A surge of imports from China is causing growing container congestion as Russia is flooded with more containers than it can dispatch back.
The imbalance is being accentuated by liner operators that continue to expand on the China-Russia trade lane, despite falling freight rates, a study claims.
In an attempt to improve the situation, Russian shipping companies are offering discounts to expedite the return of empty containers to China, according to an analysis by Hamburg-based logistics portal Container xChange.
“There is significant cargo movement from China into Russia but very scarce movement back to China from Russia,” said chief executive Christian Roeloffs.
“Containers are piling up in Russia, which means that the secondhand container prices are very low in Russia. You see a 40-foot-high cube container being on sale in Moscow for less than $1,000, while in other parts of the world it is almost double or even more.
“This is significant and has a tremendously detrimental impact on the business of container logistics because of the high imbalance of demand and supply of containers.”
Roeloffs said there are around 150,000 surplus containers in Russia “and everybody is looking for an opportunity to return containers back to China”.
New entrants
Despite a decline in rates, the trade has continued to attract new liner entrants, including CStar Line, which made its entry in August.
The Dubai-based company operates with a fleet of 18 small and midsize vessels and a total operated capacity of around 25,000 teu, according to Alphaliner.
CStar Line, headed by Zsolt Katona, uses a number of vessels that were initially reported fixed to the United Arab Emirates’ Mountain Air Shipping.
The ships primarily serve the Russian gateways of Vostochny in the Far East, Novorossiysk in the Black Sea and St Petersburg in the Baltic to China, Turkey and India.
A handful of Chinese players continue to expand on the trade, such as Hainan Yangpu New New Shipping, which is beefing up its Northern Sea Route service connecting China to St Petersburg.
The new liner players have been able to operate profitability, especially during the summer peak season, Container xChange notes.
Cargo volumes from Busan in South Korea to Russia’s Pacific ports increased by a robust 6% in July, although the market faces pressure from new entrants.
This has resulted in a month-on-month decrease in the average freight rate of around $100 per teu for the Busan-Far East Russia route, the study said.
