Northern Sea Route Still Putin's Priority

Last week saw the St Petersburg International Economic Forum where 139 countries attended the event. We have not heard much mentioned about the Northern Sea Route lately, but Putin raised this topic again. Putin is obviously obsessed with this as it is of strategic importance to Russia's future trade deals and possibly controlling world trade.

The aim within the next decade is to have 200 billion tons of cargo pass along this route which would net the Russia economy $225 billion in tax revenues. The growth over the next 10-12 years is expected to exceed 36 x and by 2030 there will be a back up rescue service covering the entire route. is is why he expansion of the Northern Sea Route ice breakers is the key and the fleet now has 7 with 2 more being completed by 2027.

The NSR is a no brainer when considering the sailing time saved plus the fuel expense with China to Europe via the Suez Canal taking 14 days quicker and 21 days quicker than going around the Cape of Good Hope. I am sure most shipping companies would have used this route if they had the ice class vessels which they do not have. Still the risk is high and why it is not being considered for winter months at least for now.

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Rusia needs to be trading 365 days every year and he Northern Sea Route with the ice has not been allowing this. Last year around 36 million tons of goods was transported along this route and the aim this year is 150 million tons. During the event it was revealed that Rosatom (Russian) and Hainan Yangpu NewNew Shipping (China) are doing a joint venture for shipping all year around. They will build 5 new ice class container vessels with the first one due in 2027. New New Shipping has 6 Arctic class vessels of which it completed 8 voyages last year and this year increase that number to 12.

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Russia needs trade routes open throughout the year and not seasonal and why they are looking at every single option open to them. The International North South Transport Corridor which is a rail route from Russia through Iran to the Port of Bandar Abbas is already under construction.

The other alternatives still open are the sea ports in the Black Sea ad why Russia was so desperate to take back Ukraine because it allowed them to have a year round port that was not frozen over. Russia has acquired another Black sea port in Ochamchire which is a Kremiln controlled region of Georgia. Sattelite images have shown dredging taking place in order to facilitate larger ships. This would allow Russia to trade via the Black Sea using the Mediterranean which was an obvious goal they had in mind with Ukraine.

This summer it will be interesting to see which shipping companies use the Northern Sea Route avoiding certain choke points like the Suez Canal and the dodging of the huge expenses of going round the Cape at the base of Africa.

Posted Using InLeo Alpha