have a strong impact on the market situation. Mr. Sokolov points out that sea freight is an important indicator of the state of the export cargo market and that the drop in rates generally indicates a negative trend. For example, a similar picture, according to him, was observed in the spring of 2022.
