Stefan Balaban, CEO of Ultima Partners and Member of the Geneva Cantonal Parliament, delivered a detailed analysis on the challenges and outlook for the coaster shipping sector during his presentation at the IAOM Eurasia Conference in Istanbul. His remarks highlighted both immediate risks and long-term structural changes that will shape freight markets.
Stefan Balaban
Coaster vessels, which connect small regional ports and carry essential goods such as coal, steel, fertilizer, and grain, remain vital for trade flows across the Black Sea and beyond. Unlike Panamax or Supramax carriers, coasters serve routes where larger vessels cannot operate. Balaban emphasized that the market is extremely fragmented, with hundreds of small, family-owned companies based mainly in Turkey, Russia, and Greece.
PORT DELAYS CAN BE MORE COSTLY THAN VOYAGES
One of the most pressing issues for coaster operators is port congestion. Balaban noted that, for these vessels, fixed spot charges are high relative to the small cargo size. As a result, waiting time in port can often be more expensive than the voyage itself. “A five-to-eight-day delay in port can easily add $10–20 per ton to freight costs — a bigger impact than fuel for vessels of this size,” he explained.
IMPACT OF RUSSIAN REGULATIONS
New regulations introduced in Russia in July 2025 require all vessels to obtain FSB clearance before entering ports. This has disrupted traffic at key hubs such as Kerch and Kavkaz.
According to Balaban, the consequences were immediate: more than 120 ships were held at anchorage, immobilizing much of the coaster fleet. This bottleneck reduced availability, pushed up spot freight rates, and sent ripples through the wider Black Sea grain market. “The key lesson is that in freight, waiting time in port can be more costly than sailing distance,” Balaban stressed.
LONG-TERM RISKS AND OPPORTUNITIES
Looking ahead, the coaster sector faces structural risks:
- Fleet age: Many vessels are over 25 years old, raising both maintenance and regulatory compliance issues.
- Environmental regulations: New energy rules will make older ships increasingly uncompetitive, as clients already prefer vessels younger than 15 years.
- Financing challenges: Small family-owned operators often lack the capital to renew their fleets.
Balaban warned that without reinvestment, many smaller owners may disappear. At the same time, he framed the energy transition as an opportunity, with modern, short-sea designs offering efficiency and sustainability. “Consolidation is inevitable, but renewal can turn risks into opportunities,” he said.
GLOBAL FREIGHT RATES
Balaban also addressed why the Baltic Dry Index (BDI) remains high even though world trade is growing at just 2–3 percent per year. The answer lies in geopolitical and climate disruptions:
- Red Sea crisis: Many ships are bypassing the Suez Canal for security reasons, adding 10–14 days per voyage via the Cape of Good Hope.
- Panama Canal drought: Reduced water levels have cut available transit slots by up to 40 percent, forcing long delays or alternative routes via the Strait of Magellan.
“These changes reduce effective fleet capacity,” Balaban noted. “Freight rates are not being driven by higher demand, but by longer routes and delays in the supply chain.”
GEOPOLITICS AND CHINA’S ROLE
In a Q&A session, Balaban was asked about the impact of U.S. measures targeting Chinese-owned vessels and the growing regulatory pressure from Europe. With China owning or building a significant share of the global fleet, the stakes are high. “We are seeing the emergence of two blocs — Western countries on one side and Asian industries on the other,” Balaban observed. “Each wants to strengthen its companies and fleets. With U.S. measures and European climate policies, shipowners will increasingly be forced to comply with these standards. In the medium to long term, this will trigger major restructuring across the shipping industry.”
KEY TAKEAWAYS
- Coasters are early warning indicators of stress in Black Sea trade.
- Port waiting times can be more costly than long voyages.
- The BDI is being propped up by delays and rerouting, not by higher demand.
- Consolidation and fleet renewal are unavoidable in the coaster sector.
- Geopolitics and environmental rules are reshaping the future of shipping markets.
Balaban concluded that grain trade is no longer only about sourcing or quality. “It is equally about freight risk management,” he said. “In today’s market, time and logistics matter as much as tons.”