Alexey Chekunkov comments on the prospects for the northern sea route

The development of Arctic territories and waters to organize the production of hydrocarbons and metals requires the enhancement of freight logistics on the NSR. Leading ocean carriers have a practical interest in the NSR in view of the possibility of reducing the goods shipping arm from Asia to Europe and back. With efficient management of cargo traffic and the availability of icebreakers, the NSR can prove to be more competitive than traditional logistics routes.

- Recently, the issue of NSR development and exploration of the Arctic has been actively discussed both in Russia and in the rest of the world. Leading experts in Russia and the Asia-Pacific Region believe that the NSR will form a basis for future development of the world’s maritime logistics and trade. Others express concern that existing natural constraints on the NSR can affect the competitiveness of the route compared to more predictable routes. Based on the established facts, climate change has caused a decrease in Arctic ice cover. The development of Arctic territories and waters to organize the production of hydrocarbons and metals requires the enhancement of freight logistics on the NSR. Leading ocean carriers have a practical interest in the NSR in view of the possibility of reducing the goods shipping arm from Asia to Europe and back. With efficient management of cargo traffic and the availability of icebreakers, the NSR can prove to be more competitive than traditional logistics routes. Besides, the demand for the NSR is stipulated by the geopolitical situation that is emerging in the Asia-Pacific Region. In the context of an excessive concentration of maritime traffic and international trade flows, already exceeding the carrying capacity of the Suez and Panama canals, as well as the aggravation of territorial disputes in the Asia-Pacific waters, it becomes urgent to develop a project to create a full-fledged alternative route. The NSR is a spare promising driving force for world maritime trade. Launching the Northern Sea Route may have a huge impact, which will spread to a wide range of industries – from shipping trade and shipbuilding to high-tech related, for example, to production of navigational equipment. The NSR is being already actively used by Russian companies that are implementing large-scale projects for exploration and development of mineral deposits in the Arctic zone (MMC Norilsk Nickel PJSC, the Yamal LNG, Gazprom Neft, Rosneft, and others). Hydrocarbon feedstock and petroleum products account for 70 percent of cargo transportation on the NSR. Large-scale Arctic oil and gas projects are the first striking examples of activities on the NSR, which have given a powerful impetus, particularly, to the implementation of the nuclear-powered icebreaker fleet development program.

A significant part of the NSR extends over the Far East. Main directions of trade flows are in the Asia-Pacific Region, which is our target region for exports of goods and services produced in the East of Russia. To establish a logistics route of new quality on the basis of the NSR, it is necessary to create conditions for the development of container traffic and attract major international shipowners and cargo owners, for which such factors as straight-line relation and predictability of route as well as security of supplies are important. Recently, there have been ever more cases when the world’s major carriers set up operational alliances seeking an optimal allocation of expenditures and reduction of transportation costs. And cooperation is one the formats of state-business interaction when implementing such a strategic project as commercialization of the NSR. Potential impetus to this process may come from carriers interested in using the NSR as an alternative route. We are already discussing with major port operators and international sea carriers the prospects for using the NSR for container transport, transportation of fish from the Far East to the European part of Russia, Europe, and Southeast Asia. However, a comprehensive approach to the development of the NSR involves fulfilling the performance potential of the waters not only for transit navigation but also for the delivery of goods within a country, the integration of the NSR with theRussian economy.

Currently, the NSR plays a modest role in global maritime traffic. Total transit cargo transported via the NSR in 2014 amounted to 4 mln tons. For comparison, an estimated 5,660 mln tons of cargo were transported through the Strait of Malacca; 882 million tons of cargo, through the Suez Canal; and 222 mln tons, through the Panama Canal. However, with the increased availability of icebreakers and the creation of an efficient cargo management system, the NSR can become more efficient than the existing routes through the Suez Canal. We encourage consideration of the NSR as a commercial project, requiring a certain level of critical infrastructure. In particular, the route prospects directly depend on the pace of implementation of the Russian nuclear icebreaker fleet development program – effective commercial exploitation of the NSR is hardly possible with the restricted icebreaking capacity. We already see some progress being made in this regard. Two new nuclear-powered icebreakers have been laid. Construction of the third icebreaker is planned to start soon. A draft design of a 50-meter nuclear leader-icebreaker with power of 110 MW has been developed. Ice passability of the icebreaker (4.5 m) is expected to enable year-round navigation along the NSR. Construction of new iceclass vessels and icebreakers can significantly reduce the cost of the transported goods. Expansion of the icebreaker fleet will make it possible to eliminate restrictions related to the unpredictability of the route and find a solution to a number of technical issues of second and the third priority in terms of pricing, establishment of the security system, attraction of operators, and marketing. Efficient performance of the NSR as a universal maritime logistics route also depends on the quality of the ground rail infrastructure. To ensure an uninterrupted delivery chain, northern seaports must be linked to the railroad network. However, there is only railroad access to ports in Murmansk and Arkhangelsk. Therefore, it is very important to facilitate the implementation of projects aimed at developing the transport infrastructure of the Russian North and the Arctic, for example, such as the Northern Latitudinal Route. The well-developed infrastructure can allow transportation of freight in the volumes we are targeting for.

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