Unprecedented Surge in Trade Sparks Container Overload between Russia and China

Subscribe to CNN's Meanwhile in China newsletter to stay updated on the country's rapid growth and global impact.

According to a recent analysis, there has been a significant increase in the flow of Chinese goods into Russia, resulting in a buildup of shipping containers from China.

According to a report released by logistics platform Container xChange on Thursday, importers are urgently trying to return an additional 150,000 shipping containers to China from Russia. This information was provided by a customer, and Container xChange CEO Christian Roeloffs explained that there is a significant amount of cargo being transported from China to Russia, but there is a minimal amount of cargo movement back to China from Russia. As a result, there is an accumulation of containers in Russia, leading to extremely low prices for secondhand containers in the country.

Following its invasion of Ukraine, Russia has turned to China as a vital economic lifeline, countering the trade restrictions and sanctions imposed by the United States and its allies. While China claims neutrality and promotes peace in Ukraine, its leaders view Moscow as a valuable ally and a necessary counterbalance against Western hostility. China has vocally opposed Western sanctions on Russia, while simultaneously increasing its energy purchases from Moscow and becoming a crucial provider of consumer goods for the Russian market.

The decline in container prices by seven-fold since early last year can be attributed to the container glut, which is a result of the "growing trade imbalance between Russia and China" in terms of containerized product shipments, as stated by Container xChange.

Chinese customs data released earlier this month revealed that bilateral trade witnessed a 32% increase in the first eight months of 2023 compared to the same period in the previous year, with total trade volume amounting to $155 billion.

This image, provided by the Sputnik agency, shows Russia's President Vladimir Putin delivering a speech at the Eastern Economic Forum in Vladivostok on September 12, 2023. (Photo by Mikhail METZEL / POOL / AFP) (Photo by MIKHAIL METZEL/POOL/AFP via Getty Images)

Mikhail Metzel/AFP/Getty Images

Putin lauds 'excellent' economic ties with China. Here's how they've grown

Exports from China to Russia experienced a significant surge, increasing by 63.2% from the previous year to reach a total of $71.8 billion. On the other hand, imports into China witnessed a more modest growth of 13.3% amounting to $83.3 billion. Russia has expressed its anticipation for trade with China to reach an unprecedented milestone of $200 billion this year, surpassing the target set by President Vladimir Putin and Chinese leader Xi Jinping in 2019, an entire year ahead of schedule.

Russia's expanding trade relationship has led to a shift in its energy trade towards the east, causing concern that China's economic assistance is fueling Russia's conflict with Ukraine. Container xChange reports that the specific goods being traded are leading to an excess of shipping containers in Russia.

Chinese suppliers are primarily selling cars and consumer electronics to Russia, taking advantage of the departure of numerous global brands from the country following the invasion.

Russia supplied nearly 20% of China's crude imports in July, as reported by the Organization of the Petroleum Exporting Countries. According to the International Energy Agency, China and India combined accounted for 80% of Russian oil exports in the same month.

Container xChange also highlighted the logistical challenges arising from changing trade patterns and congestion. The report mentions that overloaded Russian ports and roads create transportation inefficiencies. Despite efforts to enhance infrastructure, financial limitations and the measures taken to address budget gaps further complicate the situation.

"Russias pivot to Asia hinges on substantial infrastructure development," it added.