Asia-Russia ocean rates to fall as import growth plateaus
Volume through Russian Far East ports like Vladivostok surged in the first half of 2017.
Asia-Russia ocean shipping spot rates could decline 30 to 40 percent from current levels by the end of this year as Russia’s economic growth slows and inventory builds up.
Spot ocean shipping rates from Shanghai-St.Petersburg via the Vladivostok port range from $3,585 to $3,700 per TEU, while all-water rates from Shanghai-St.Petersburg are between $1,200 and $1,400 per TEU. Those rates are up 150 percent year over year, but analysts from Russian container line FESCO expect rates to begin falling in August or September.
Growth in Russian imports over the past 10 to 12 months came from the economy readjusting to Western sanctions put in place in 2014 and 2015, but now that the adjustment is complete, growth will slow, said Ivan Korenev, deputy director of Megatrans, an importer of Chinese-made household goods. Russia’s GDP will increase 1.5 percent this year after contracting 0.4 percent last year, according to IHS Markit forecasts.
Another factor in the slower growth is that Russian wages have stagnated over the past 12 to 14 months, which means that goods imported during the last growth spurt are now sitting idle in warehouses and suppressing future demand, according to the Russian Union of Industrialists and Entrepreneurs. Russian inventories grew 0.6 percent last year and will grow 0.4 percent this year, according to IHS Markit.
Russian container volume increased 15.3 percent year over year to 2.3 million TEU in the first half, according to statistics from the Ministry of Transport.
Containerized imports rose 24 percent to 971,570 TEU, led by ports in Russia’s Far East, where import traffic surged 47 percent year over year to 340,098. Russian exports rose 15 percent year over year to 952,060 TEU.
Analysts expect that import growth will slow to between 10 and 15 percent in the second half, leading to the dramatic drop in rates by year’s end.