Container crisis: imported goods in Russia will rise sharply in price

MOSCOW, 28 Feb – RIA Novosti, Natalia Dembinskaya. The sudden shortage of containers has sharply inflated freight rates. As a result, imported clothing, footwear, furniture, food, electronics and household appliances may rise in price. What happened in the transportation market and how prices will change – in the material of RIA Novosti.

Shortage of containers

The cost of container shipping has skyrocketed 250 percent since December. Thus, the route from Asia to Europe, which is key for the Russian consumer, has quadrupled in price. For a forty-pound container, they now ask for $ 8.7 thousand.

Until November, transportation together with freight from any port of China cost 2.3 thousand, of which 800-850 was the actual transportation.

“For example, in September one container cost 1,5-2 thousand dollars. In January it was already 9-11. In February, tariffs were fixed at a high level,” said Ilya Bartosh, Operations Director of the First Expeditionary Company.

It's all about a sudden deficit. Before the New Year, demand traditionally increased, and then it became clear that there were not enough containers for cargo. The pandemic has caused imbalances in trade and logistics.

As market participants explain, if there is a demand for containers in the region, as in the Far East, the owner is even ready to subsidize shipping in this direction. Conversely, the price rises sharply when containers are transported to places where there is almost no demand for them.

Market imbalance

“The growth in the cost of container transportation in the winter months is due to the fact that the Chinese economy is rapidly recovering after the removal of pandemic restrictions and it needs a lot of containers for cargo. So much so that the cost of sending a container from China rose ten or more times,” Stanislav explained to RIA Novosti Puchkov, head of the container transportation department of LLC “Baikal-Service TK”.

Now the situation has stabilized a little, but the imbalance in directions remains. “So, if earlier there was an approximate parity in the cost of transporting a container from the Far East and back, now transportation along the Shanghai – Moscow route is six to seven times more expensive than in the opposite direction,” the analyst points out.

Evgeny Afanasyev, head of the Appraisal and Financial Consulting department of the SRG group of companies, speaks of a threefold increase in rates. The result is an increase in the prices of non-food products. Since a significant share of imports comes from sea transport, the crisis will undoubtedly affect Russia as well.

According to analysts, so far the consumer does not notice anything thanks to the stocks accumulated by retailers. However, if sea freight does not return to previous values in the near future, many goods will rise in price significantly.

Household appliances and electronics

The Association of Retail Companies (AKORT) warned about this in a letter sent to the Ministry of Industry and Trade. Retailers also noted an increase in the cost of rail transit.

As analysts and market players explained to RIA Novosti, first of all, prices will rise for inexpensive but bulky goods that take up a lot of space in a container. If the product is compact and expensive (for example, a smartphone), its cost will most likely not change.

“The AKORT letter concerns the supply of foreign goods, which will rise in price due to the increase in tariffs for railway and sea transportation. This will mainly affect the sector of electronics, household appliances, clothing and footwear, without affecting, for the most part, consumer goods”, – specifies Dmitry Smirnov, director of business development for the IT company CROC in retail.

Furniture and equipment

“Electronics, household appliances and furniture can add 10-20 percent. Clothes, shoes, toys – three to five”, – predicts Afanasyev from the SRG group of companies.

Also on the list are heavy and high-tech industrial equipment that has no domestic counterparts. According to Evgeny Galygin, head of CGS Logistics, “prices will rise by 10-15 percent.

As noted by Ilya Bartosh from PEK, in the future, the rise in the cost of logistics may affect the cost of goods produced in Russia from imported raw materials. An example is confectionery, since coconut and palm oil are imported from China, or shampoos, the raw material base for which is also delivered from China. In addition, a rise in the price of PET packaging, also made from Chinese raw materials, is very likely.

Nevertheless, analysts do not expect a massive rise in prices in Russian stores: the container crisis has affected only a few countries, although they have a decent share in Russian imports.

Experts also emphasize that this is a temporary post-pandemic phenomenon. The peak of the cost of transportation has passed, in three or four months they will begin to fall in price. Accordingly, by the summer, prices may return to their previous values.

Author: wedocount

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