Sanctions fuel boom in Russia-India container trade

Posted June 18, 2023 9:54 PM by

Brian Gicheru Kinyua

Energy ties between Russia and India have been booming over the past year, and container traffic between the two countries is also set to grow. With some of the Russian shipping companies facing sanctions from the West, the Indian market presents a new opportunity for growth.

One such company is FESCO (Russia’s largest container carrier), which estimates that the number of containers it moves between Russia and India could rise to 89,000 TEU this year from 76,000 TEU in 2022.

Speaking this week during the St. Petersburg International Economic Forum (SPIEF 2023), German Maslov, Vice President of FESCO’s Transport and Logistics Division, said the company has seen an increase in commodities traded between Russia and India. The main cargoes imported to Russia are ceramics and cereals, while those exported to India include construction materials, inorganic chemicals and paper.

As the terminal operator for the Russian Pacific port of Vladivostok, FESCO uses the port to move cargo to Asian ports with a fleet of more than 30 vessels. In February, FESCO added a new Asia service dedicated to India.

FESCO’s new Indian service will operate biweekly, departing from Novorossiysk and calling Ambarli in T?rkiye, then Nhava Sheva and Mundra in India. This would complement another of FESCO’s existing services connecting the Port of Saint Petersburg in Russia with the Port of Mundra in India.

“FESCO is expanding the geography of its container shipping and countries like India are actively considering Russia’s Far Eastern ports in renewed trade ties,” added German Maslov.

Last month, a high-level delegation from the Indian Ministry of Ports, Shipping and Waterways visited the Port of Vladivostok. The aim was to look for opportunities for cooperation in the development of the Russian Far East and the Arctic.

“Considering the current geopolitical situation, the Indian government attaches great importance to the development of shipping between the eastern ports of India and the Far Eastern ports of Russia,” said the additional secretary of the Ministry of Shipping of India. India, Rajesh Sinha.

According to a press release released after the visit, officials projected that container turnover between India and Russia would reach 760,000 TEU per year by 2040 compared to 140,000 TEU today.

Economic ties between India and Russia are about to strengthen, and the two countries are reportedly in advanced negotiations on a free trade agreement. This was confirmed in April when their respective trade ministers said they were in talks to reach a free trade agreement.