The shortage of containers threatens with a new wave of rising prices for all goods

Experts doubt that the people will feel the price reduction on themselves: problems with logistics are coming.

Victoria Pavlova

According to official statistics, by the end of July, prices in the country fell by an average of 0.39%: food prices fell by 1.53%, and non-food products - by 0.44%. With food, it is clear: the harvest season has come, vegetables and fruits have fallen in price by 11.53%. In October, the rise in prices will resume. Non-food items from socks to iPhones do not grow in garden beds, they are influenced by other factors. Now, as experts say, sellers have taken a break: they are moving away from a sharp rise in prices in the spring, adapting to the current ruble exchange rate and low demand. But problems with logistics threaten a new wave of price increases.

Achilles' heel of imports - containers

Last year, 75% of non-food items were imported. If nothing is delivered to us, then prices will go to conquer unprecedented heights. And they import, as noted by Dmitry Arzhanykh, co-founder of the SLK Group of Companies, mainly from China, and mainly in containers.

- At the moment, the main import flows come from China. Almost all groups of goods are imported in containers, excluding, of course, liquid and bulk cargo - shoes, clothing, consumer goods, equipment, etc. Even dangerous chemicals in barrels are loaded into standard 20 or 40 foot containers.

Containers have an important advantage that other shipments lack - ease of reloading from one mode of transport to another. The container can first go by sea on a ship with standard cargo spaces, then it can be loaded onto a standard rail car in any country in the world, and an ordinary truck with a standard cargo platform will take it to the final point. In the case of multimodal transportation, this is a very convenient thing. Containers are especially relevant for international transportation and delivery to some regions of Russia - adds Alexey Chernyshev, Commercial Director of AKFA.

- Containers are needed for those transportations that occur with a change in the mode of transport, and these are mainly international transportations and domestic shipments to the Far East and Northern delivery.

Russia does not control 2/3 of containers

Everyone needs containers, but a representative of the largest railway container transportation operator TransContainer of the Delo group of companies (70% owned by Sergey Shishkarev, and 30% by Rosatom) warns that the threat of container shortages has not gone away. Estimated shortage of containers from the Eurasian Union of Rail Freight Transport Participants (ESP) - 77 thousand containers, according to TransContainer, the shortage may be 100-200 thousand TEU, And the domestic container manufacturer RM Rail believes that Russian companies after the final withdrawal foreign players will need 350 thousand TEU. "Boxes" are taken away from Russia and not returned. Only 29% of the container fleet in Russia belongs to domestic owners. 31% of the containers are owned by the Chinese, and 40% are shipping containers. The largest shipping lines Maersk (controls 18% of the world's container traffic) and MSC have completely stopped deliveries to Russia, the Chinese are also not particularly holding back - they have their own shortage of 20-foot containers. But they don’t return it, since imports to Russia have dipped significantly: over 6 months of 2022, exports in freight containers grew by 1.9%, while imports fell by 2.4%.

The shortage of "boxes" directly affects the freight rates - explains Dmitry Arzhanykh .

- Problems with logistics have been observed for quite a long time - since the beginning of 2020, when widespread lockdowns occurred due to the pandemic. Even then, there was an extreme shortage of empty equipment for the export of goods from China, which led to a significant increase in rates. For example, in 2019, the rate on the China-Vladivostok route for a 40-foot container was $1,200 against the current rate of $8,000. Logistics, which is becoming more expensive every year, affects all groups of transported goods, sea freight rates have increased by more than 5 times. Therefore, of course, the cost of logistics will be included in the cost of goods, which will entail an increase in prices.

Consumers, of course, do not care how the goods are delivered - even in a container, even on a dog sled. Dmitry Arzhanykh warns that other methods will not please you with the timing and price.

- There are several options for the delivery of goods from China in addition to container sea or railway transportation. Auto-delivery is an increasingly popular story, as the transportation time is much lower - 25 days versus 40 days by sea and by rail through Vladivostok. But here the shipping cost is higher. The cost of transportation from China to Moscow for a standard truck will be about $20 thousand, and the rate for the same consignment of goods in a container (by sea + railway or only by railway) will be about $12-13 thousand. The second big disadvantage of road transport is the deteriorating situation at border crossings - long queues, tightening measures for covid (all drivers need to take a test and wait for the result). Air delivery is the most expensive option, now rates from China fluctuate between 7–10 dollars / kg for large weights from 1 ton. This method is suitable for expensive and small consignments of goods, as well as in case of urgent delivery, although here, too, the depth of booking (waiting) for departure takes up to 2 weeks.

