News / Opportunistic players quit as the Russian freight party winds down

China-Russia freight rates have been flat for the past two years, hovering around $3,000 per 40ft, or approximately half the peak seen in mid-2022.

Opportunistic operators, many China-based, rushed to fill the gap when Russia’s invasion of Ukraine in February 2022 prompted mainline operators to shun calls at Russia. At the time, rates were as high as $6,000 per 40ft.

The story is different now. Linerlytica’s data shows that the Russia Far East trade is now served by 75 ships, with total capacity of 84,466 teu, down 17% from January, and 12% lower than a year ago.

The consultancy noted: “The Russian market was already weakening since the first quarter of this year, and resulted in the withdrawal of several Russian operators.”

Russia’s economy is reportedly slowing down, following western sanctions and the diversion of state resources to producing arms for its war on Ukraine at the expense of private enterprises.

Xeneta’s chief analyst, Peter Sand, told The Loadstar that while the consultancy had no data on China-Russia Far East shipments, he could comment on the Far East to North-eastern Europe (proxy for the Baltic Sea).

He said: “It follows the trend that we generally see into North Europe – it hasn’t collapsed, nor is it a tradelane that is used as much as was the case prior to Russia’s invasion of Ukraine.”

An executive at Sinokor Merchant Marine, which operates a South Korea-Russia service through China, told The Loadstar that now was the peak period for shipments into Russia, where importers are stocking up for Christmas.

“Sanctions make it difficult to send non-essentials to Russia, but from China, there are shippers exporting cosmetics and other seasonal items. However, the volume isn’t as high as it was two, three years back, so freight levels are generally flat.”

A few opportunistic operators and forwarders that had targeted Russia-China routes have scaled down their exposure or exited. A representative of Chinese forwarder Basenton Logistics said sanctions concerns had prompted the company to stop offering shipments to and from Russia.

Dubai-incorporated Reel Shipping, which started a Russia-China service in January 2023, is reported to be one of the leavers, with its Chinese agent, Hong Kong-incorporated Vuxx Shipping, taking over its services. And Russian operator E-Line is understood to have started bankruptcy proceedings after nearly two and a half years of operations between South Korea and Russia, and China and Russia.

Even with the downward trend in freight rates, some newcomers have yet to be dissuaded

Vuxx, operator of six of 22 containerships sanctioned last week by the US Treasury, for links to Mohammad Hossein Shamkhani, son of Ali Shamkhani, a top political adviser to Iran’s supreme leader and a former commander of the Islamic Revolutionary Guard Corps Navy, continues to operate the vessels.

Last week, Vuxx launched a China-Baltic service connecting Shanghai, Ningbo, Nansha, Damietta, Kaliningrad, St Petersburg, Damietta and Shanghai. The service will turn in 12 weeks and deploy up to six 1,500-2,500 teu ships.