Insecurity in the Black Sea; the calm before storm to increase sea freight rates

Due to exchange rate fluctuations, many traders and goods owners operate cautiously due to the lack of financial security. In this situation, the number of sea services will decrease. On the other hand, when the supply and demand cycle is out of balance, freight rates will also become unpredictable.

In addition, the owners of the goods change their minds about the import or export of their goods due to exchange rate fluctuations. Therefore, many vessel owners cannot provide service to Iran with full confidence because there is always a possibility that the requested service will be canceled. Hence, they always try to be cautious and put themselves in the safe zone with the prices they offer.

Vessels operating in the Caspian Sea have fixed costs such as fuel and personnel salaries in proportion to their capacity, but due to the decrease in port draft, the amount of cargo loading for vessels above 3,000 tons has decreased significantly. In such a situation, naturally, the price of freight increases because a ship that is supposed to load, for example, 5,000 tons of goods, cannot load more than 4,000 tons, which will lead to the imposition of 20% overhead costs on the ship owners, and thus increase the cost of transportation.

A large part of the grain needed by the country was imported through the Black Sea. When market challenges increase, overhead costs such as war insurance are imposed on companies due to the uncertainty of many ships berthing in some ports.