Freight barrier to international trade

Despite the fact that its effect began to be seen at the beginning of 2020 and the vaccine was found and started to be applied, the pandemic period, whose negative effect did not decrease significantly in 2021, caused experiences that will not be seen in centuries or even tens of centuries. First of all, there were breaks in supply chains. Then, the supply shortage caused the delayed demands to not be met. The realization of giant projects that were previously planned or that needed new planning, in order not to reduce employment and turn the wheels, accelerated the demand in the field of iron and steel, as in many other fields. The limited new production in the field of cargo ships and containers has not been able to respond to the accelerating demand. Again, changes in the seasons due to global warming have caused excessive precipitation in some countries, while others have caused drought. This made it necessary for more grains to change countries and the need for additional ships arose.

Therefore, the Baltic Dry Index, which shows the international dry cargo ship freight, has increased by 2.5-3 times and has reached the level of 3.300 these days. Container rental costs have increased approximately 5 times. In the last 15-20 days, higher prices have brought an unbearable additional cost to international trade. For example, it was reported that the freight of large ships, which was 65 usd for Turkey-Asia shipments at the beginning of last week, has reached 80-85 usd today. In yet another example, scrap collected in the Netherlands, which is one of the scrap supply base locations for Turkey, was able to be sold to Luxembourg due to the decrease in scrap prices delivered to Turkey and the additional increase in freight prices. Sellers have now had to choose short destinations. If prices do not rise in Asia, our country may be exposed to Russian billet attack in the near future.

Sales to Asian countries, which are among our iron and steel markets for our country, do not seem possible under current conditions. This situation puts pressure on raw material and product prices. It may take 1-2 months for prices to find a new equilibrium point. In particular, the effect of grain transport should be eliminated.