China's exports to Russia outpace inbound shipments, raising trade imbalance concerns

Russia is currently grappling with managing around 150,000 surplus shipping containers in its rail depots, a consequence of a substantial increase in the influx of Chinese goods into the country, while there needs to be more outward-bound movement. According to an analysis released by Hamburg-based trading platform Container xChange on September 28, 2023.

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

China is the largest consumer and producer of aluminium, accounting for more than half of the global consumption. China is the major contributor to the increase in production of alumina, with an estimated 78.8 million tonnes, making up around 57 per cent of the global output in 2022.

The congestion in Russia, however, primarily stems from its geo-economic situation. Despite facing sanctions from Western nations due to its Ukraine-Russia geo-political crisis, the Russian government anticipates that its trade volume with China will exceed $200 billion this year, up from $185 billion in 2022, as Container xChange reports.

Consequently, the secondary container market in Russia has experienced a significant decline, with prices plummeting to less than half of their global counterparts. For instance, the average cost of purchasing a used 40-foot "high cube" container, which offers slightly more capacity than a standard 40-foot container, has fallen to $580 in the city this week, down from $4,175 in February 2022.

According to the Chinese customs data, trade between the two countries increased by 37 per cent in the first seven months of 2023. Exports from China to Russia increased by 73 per cent, reaching $62.54 billion, while imports from Russia grew 15 per cent to $71.6 billion.

Bilateral trade relationships continue to strengthen, as indicated by recent agreements. A few days back, the China Nonferrous Metals Industry Association and the Russian Aluminium Association signed a memorandum of understanding in Beijing. This memorandum aims to foster enhanced cooperation in aluminium fabrication, aluminium products and alumina.

Russia's leading logistics provider, Fesco Transport Group, entered into agreements with Jilin Northeast Asia Railway Group and the Union of Chinese Entrepreneurs. Fesco revealed that these parties intend to collaborate on monitoring the current container shipping routes connecting Russia and China, with a shared goal of expanding the pool of potential shippers in the China-Russia-China direction.

However, in a separate development, the Kiel Trade Indicator reported that Russian port activity has rebounded, nearly reaching levels seen before the geopolitical crisis.