Sanctions Drive Boom in Container Trade Between Russia and India

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

One such company is FESCO (Russia’s largest container carrier), which is estimating the number of containers it moves between Russia and India could increase 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 Liner and Logistics Division of FESCO, said the company has seen a spike in the commodities traded between Russia and India. The key cargoes imported to Russia are ceramics and cereals, while those exported to India include construction materials, inorganic chemical products and paper.

As the terminal operator of 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.

The new FESCO Indian Service will operate fortnightly, departing Novorossiysk and calling at Ambarli in T?rkiye, then to Nhava Sheva and Mundra in India. This would supplement another of FESCO’s existing service connecting Russia’s Port of St. Petersburg to India’s Mundra Port.

“FESCO is expanding the geography of its container transport and countries such as India are actively considering Russia’s Far East Ports in the 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 goal was to seek opportunities for cooperation in the development of the Russian Far East and the Arctic.

“Taking into account the current geopolitical situation, the government of India attaches great importance to the development of shipping between the eastern ports of India and the Far East Ports of Russia,” said Additional Secretary of Indian Ministry of Shipping Rajesh Sinha.

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

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