September 17, 2021

Due to the melting of ice in the Arctic, coastal countries of the Arctic region are carefully studying the increase in navigation opportunities in polar waters. For the time being, according to scientists’ forecasts, year-round navigation for transport container ships (not nuclear icebreakers) is not expected, and serious climate risks typical for the territories beyond the Arctic Circle will persist for a long time.

Nevertheless, since geometrically the Northern Sea Route (NSR) from Europe to Asia is two times shorter than the transportation of goods through the Suez Canal, a number of countries, primarily Russia, China and the United States, hope to actively use this route. Most of all, this hope is nursed by the Russian Federation, as the NSR runs along its coastline. It expects for various profits from the use of the NSR by other countries.

In fact, a serious contradiction occurs here: the Russian Federation insists that the NSR passes through its internal sea waters, the territorial sea and the exclusive economic zone. In turn, the United States, China and other countries consider that the NSR passes through international waters.

In general, geographically, the NSR stretches from the Barents Sea to the Bering Strait. In legal terms (that is provided by the Russian law No. 132 of 2012), the NSR is shorter – from the Kara Gates in the West to Cape Dezhnev in the East. That is, at the moment, even such large harbors as Arkhangelsk and Murmansk are not included in the list of harbors of the NSR.

However, Russia plans to go beyond the legal boundaries of the NSR by launching the so-called Northern Sea Transit Corridor on its base till 2035. The new sea line is to become a unified transport system for practically all ports and infrastructure in the Far North of Russia.

In general, these legal peculiarities are not of interest to the Russian Federation, while the logistics specialists from trading companies face the main question: is it really commercially profitable to start developing a navigable route through the waters of the Arctic?!

Russia, in turn, highlights the following benefits for the use of NSR:

– a shorter route from Europe to Asia reduces the length of the sea journey;

– a short journey reduces the cost of fuel, staff wages and ship freight;

– there is no payment for the passage of the vessel, as opposed to the Suez Canal;

– there are no permanent queues, as in the case of the Suez Canal. Moreover, on March 23, 2021, a 400-meter container ship blocked the canal traffic for a whole week. Losses of companies due to this incident amounted to hundreds of millions of dollars. Naturally, there is no guarantee that such a case will not happen again;

– there is no risk of pirate attack.

On the other hand, skeptics refer to the following considerations:

– in the near future, this region will be covered by ice in winter and spring, which makes year-round navigation without icebreakerэ€™s support impossible. In turn, changing routes for the container ships from north to south and vice versa every six months requires too much organizational effort;

– icebreaker escort of cargo significantly increases the cost of transit;

– dependence of merchant ships on the movement of icebreakers significantly reduces the speed of container ships. As a result, the length of the route along the NSR is indeed shorter (comparing through the Suez Canal), however, the travel time does not decrease. At the same time, daily freight of such vessels is very expensive;

– even those vessels that will be used during the summer-autumn navigation will still need to strengthen the hull, because some ice floes and icebergs may be found along the way. Firstly, it means the need for serious investment. Secondly, due to the additional strengthening of the hull, the ship becomes noticeably heavier, that is, its carrying capacity decreases, and fuel consumption increases;

– even if a merchant vessel with a reinforced hull sails along the NSR in the summer, it is still impossible to sail at the usual speed of 25 knots for large container ships in those areas where ice floes are potentially possible. That is, the already described effect is repeated: the route is shorter, but the travel time does not decrease;

– the authorities of the Suez Canal said that, in the event of real competition from the NSR, it will immediately reduce tariffs for international transit;

– unlike the southern route, there are practically no hub ports along the NSR. Currently, only two deep-water ports operate along the entire northern route – Sabetta and Murmansk. Small cities in the Far North of Russia do not economically justify the entry of large container ships in order to unload some of the existing containers and take on board new ones;

– the Russian Federation insists that foreign vessels must take on board Russian pilots and, naturally, pay for their work in order to pass through the NSR. Moreover, the Russian Federation plans to impose restrictions on the movement of foreign vessels in the Russian water area of the NSR, so that cargo transportation is carried out using chartered Russian ships;

– a number of countries and international organizations, primarily the Arctic Council, express deep concern that the active use of polar navigation can significantly harm the environment and global biodiversity. And these are not just beautiful declarations. Thus, France and Norway have already refused to use the NSR to deliver their goods to Asia in order to preserve the ecology of the Arctic region. In addition, Norway refused to provide its ports on the Svalbard archipelago for their use in the NSR.

