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An interesting set of trade dynamics is playing out as market demand for Chinese products has recovered throughout Eurasia, while at the same time the Middle East is experiencing significant logistics problems.
In February 2026, business activity in China grew at its strongest pace in the last 5 years, with the composite PMI rising to 52.1 (+1.8 p. m/m), reaching its highest level since December 2020. The key driver behind this has been powerful growth in production volumes and demand, with new Chinese export orders showing the strongest dynamics since September 2020.
Against this background of strengthening market demand and the launch of new production lines, business expectations jumped to an 11-month high. The strengthening of business activity and optimistic expectations of manufacturers indicate that high demand for export transport from China will be maintained.
Demand for Asia-Europe sea transport is recovering after the Lunar New Year holidays in China and Asia, but continuing growth rates are not high. Manufacturing activity in Asia is growing, but counterbalancing this is that Eurozone economic growth remains modest or even static – ongoing inflation and weak consumer confidence restrain demand for imports. This is impacting Eurasian regional logistics.
Based on the results of January–February—ongoing, the Iran conflict blew up—the volume of China-Europe-China rail container transport grew by 25% year-on-year, while the volume via the Central Eurasian Corridor increased by 31% over the year. The total volume of transport via all routes grew by 28% year-on-year, also increasing by 1% m/m.
But against the backdrop of Middle Eastern volatility in the sea and aviation markets, individual forwarders are now recording increased demand for Eurasian rail connectivity.
For example, for shipping Shanghai-Rotterdam, as of 5 March 2026, this was priced at US$2,052/FEU and had been decreasing. But as of 12 March, the Shanghai-Rotterdam indicator increased by 19% to US$2,443/FEU. For the second half of March, shipping lines have planned rate increases due to a sharp rise in fuel costs and insurance premiums, with average quotes now in the range of US$3,000 to US$4,000/FEU depending on the carrier.
Fuel costs are also increasing despite signals of a possible end to the conflict with Iran. The bunker market continues to react to the previous jump in quotes. From 27 February to 10 March, the price of very low sulfur fuel oil (VLSFO) in Singapore doubled and broke the US$1,000/t level. Major container lines are introducing emergency fuel surcharges from 16 March.
Kuehne + Nagel warns of airport congestion in Asia due to the closure of airspace over the Middle East. About 18% of global cargo capacity has effectively exited the market following the closure of regional airports. Against this backdrop, congestion is expected in China and Southeast Asia on routes to Europe, a situation that resembles the Covid pandemic imbalance of supply and demand and is seeing air carrier rates increase even more than shipping. In terms of predictions, most carriers are now looking at the following scenarios between Asia and Europe in terms of maritime routes:
- Short Term
“High volatility in the market will most likely result in rate increases and further service deterioration for shippers. Increased market volatility against the background of the conflict in the Middle East. Delays will persist in key ports, and the operational environment will most likely continue to deteriorate.” - Medium–Long Term
“The escalation of tension in the Middle East has reduced the likelihood of resuming shipping through the Suez Canal. Insurance companies have begun to withdraw war risk coverage for the Persian and Oman Gulfs, which makes the operation of commercial vessels practically impossible without specialized insurance premiums at inflated rates. Even after the cessation of the conflict, up to six months may be required to assess the situation.”
Against this background of disruptions, logistics companies are beginning to consider road transport as an alternative for urgent cargo. Road delivery on the China–Europe route via Central Asia currently takes about 14–18 days. Infrastructure development and the simplification of border procedures in Central Asia, primarily in Kazakhstan, make this corridor increasingly competitive for transporting high-value-added cargo.
The Middle East conflict has hit global supplies of oil, gas, aluminum, and fertilizers, which has temporarily increased the attractiveness of Russian raw materials on world markets. Simultaneously, the halt of shipping in the Strait of Hormuz has paralyzed container transport in the region, causing an explosive growth in freight rates and insurance.
For Russia, the escalation has become a double-edged sword: in the short term, it promises excess profits from rising energy prices, but the decisive factor is the duration of the conflict. A prolonged war risks collapsing global demand for raw materials and provoking a recession, which ultimately nullifies current benefits. Chaos on sea routes creates a window of opportunity for alternative routes: land corridors and the Northern Sea Route become more competitive against the backdrop of the unpredictability of traditional sea transport.
