In 2024, Russia started gradually tightening its trade policies with China which has had a significant impact on the operation of the China-Europe Railway Express. In the first quarter of this year, the number of trains and freight volume of the China-Europe Railway Express decreased, with the number of outbound trains dropping by 22.5% and the number of containers sent down by 24.8%.
According to data released by the China State Railway Group, the number of trains operated by the China-Europe Railway Express has been declining year-on-year for three consecutive months.
In March, a total of 1592 trains operated on both outbound and inbound journeys, a 1.3% decrease compared to the same period last year; and 164,800 standard containers were sent, marking a 7% decrease. From January to March, a total of 4250 trains were operated by the China-Europe Railway Express, a 6.4% decrease compared to the same period in 2024, and 445,800 standard containers were sent, a 9.7% decrease year-on-year.
Finance New News pointed out that the significant decline in outbound operations is the main reason for the overall drop in China-Europe Railway Express data.
From January to March, a total of 1936 outbound trains were operated, showing a 22.5% decrease year-on-year, and a total of 204,900 standard containers were sent, a 24.8% decrease compared to the same period last year. In March, 759 outbound trains were operated, a 16.3% decrease year-on-year, while 76,300 outbound standard containers were sent, a 22.5% decrease. Additionally, 833 inbound trains were operated, an 18% increase year-on-year, and 88,500 inbound standard containers were sent, a 12.3% increase.
In February, the China-Europe Railway Express operated 422 outbound trains, a drastic 43.3% decrease year-on-year, and sent 48,300 standard containers, a 43.4% decrease. In January, the number of outbound trains operated was 735, and 80,200 standard containers were sent, both showing a 9.5% decrease year-on-year.
Yang Jie, General Manager of EU-Bao International Freight Agency (Suzhou) Co., Ltd., told Finance New News that since the fourth quarter of last year, the company’s source of goods has gradually been affected. Since January and February this year, there has been a noticeable shortage in the market and downward pressure on freight rates has increased. “In February and March, the freight rates from Eastern China to Moscow dropped from $9,000 per 40-foot container in October 2024 to $4,500 per container.”
The company is a Sino-foreign joint venture and its main business is focused on the China-Europe Railway Express.
Yang Jie expressed that the decrease in the operation of the China-Europe Railway Express since last October is a result of the combined effects of a decrease in Chinese exports of automobiles to Russia, goods bound for Europe being seized by Russia, a decrease in Russian purchasing power, and adjustments to the ruble exchange rate.
After the outbreak of the Russia-Ukraine war, China became a major exporter of automobiles to Russia, accounting for approximately 20% of China’s automobile exports.
According to reports from First Financial, before the outbreak of the Russia-Ukraine war, European car manufacturers dominated the Russian market, with German and French brands collectively accounting for about 30% of the market share, domestic Russian cars holding 25%, Korean cars over 20%, Japanese cars at 17%, and American cars below 10%.
Since 2023, impacted by sanctions, European and American car brands have largely exited the market, leading to an increase in the market share of domestic Russian cars to 40%. Chinese car manufacturers took advantage of this situation, with their market share in Russia surpassing 50% in 2023 and reaching 60% in some months of 2024, and reaching 67% in the third quarter of the year.
Since 2024, Russia has begun implementing a series of measures to tighten car imports.
Starting from April 1, 2024, Russia started requiring additional taxes for cars entering through Central Asian countries, including tariffs, value-added tax, and consumption tax. Previously, to avoid high taxes in Russia, some Chinese cars were transshipped through countries such as Kazakhstan and Kyrgyzstan before entering Russia.
Subsequently, Russia announced an increase in the scrapping tax for imported cars from October 1, 2024, by 70% to 85% depending on the model, with tax rates scheduled to increase by 10% to 20% annually starting from January.
However, Chinese car quality has been called into question. In February this year, Russian Minister of Industry and Trade Alihanov stated that imports of trucks from three Chinese brands do not meet Russian regulations and should not be on the roads at all. Russia plans to take measures including revoking certificates and cooperating with the prosecutor’s office, and stricter certification checks will be required for foreign imported cars.