So, the huge increase in operating costs when using the NSR and the potential negative impact on the Arctic ecosystem put the competitiveness of the northern route into question!

Naturally, for Russia itself, the use of the NSR would be advisable, since it is about the transportation of minerals extracted in the Russian Arctic. These traffic volumes are likely to grow. As oil fields in Western Siberia according to forecasts may reduce, Moscow views the Arctic as a new source of large volumes of hydrocarbons.

Another question is that the Russian Federation today cannot conduct full-fledged mining in the Arctic due to the lack of the latest technologies. At the same time, as long as the restrictive measures of Western countries imposed after the occupation of Crimea by Russia are in effect, none of the technologically highly developed countries will transfer such technologies to Moscow.

Of course, the Russian Federation can try to bypass Western sanctions, relying on the arrival of the necessary technologies from China. Thus, the Russian Federation has already increased its oil exports to China by tankers loaded in the ports of the Baltic Sea. Moreover, the Russian Federation plans to trade with China using exclusively the Chinese yuan. Generally, in order to reduce the use of the US dollar in financial transactions related to the NSR, Vladivostok Pacific Exchange VladEx LLC was founded in 2018, which accepts, among other things, blockchain and cryptocurrencies.

However, Moscow clearly fears that by cooperating in the Arctic with Beijing, it could easily turn into a junior partner. At least the very important contract for the deepening of the harbor and the creation of new infrastructure in the northern port of Arkhangelsk was initially planned to be awarded to China, but then … Russia changed its mind and gave it to another contractor.

Today the NSR provides passage for about 40 ships a year, although 18 thousand ships pass through the Suez Canal for the same time. In 2020, the traffic volume through the NSR amounted to 33 million tons, although more than 3 million tons of cargo are delivered via the Suez Canal daily. The largest share of cargo transported along the NSR is made up of minerals mined by Russia.

According to V. Putin’s decree, the annual traffic volume through the NSR should reach 80 million tons in 2024, 120 million tons – in 2030, 160 million tons – in 2035. The export of Russian natural resources should be the basis for cargo traffic increase.

The main cargo transported through the NSR will be liquefied natural gas. First of all, it is about the supply of LNG from factories on the Yamal Peninsula to China. It is also expected to increase transportation through the NSR of oil produced in the Arctic – to the PRC and other consumers, and coal mined on the Taimyr Peninsula – to India.

Thus, none of the Russian officials, in fact, expects an increase in the volume of traffic through the NSR due to a serious increase in transit trade flows, at least in the medium term. It is anticipated that the share of transit through the NSR will be only 6% by 2035 – the volume of transit cargo should increase from the current 0.49 million tons to 10 million tons, which is about a thousand times less than that passing through the Suez Canal.

As for the possibility of achieving the tasks set by the leader of Russia, the Ministry for the Development of the Far East and the Arctic, as well as the Ministry of Transport of the Russian Federation, following the worst traditions of the USSR, say that the indicators set by the President will be not only met, but also exceeded.

However, the Accounts Chamber of the Russian Federation, headed by the liberal economist Alexei Kudrin, believes that the planned figure of 80 million tons in 2024 is an unrealistic figure. The reason is that even those large Russian companies that could really provide an additional 28 million tons (although this would increase the volume to 60 million, not 80 million tons) do not have an icebreaker fleet and Arctic-class vessels. In addition, as emphasized by the Accounts Chamber of the Russian Federation, the quantity and quality of infrastructure facilities along the NSR route is unsatisfactory.

The Arctic ice is melting today twice as intense as Antarctic. Why this happens – none of the scientists can explain. Scientific research predicts that there will be very little ice in the Arctic by 2050. Of course, such a forecast makes us take a closer look at the NSR. At the same time, if the intensive ice melting at both poles of our planet does not stop, then the nature of climatic changes will raise the question of the survival of the Homo Sapiens as a whole. Then there will be too late to lay new shipping routes.

Source: Democratic-Europe

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