Between January and February 2026, 1,224 million loaded and empty containers (TEU) were transported via the Russian Railways network in all types of communication, a decrease of 4.9% year on year. For February, the volume was 589,600 TEU.
At the beginning of March, the CACI container index rose to US$6,778/FEU (+2% m/m). This increase is due to the rise in rates for direct container trains from China to Russia, as tariffs increased by an average of US$300/FEU (+6% m/m) against the background of a shortage of space on rail services, as well as mass delays in the departure of trains from Chinese stations. At the same time, sea freight rates from China to the western and southern ports of Russia showed weak dynamics in February and are set to decline further given the situation in the Middle East and Ukrainian attacks on shipping heading for Russian ports in the Black Sea.
Current rates on Russian railways are as follows:
- Kazakhstan: (Altynkol/Dostyk–Moscow): US$3,350 FEU
- Mongolia: Zamyn-Uud – Moscow): US$3,700 FEU
- China: (Manzhouli–Moscow): US$3,500 FEU.
Some logistics platforms record an increase in demand for spot shipments and are raising rates for such transport by US$500. The current situation with container trains from China to Russia is characterized by increasing delays, especially on eastern routes. The greatest problems are recorded for shipments via Manzhouli and Erlian, where delays reach 2–4 weeks and also affect rail connectivity for Chinese suppliers in Zhengzhou, Changsha, and Shijiazhuang.
Routes via Kazakhstan (Alashankou/Khorgos) remain more stable with delays within 1–7 days; however, a deterioration of the current situation is also taking place there.
According to forecasts, the volume of container transport via the Russian Railways network will reach 8 million TEU by 2027 (+5.3% from 2025) and will grow 1.5 times to 10–12 million TEU by 2035. Constraints remain the volatility of sea rates, dumping by Chinese road carriers, and sanction pressure, while growth drivers will be tariff discounts on North–South INSTC routes, the development of terminal infrastructure, and attracting transit from sea transport to the railway.
However, the Railway Market Confidence Index remains in the negative zone for the fourth month in a row. The main reason was record snowfall, which, combined with Russian Railways regulatory restrictions, led to failures in European operators’ work. In the container transport segment, the situation was complicated by the introduction of new rules for train formation: the dispatch of trains from a number of stations to China via Kazakhstan now requires a length of at least 71 conventional wagons, which contradicts the technical capabilities of the adjacent side and increases downtime at the border. Market participants note that the current situation is characterized by a lack of short-term improvement prospects, and emerging from the crisis will require significant investment under conditions of long-term demand uncertainty.
Summary
In short, Russian Railways is operating at almost 100% capacity, with only deft logistics management able to service the demand. Some of this involves the use of non-Russian railways, such as those operating across Kazakhstan; however, the prognosis for Europe is not positive—even if they opened their borders to Russian railway connectivity (which appears unlikely in any event).
While China and Russia have some shipping access via the Strait of Hormuz and potentially the Suez Canal, shipping insurance rates are making these supply chains prohibitively expensive for operators—unless governments step in to subsidize rates. Then there is the additional risk posed by Ukraine attacking ships, regardless of nationality, approaching Russia’s Black Sea ports.
These negative dynamics mean that there are five alternative short-term solutions, although none solve the total logistics squeeze; combinations could be effective:
- Working with other Eurasian rail operators to squeeze more staggered TEU capacity onto Eurasian railways to relieve some of the pressure on the Russian network;
- Increase shipping via the Northern Sea Route;
- Increase shipping via the Russian River network and inland ports;
- Increase road traffic on Eurasian highways to and from Russia.
- Increase supply chains between Russia, East Asia, and South America.
Either way, the intensity of the Middle East conflict has shown where supply chain weaknesses exist. With the world seemingly entering a prolonged period of volatility, both Russia and China and the Eurasian countries concerned, together with outliers such as India, will be looking to secure transit routes that bypass the Middle East. That means making deals with and placing investments into Afghanistan, better connectivity with Turkmenistan, and the further development of logistics infrastructure in Uzbekistan.
As we pointed out here — new airport, road, and rail infrastructure can be expected to develop in Mary and Bukhara, while the need for the Trans-Afghan railway to be built and operational is starting to become a critical requirement.