Hour delay "X"

But a number of experts believe that it is too early to sound the alarm. Egor Tarasov , the founder of the logistics company ROKOTT Trans, is sure that there will be “boxes” for the transportation of goods for his company.

A shortage of goods due to problems with logistics is possible, but the problem is not so much in logistics as in the goods themselves. If earlier it was all produced in Europe, now the chains are changing, something is transported through Turkey, something through Kazakhstan, something through Azerbaijan, through China, through Primorye, but as such, there is no shortage of goods. The same with container ami . In fact, we find all the containers that we need - both for domestic transportation in Russia and for international ones. We do not observe any difficulties at all with domestic transportation, containers are available and rates have even fallen now. In February, these rates increased, but now we are even paid extra to rent containers on the Moscow-Vladivostok route. For international transportation, there is a certain shortage, but it is more related to the breakdown of supply chains, and not to the fact that Maersk left. In China , either quarantine, or some kind of holidays, or something else - because of this, traffic jams occur in ports, or because of the accumulation of containers, or because of the accumulation of ships, containers may return untimely from Russia or from other countries to China, and because of these container breaks, there are fewer containers in China than there were in May-June.

Regional Development Director of STS Logistics Vladimir Dorokhov adds that logistics has the least impact on the cost of goods in the case of transportation of compact but expensive items. For example, smartphones. According to his calculations, the transportation of one phone from China to Russia costs 9.4 rubles.

As long as transport companies have the opportunity to produce containers, albeit at an inflated price, consumers need not worry too much. An independent expert, the creator of the N.TransLab project, Maria Nikitina , claims that the cost of container transportation is only a small part of the cost of goods. Prices can rise only because of the shortage of the goods themselves.

Logistics in the price of traditional container goods usually does not exceed 1.5-2%. Another thing is that at the moment a failure leads to a shortage of a particular product on the market, and this can cause the price to grow uncontrollably. For example, spare parts for cars, some medicines, equipment for various production areas. Over time, with the restoration of the rhythm of supply chains, even with an increase in the cost of delivery at times, the price of products will not change significantly.

Who benefits from all this

But what if, nevertheless, pessimistic forecasts come true, and Russia is left without containers? Then there will be losers and winners. Consumers will definitely be at a disadvantage. Goods will also become more expensive due to the growth of transportation tariffs (logistics does not affect smartphones much, but there are, for example, auto parts, which are often either heavy or voluminous, there are shoes, voluminous winter clothes and a lot of other goods that you can’t fit much in one container), and simply because of the lack of imports. There is a real risk that Far Eastern pollock, for example, which requires transportation in imported containers with refrigeration equipment and cannot be packed tightly for air circulation inside the container, may rise in price significantly in the western part of Russia.

And the long painful process of import substitution will begin. Now the undisputed world leader in the production of containers is China - they produce about 400 thousand TEU per month. The capacities of Russian producers allow to produce no more than 12 thousand TEU per year. At this rate, import substitution could drag on for 30 years. It will be especially difficult to replace refrigerated containers, in which, for example, frozen fish can be transported from the Far East to the European part of Russia. Vladimir Dorokhov notes that we do not have serial production of refrigerated containers at all.

- We have experimental refrigerated containers of varying degrees of autonomy from Omsktransmash and Donskoy Mechanical Plant , but , unfortunately, these are not serial samples. In fairness, we can say that in Russia the production of (but again experimental ) refrigerated cars from RusRef is also being established , but I have not yet heard about their mass production either.

Proponents of the inevitable shortage point out that Russian containers are simply uncompetitive in price - even short 20-foot containers from China come out about 100 thousand rubles cheaper, since the Chinese government subsidizes the purchase of steel for producers of "boxes". In Russia, there are no such subsidies. But if the collapse occurs, then the producers will certainly be able to count on state support. It is this mechanism that is emphasized by those companies that warn of shortages.

Now we have containers produced by several relatively small companies - Spetskonteiner, Baltic Container, Solvig PRO, PiterEnergoMash with revenues of tens of millions of rubles a year. And there is RM Rail, which is part of Oleg Deripaska 's Russian Machines holding with a turnover of billions of rubles. He will have to become the main recipient of subsidies.

For consumers, all hope is in China, which will not abandon, will not leave Russian companies without containers, both traditional and specialized. After all, otherwise a new surge in inflation cannot be avoided - the domestic industry is not able to quickly cope with the problem. Although freight transportation is a small part of the cost of many goods, logistical difficulties will become a trigger for another surge in prices.