Ankara will raise the cost of passage through the Bosphorus and Dardanelles by 500%

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"He who has the gold makes the rules"

Merchant vessels transiting in the direction of the Black Sea and Mediterranean, will now have to pay 5 times more for passing through the Straits. The new tariffs will come into force on October 7, 2022.

Turkey regained its sovereignty over this internationally important waterway back in 1936 as a result of the Convention on the Regime of the Black Sea Straits in Montreux, Switzerland.

Based on this agreement, Turkey, as the owner of the territory, was granted exclusive rights to regulate the passage of merchant and military vessels through the Straits, in both peacetime and wartime.

"Passage Fee"

The established transit passage fee has not changed since 1983. It is for a good reason that Turkey decided to change the tariffs: under the Montreux Convention, prices were denominated in gold francs, which were equated to $0.8 or 0.29 grams of pure gold after they went out of circulation. As a result of a dire economic situation in Turkey in the 1980s, a 75% discount was applied to the fees.
Over a period of almost 40 years, the Germinal Frank notional currency adopted by the UN to calculate Turkish transit rates through the Bosphorus and Dardanelles has risen to $4 (this figure shall be multiplied by the vessel's net tonnage when calculating the fee).

The Turkish Ministry of Transport said that from now on, the tariffs will be reviewed annually.


What will be the new tariffs?

The Montreux Convention establishes the right of free passage through the Straits for merchant fleet of all countries. However, Turkey reserves the right to charge for sanitary, light , life saving dues.
How much will the transit cost: we have prepared the below exclusive information on new tariffs specifically for our clients.

Here is an example for a 10.000 dwt vessel with 6.000 GRT and 3.541 NRT

In essence, the tariff increase represents a reversal of the 75% discount previously granted by Ankara. Turkey has achieved a prominent international status and is making it clear to the whole world that it can lay down its own rules.

The throughput capacity of the Bosphorus and Dardanelles is currently about 45 thousand vessels a year. However, according to experts, the safe use of the Straits implies a limit of 25 thousand vessels a year. The tariff increase will enable Turkish government to raise annual revenues from 40 to 200 mln USD.

Is the price of lighthouse justified?

Turkey's economy has been severely hit and, at first glance, such a decision would have a positive impact on the increase the country's revenues. However, no level of inflation can stop Turkish authorities from announcing the launch of its titanic project - the construction of "Istanbul" artificial canal, which will serve as an alternate route of the Bosphorus Strait. Ankara plans to spend 15 billion dollars of its own as well as investment funds, and complete the construction in 6 years.

Is there any reason to panic?

Formally, there are no violations of the Montreux Convention. This fact is openly reiterated by the Turkish government, referring to the Bosphorus' environmental problems and traffic congestion. However, the alternative - a large-scale project to connect the Black Sea and the Sea of Marmara - would require an urgent payback.
Theoretically, we can assume that the possibility of closing the Bosphorus strait does exist. Turkey, like any country, has the right to do anything in its territory to improve its transport accessibility.

This is a good pretext to start cleaning or dredging works in the area.

AG CARGOBROKER
Due to the upcoming events, AG Cargobroker experts predict a 1.5 times increase in freight rates in the Azov-Black Sea region in early October: vessel owners will be including additional costs for the passage of the Bosphorus and Dardanelles in their freights, taking into account traffic in both directions.

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