China is selling so much to Russia that containers are piling up

This is according to an analysis published Thursday by Container xChange, a Hamburg, Germany-based trading platform.

“There is significant cargo movement from China into Russia but very scarce movement back to China from Russia,” Christian Roeloffs, co-founder and CEO of Container xChange, said in the report. This has a “tremendously detrimental impact on the business of container logistics because of the high imbalance of demand and supply.”

Three years ago, a line of cargo ships formed off the coast of Los Angeles, carrying an unprecedented wave of imports for American consumers to ride out the pandemic and symbolizing the warped shape of the global economy.

The pileup in Russia, however, is more closely tied to geoeconomics. Though Russia has endured sanctions from western economies since its invasion of Ukraine, the government in Moscow expects trade volume with China will top $200 billion this year, from $185 billion in 2022, Container xChange said.

Bloomberg

The result: a collapse in the secondary market for containers in Moscow, which are going for less than half the price elsewhere in the world. The average price to buy a used 40-foot “high cube” container – those with a little more capacity than a regular 40-foot box – has plunged to $580 as of this week in the city, from $4,175 in February 2022.

For new containers, the price has fallen to $1,450 from $4,309 before Russia’s invasion of Ukraine, according to Container xChange’s data.

Trade Jump

Trade between the two countries jumped 37% in the first seven months this year, reaching $134.1 billion, Container xChange said, citing Chinese customs data. China’s exports to Russia surged by 73%, reaching approximately $62.54 billion, while imports from Russia grew 15%, to $71.6 billion.

The bilateral commercial ties are only getting tighter, if recent deals are any predictor. On Monday, the China Nonferrous Metals Industry Association signed a memorandum of understanding with the Russian Aluminium Association in Beijing, saying the aim was to collaborate more closely on alumina, aluminum fabrication and aluminum products.

Earlier this month, Fesco Transport Group — one of Russia’s biggest logistics providers — signed agreements with Jilin Northeast Asia Railway Group and the Union of Chinese Entrepreneurs. “The parties plan to monitor existing container-shipping routes between Russia and China and jointly expand the pool of potential shippers in the China-Russia-China direction,” according to a press release on Fesco’s website.

Earlier this month, the Kiel Trade Indicator noted that Russian port activity has recovered close to pre-war levels.