CHNL – transit shipping in the Arctic remains at the same level

«Center for High North Logistics» took part in a seminar on Arctic shipping in the South Korean city Busan.

The seminar was organized by the Institute of Arctic Logistics, South Korea. Among the participants were http://arcticshippingseminar.kr/eng/speaker.html representatives of Russia, Norway, China, Japan and Korea. For example, there were the Infrastructure Operator of the NSR – Rosatom, Administration of the Northern Sea Route, a new company “Rosatom-Cargo” on the Russian side, Norway was represented by the Center for High North Logistics (CHNL), and the delegation of South Korea was the largest – about 250 people.

This year the seminar was dedicated to the potential of the development of commercial transit shipping along the NSR. Experts compared ideas about the prospects of the NSR use for transit of various cargoes.

The participants expressed different opinions – from denying the existence of conditions for the development of transit as a commercial model of the NSR usage to recognizing the possibility of such conditions in the next 5-10 years. It all depends on the influence of various factors and circumstances, such as the adoption of strong-willed decisions by the Russian government.

One of the most extraordinary and interesting is the plans of the new Russian company “Rosatom-Cargo”, created with the aim of developing transit container traffic via the NSR. These include the creation of a permanent container line, a fleet of container vessels with high ice class and a capacity of 5,000 containers per each, and the construction of 2 hub terminals in the west and east of the NSR, that will collect cargoes for transportation along the Arctic. For now, this project is at a preliminary stage, when an assessment is underway in order to attract investments and partners, consideration of models in detail.

“The idea of hubs construction is not new, but now it looks more serious, as it is announced by the structure of the official operator of the NSR. The only thing that is not yet clear is where will the cargoes in such large quantities come from? There is an assumption that they will appear when the container line is launched. In my opinion, this is quite controversial. In addition, it is not clear yet where the huge financial investments will come from, how exactly the possible investments will pay off, and what stage this project will go to,” explains Sergey Balmasov, head of the Murmansk branch of CHNL.

CHNL has been dealing with the issue of the potential of transit shipping in the Arctic since 2011. According to its experts, the situation has almost not changed over the past few years – spontaneous voyages occur in a very short period of time. They are made by the companies that have good experience on the NSR. This is a rather narrow segment that does not form a cargo flow. At the same time, some transits are necessary only for repositioning – to move from one port to another in the summer, it saves costs and time.

That is, at the moment, there is very little commercial interest among the businesses in transit transportation via the NSR. For many companies, reorienting of cargo traffic for 3-4 months does not seem appropriate in terms of risks and changes in the supply chain. They will do this in case of opening year-round navigation.

“For the moment, navigation is carried out only in the summer season, the NSR cannot ensure the stable operation of carriers. This is due to the fact that now Russia does not have the required number of icebreakers, a large container fleet and necessary infrastructure. When these necessities appear, the situation, of course, will change, but for now transit is a path in the ice, that can shorten a voyage, but not for everyone and not always. That’s why the main cargo flows both went and will in the near future go via the southern seas,” noted Sergey Balmasov during a panel discussion on the prospects of transit shipping in the Arctic.

In support of this opinion, Bjorn Gunnarsson, a representative from CHNL, cited the following data in his report on the ongoing changes in the Arctic shipping over the past 3 years: 27 transit voyages were made in 2018, 27 – in 2019, and the record was established in 2013 – over 71 trips via the NSR carried 1,3 mln tons of cargo. Experts are sure that these figures will not change significantly in the near future.