Central Russia returns empty containers to China at a discount

The rise in imports from China has led to a backlog of empty containers in Central Russia, and operators are now offering negative rental rates to bring containers back to the east. The rate includes a discount, which for the operators’ own containers is $400-1100 when transported from Moscow to China in relation to the sender’s containers. Analysts warn that this situation will persist in the medium term. However, market participants note that the situation is not unique and repeats from year to year during periods of accumulation of containers in the Russian Federation.

According to the analytical report of the Center for Price Indices (CPI) of Gazprombank, in May, the rates for the transportation of containers were reduced “against the background of an increase in the amount of discounts, provided that a fitting platform is provided for transportation together with a container owned by the carrier.” Due to the growth of imports of containers and their accumulation in Central Russia, operators are forced to provide preferential tariffs for the return of containers. In particular, for the transportation of cargo in a 40-foot container owned by the operator to China from Moscow, the operator will give the client a discount of $400-1100, while transporting from St. Petersburg and Yekaterinburg – up to $400, the report says. There is also a discount on certain domestic routes for the transportation of goods in the operator’s containers: Moscow-Vladivostok – 50-120 thousand rubles, Moscow-Novosibirsk – 50-70 thousand rubles.

Overland transportation of containers is growing in 2023, sea transportation is gradually recovering. Transportation of containers through the network of JSC Russian Railways in May increased by 22%, to 626.1 thousand TEU, in five months – by 11.3%, to 2.97 million TEU. The main increase, according to JSC Russian Railways, was achieved through the transportation of fertilizers (growth by 3.1 times), chemicals (growth by 9.8%), food products (by 40%), cars and spare parts (growth by 1.7 times) , machines, machine tools and engines (by 22.9%) and so on. The container turnover of Russian ports in May increased by 36% to 428.7 thousand TEU, in January-May it fell by 1.1% to 2 million TEU.

Roman Shagalov, CCI analyst at Gazprombank, explains that operators interested in returning containers to China and the eastern regions of the Russian Federation include a negative rate for using containers in the transportation service. This situation, he notes, is observed throughout 2023.

At the same time, the import of containerized cargo from China to the central regions of the Russian Federation, primarily to Moscow, is constantly growing, and with it the size of this negative rate is also growing. According to him, this situation will continue at least in the medium term.

In three profile companies, Kommersant confirmed that the trend was traced correctly, the spread between rates is the same as reported by the CCI. At the same time, one interlocutor of Kommersant says that this is a normal market story that repeats itself from year to year: when containers accumulate in Russia, operators give a discount on the return, but then the container is concentrated in China, and it disappears. The interlocutor of Kommersant notes that the determining factor is seasonality. Alexander Podylov, Vice President of TransContainer, says that the company sets tariffs “based on the needs of customers, the current load of the infrastructure, as well as the availability of rolling stock and containers to solve logistics problems in a particular region.”

According to Gazprombank’s CIC, an additional factor in the reduction of container transportation rates is increased competition between carriers in key import directions, which is associated not only with the launch of new regular container services, but also with the growth of container transportation in gondola cars. In April, the report notes, the share of gondola car operators in the transportation of imported containerized cargo amounted to 7.1%. In an interview with RZD-TV last week, Irina Olkhovskaya, Director for Port and Railway Projects of the UMMC, said that in June, the port of Vostochny handles the same number of containers in gondola cars as in the whole of last year, and the shipment for five months amounted to 11.6 thousand TEU .

Natalya Skorlygina