China Prepares New 'Surprise' For Russia

Delivery of goods from this country by sea has risen by a third.

A new feature for suppliers of goods to Russia – transportation by sea from China is quickly becoming more expensive, according to transport companies and importers. These additional costs will be translated into prices.

The unexpected revival of world trade amid problems with shipping on the most popular routes in the Red Sea and the resulting shortage of containers in China began to affect the price of goods in Russia. Over the past two weeks, the freight rates of a sea 40-foot container from Shanghai to Moscow by sea and by rail have increased by 13% from $6,000 to $6,800, following from the prices that ten transport companies sent to The Moscow Times. Now they are 35% higher than in the second half of April – then, according to the logistics company Tradest, the rates slightly exceeded $5,000.

Prices are also rising in other major shipping destinations to Russia – St. Petersburg and Novorossiysk, the Tradest review notes, and this trend is not yet expected to reverse, because it is associated with a shortage of containers in the Chinese market.

"At the end of June, we are already offered the sea+railway to Moscow for $7,250," the manager of the clothing company said. "Like many of our colleagues, we are switching to delivery of goods by trucks from China, where prices are more stable – from $3,500-4,000 per truck," says the importer of tableware. Just book free seats, otherwise you will not take your cargo anywhere at all, says the manager of a large transport company in response to this. None of them foresees a quick solution to the problems.

Shortages of ships and containers due to shipping problems on the most popular trade routes in the Red Sea have spread across Asia and led to the Shanghai SCFI Container Index reaching its highest level since September 2022 by mid-May, rising by another 7% over the past week. The largest shipping operator in the world, Danish Maersk, claims that the loss of capacity on the Asia-Europe and Mediterranean routes has reached 15-20%, Linerlytica's resource indicates.

The situation with effective capacities is not as deplorable as the carriers assume, but high demand, ahead of all forecasts, caught the market by surprise, since container equipment and ships are also in short supply, Linerlytica experts note. In almost all ports in Asia, shippers are forced to wait for empty containers – from several days to a week, and in China, 40-foot containers are almost running out, analysts at another logistics resource Drewry say.

In the case of Russia, the situation is exacerbated by an imbalance in trade: imports are mainly goods and equipment, and the main export item is energy. “Russia is a very big country. And therefore, containers get stuck here," experts of the Center for Economic Forecasting of Gazprombank ironize. According to their estimates, since the beginning of 2023, 530,000 20-foot containers more have been imported into Russia through ports and by rail than exported from the country.

Some of the empty containers are taken out for storage, sold or handed over for metal, but most of the equipment remains in warehouses, limiting the possibility of cargo handling. Recently, the problem has become so aggravated that one of the largest foreign sea lines has banned from April 1 to hand over its containers in Yekaterinburg under the drop-off scheme (a fee for the return of a container belonging to the carrier in a place other than the destination), and in most other cities tariffs have reached maximums, having increased several times since mid-2023, CEF experts note.

The Center for Price Indices (CPI) also records an increase in the cost of delivery from China. According to him, in May, prices for direct transportation of containers from China to Russia began to rise, which until then had been steadily declining throughout the year. By the middle of the month, according to the CPI, they added up to 8% depending on the route.