Congestion in container shipping declines, sanctions hit Russia's trade hard
November 7, 2022
in container shipping is receding at a high level. This is shown by the latest
data update of the Kiel Trade Indicator for the month of October. Freight rates
for the transport of goods from China to Europe are at their lowest level since
around 2 years. Trade values globally and for major economies compared to the
previous month tend to be negative (price and seasonally adjusted). In the case
of Russia, the sanctions are having an impact. The country is missing imports
worth around 4.5 billion US Dollars per month.
According to the latest data update by the Kiel Trade Indicator, world trade
volumes slightly decline month-on-month by 0.8 percent (price and seasonally
adjusted). For Germany, indicator values point to a marginal decrease for
imports (-0.9 percent) and no significant change for exports (-0.2 percent).
There is also little change in trade of the EU, as imports (0.0 percent) and
exports (1.0 percent) lie on previous month’s levels or slightly above.
For the United States, the Kiel Trade Indicator signals no change to import
levels (0.0 percent), but a reduction of export levels (-2.7 percent). Values
indicate no significant change to import levels of China (0.9 percent) and a
strong increase of exports (10.1 percent).
“Global trade is showing an unsteady path, even if this development is not
evenly distributed across all countries. German exports have been following this
sideways movement in price-adjusted terms for several months now, so the
difficult economic conditions are obviously having a noticeable impact on German
exporters,” says Vincent Stamer, Head of Kiel Trade Indicator.
”China's export growth over the month of September is a positive outlier in
global trade. It remains to be seen if this marks an easing of China's
restrictive zero-Covid strategy and if this implies a sustainable positive trend
for Chinese exports. Large monthly trade changes are historically not unusual
for Chinese trade.”
In Russia, the sanctions imposed by Western countries are having an impact. Both
for exports (-2.6 percent) and for imports (-0.4 percent) the indication for
monthly changes to trade volumes are negative. Trade had already slumped
significantly in recent months, especially with the EU.
Russia's official statistics agency has not published any import figures for
several months now, apparently to conceal the effect of the sanctions against
Russia. An analysis of exports from 57 countries and regions to Russia,
including the EU and China, for the summer months of June, July, and August 2022
shows that Russia imports around 24 percent fewer goods per month than in 2021.
The monthly import gap is around 4.5 billion US Dollars.
While the EU was Russia's most important trading partner in the summer of 2021,
China has now taken over this top position. Compared to the previous year, the
EU exports 43 percent fewer goods to Russia, while China exports 23 percent
more. However, the increase in exports from China to Russia lost momentum in
”Since China’s exports are currently not sufficient to compensate for the drop
of Russia’s trade with the EU, Russia's efforts to replace slipping imports from
Europe are proving increasingly difficult. The sanctions imposed by the Western
alliance are apparently hitting the Russian economy hard and noticeably limiting
the population's consumption options,” Stamer said.
This is also indicated by the decline in cargo unloaded at Russian ports. St.
Petersburg, formerly Russia's largest container port and an important hub for
trade with Europe, for the first time achieved less than 10 percent of the
previous year's volumes in October. The major port in the Black Sea,
Novorossiysk, also realized only 50 percent of previous year’s trade. The port
of Vladivostok, which is important to the handling of trade with Asia, has also
seen declines in incoming cargo, so that the disappearing trade between Europe
and Russia cannot be compensated there.
ship congestion around the globe continues to show signs of easing at a high
level. Currently, 10 percent of all goods shipped worldwide are in congestion.
Since the beginning of the year, freight rates from China to Northern Europe
have fallen by around two thirds. For the first time in around 2 years, prices
for a standard container are again below 5,000 US Dollars and thus close to the
level before the outbreak of the trade crisis. On the route from China to North
America, prices began to fall somewhat earlier.
Stamer: ”The significant drop in freight rates is a positive impulse for global
trade and thus also for the German economy. If rates remain low and global
shipping congestion continues to ease, low transport costs could partly
counteract fears of recession in exporting industries.