Into the North: Russia’s Northern Sea Route
Published on 28/11/2017
The trouble with Russia’s most northerly climes is they are cold. Exceptionally cold. So cold in fact, if sea routes aren’t treacherous enough, they’re regularly frozen over. Not great for transport and logistics flows.
Geography has often been tamed by man, and that looks to be the case once more in Russia. The government is pressing quickly ahead with the Northern Sea Route maritime corridor project, which pushes through the more Arctic waters of the Russian far north.
Presidents Putin and China’s Xi Jinping signed the “China-Russia Joint Declaration on Further Strengthening Comprehensive, Strategic, and Cooperative Partnership, in July 2017. Quite a mouthful, but the upshot of this agreement was a new impulse to develop the Northern Sea Route.
The Northern Sea Route: A new Suez Canal?
Officially, the Northern Sea Route is defined under Russian legislature as the territorial waters along the Arctic coast. Specifically, the route covers from the east of Novyaya Zemlya in the Arkhangelsk region, across the Kara Sea across Siberia, to the Bering Strait between Russia and Alaska.
For Russia, the Northern Sea Route represents a chance to present an alternative route to the Suez Canal for container and LNG shipping between East and West. Along the route, special economic zones and trans-logistics infrastructure will be set up to facilitate the mass-movement of cargoes.
New shipping lanes on their way to Russia?
With China rapidly emerging as perhaps the most voracious market in the world, the drive to establish new routes to and from there is a massive driver of transport and logistics activity – not least in Russia.
While China’s One Road One Belt initiative is powering worldwide transformation, the Northern Sea Route represents a very Russian reaction to China’s increasing economic heft.
Part of its development has been spurred on by the advantages the Route offers for sea shippers; chiefly a reduction in cost and an increase in speed.
In August 2017, Russian LNG tanker, Christophe de Margerie, delivered liquid gas cargoes from Hammerfest in Norway to Boryeong, South Korea, in 19 days. That was a 30% reduction in transit times compared with the traditional Suez Canal corridor – and that includes Christophe de Margerie’s negotiation of ice fields up to 1.2m thick. The Russian vessel completed the Arctic portion of its journey in just six days.
South Korea is keen to see the Northern Sea Route a success. Both it and Russia have signed deals to keep its development flowing. Indeed, Hyundai Merchant Marine has earmarked container ship tests across the corridor for 2020, testing the viability of 2,500-3,500 TEU carrying vessels in the icy waters.
Russia invests in Arctic Ports
Ports and maritime centres in the Russian Arctic actually posted the biggest increases in trade turnover of all such Russian sites in 2016, increasing 40.6% for a total just below 50 million tons. Now, with those increases and the Northern Sea Route being worked on in earnest, Arctic ports are set for major investment.
Of particular note is the activity to enlarge Murmansk, which is already a key port for Russian arctic cargoes. Here, work is ongoing on the Murmansk Transport Hub – a terminal dedicated to freight transhipment.
Murmansk Transport Hub incorporates a port expansion, new roads and rail routes, and other storage facilities, in anticipation for higher cargo volumes passing through its gates. In time, it will serve as Russia’s main western gateway for the Northern Sea Route.
On the other end of Russia’s continent-spanning coastline, in the wild and rugged Yamal region, Sabetta Port is under construction. Once complete, 30 million tons of freight will pass through every year, making it the largest port north of the Arctic Circle.
Sabetta is a joint project between the Russian government and energy firm Novatek, which is currently ploughing ahead with its $27 billion Yamal Liquid Natural Gas (LNG) terminal there. Yamal is stuffed with oil and gas deposits, hence the drive to build Sabetta as an export hub for such cargoes.
Work on the Northern Sea Route represents growing confidence and recovery across the board in Russia’s transport and logistics industry. While the influence of China is, of course, massive, the increase in consumer goods being brought in and out of Russia via this maritime corridor suggests a greater deal of purchasing power – especially after Russia’s recent years of economic underperformance.
With more money comes more cargo, and with that comes more need for dedicated transportation and trans logistics services.
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