Russia Tightening The Screws Over Northern Sea Route

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2 years ago - 4 minutes read

source Not surprisingly very few ships are using the Northern Sea Route even though the ice is not very thick. The Atlantic Amsterdam seen above is the last ship to travel from the West to the East using this route last week. Maybe if one could actually see the blue sea ships would be more open to using this route. I must admit I would be uncomfortable sailing through ice for days on end as it just doesn't seem right. Ice breakers are coming and they are not exactly small being 400m long and 50 m wide.

A New Cold War looming?

Russia is adding new legislation for the Northern Sea Route which is not surprising as Russia sees the sea route as new economic wealth for the country. Besides the obvious natural resources like natural gas and oil Russia wants to do more business with the rest of the world. Coal exports along with fertilizers is just naming a few of what is coming next. The route earning money via a toll system for container ships is what they are really after.

Last week the Kremlin announced a few updates on controls that they will apply on foreign warships. 45 days notice is required along with providing the rank and name of the vessels captain. The other point they have stressed is that a Russian pilot must be allowed to join the vessel whilst it travels through Soviet waters. This is quite funny as Russia and the US both fought these kinds of stipulations in the 1980's and now Russia is doing it to everyone else. They called it back then Freedom Of Navigation Operations so basically there is no freedom on their turf. The US will not roll over though as they would also like to be involved in this lucrative region. America has reopened it's air force base in Iceland after leaving it 15 years ago. Russia is now spending on military airfields along the Northern Sea Route so this is going to escalate quickly.

The Northern Sea Route should have seen it's peak during September this year as that is when the lowest amount of sea ice is expected but the shipping numbers have not increased this year thus far. All shipping has to apply before entering the route and it seems that the adoption by the big shipping lines has not happened yet.

Like anything new it needs time to catch on as "guinea pigs" have to test the route out first. Some shipping lines like the MSC group have openly come out saying they just cannot. They are all for being greener but said it goes against everything they believe breaking up ice and adding to the pollution in a protected environment. Climate change has obviously sped the sea ice melting in the first place which Russia are over the moon about as it has given them new revenue opportunities regardless of the effects on the planet.

Russia will no doubt fight aggressively to get the shipping route running for next season and expect the possibility of a free service for anyone wanting to use the route. Sometimes you have to give things away to open new customers eyes at the possibilities on offer.

One ship had no choice to use this route last week as the heavy lifter vessel was carrying a jack up accommodation rig from Denmark to China. Normally they would have had to travel around the Cape as the Suez Canal has the Al Nasr Bridge which is too low for this shipment. The stormy seas around the Cape could have caused damage so they had no choice. A 51 day voyage was completed within 27 days which is quite remarkable really.

Russia may have a job on their hands selling the route to other shipping companies but this will not stop them. The alternative being discussed is to make their own fleet of container ships which would seriously affect the other shipping lines. A fleet of 10 is planned with backing from the Government and private investors.

If you are a retailer or end user and were offered a faster, quicker route for delivery at half the price of the normal sea freight tariffs as that is basically what this boils down to. Russia could compete forcing the bigger companies to change their minds depending on how quickly they can get the vessels built. India also has seen this opportunity and why they have agreed to help build the vessels along with Russian ship yards.

Personally I can't see the Chinese missing out on this with Cosco Shipping seriously interested in this route. Negotiations are going to happen and expect the likes of Maersk being forced into using this route within the next 5 years to stay competitive. Shipping costs have escalated to the point that consumers will switch to whoever is offering the best prices. There is definitely what seems like a monopoly happening currently due to shortages of containers and shipping resulting in massive profits for the shipping lines.

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