China-Europe Rail Freight Slump Continues Amid Russian Headwinds
By Zou Xiaotong and Wang Xintong
China-Europe rail freight declined in March, extending a slump since January, triggered largely by trade headwinds and policy changes in Russia, a major transit hub.
In March, the number of China-Europe freight train trips fell 1.3% year-on-year to 1,592, while cargo volume dropped 7% to 164,800 twenty-foot equivalent units (TEUs), according to data from China State Railway Group Co. Ltd. This continued the downward trend seen in the previous two months, although the rates of decline in both trips and volume did ease in March compared with the double-digit drops recorded in February.
In total, the number of China-Europe freight train trips fell 6.4% to 4,250 and cargo volume dropped 9.7% to 445,800 TEUs in the first quarter, data from the state rail operator showed.
Industry sources attributed the slump to multiple factors, with Russia at the center, through which the majority of China-Europe trains pass.
China-to-Europe freight demand began declining in the fourth quarter of last year and deepened sharply in January and February this year, according to Yang Jie, general manager of BFE International Freight Forwarding (Suzhou) Co. Ltd. This caused freight rates to plummet — from $9,000 per 40-foot container in October 2024 to $4,500 last month, Yang said.
Russian policy changes have played a major role. A major factor has been Moscow’s successive tightening of auto import rules, including requiring vehicles entering from Central Asian countries to pay additional duties from April 2024. This targets Chinese cars that previously used countries including Kazakhstan and Kyrgyzstan as transit points to avoid higher Russian import tariffs. Russia also hiked auto recycling taxes by 70% to 85% in October, further denting local demand, which accounted for 20% of China’s total auto exports last year. Moscow also suspended sales of a Chinese truck model in February this year.
Compounding the problem, Russia began seizing Europe-bound goods in late 2024 under a new directive expanding its list of dual-use items — those with both civilian and military applications — and banning them from transiting the country. Liu Zan, general manager of CMC Logistics (Hunan) Co. Ltd., told Caixin in late January that their firm had 70 containers detained, while another logistics source estimated that over 1,000 had been affected overall.
Yang also cited Russia’s weakening purchasing power and the ruble’s depreciation as two contributing factors for the decline in demand.
Still, BFE International Freight observed a slight rebound in March volumes after rail authorities that month lowered the minimum container requirement per train to boost trade, Yang said. He expects a modest freight rate increase by May, but warns that a broader recovery may not come until mid-2025.
Denise Jia contributed to this story.
Contact reporter Wang Xintong (xintongwang@caixin.com) and editor Jonathan Breen (jonathanbreen@caixin.com)
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