5 September 2024

The Northern Sea Route – a global logistics corridor and Russia’s contribution to international trade

The Northern Sea Route (NSR) is the sole maritime route linking all Arctic regions of Russia, providing essential resources to its inhabitants. Moreover, it serves as an increasingly viable, secure, and efficient alternative to existing global shipping lanes. During the session entitled The Northern Sea Route and Its Logistics Capabilities at the Eastern Economic Forum (EEF), participants discussed the future development of the NSR, the challenges of ensuring shipping safety, logistics organization, integration with key transport infrastructure, and the perspectives of partner countries.

 

Key Conclusions

The Northern Sea Route is the future of global logistics

“Looking at this map, you can see 10 international corridors that are constantly competing: North–South, Murmansk, and the ports of the Persian Gulf. We are actively engaging with our foreign partners on these routes. However, access to the open seas is through the Northern Sea Route – this is the future of global logistics. Our task is to make it convenient, reliable, and accessible because it will, by all metrics, be competitive with other maritime routes,” Igor Levitin, Adviser to the President of the Russian Federation, Special Representative of the President for International Transport Cooperation, and Deputy Chairman of the Marine Board of the Russian Federation.

 

“We are all essentially bound to see this route become a primary reality, not merely an alternative. The global market is growing, demand is increasing, and the volume of freight shipping is expanding as routes are lengthened. <…> International container freight indices have more than doubled in recent years, making the Northern Sea Route a far more attractive international corridor. In this context, Russia’s role in the global economy is immense. For us, these are not merely economic routes; this is a sovereign route that allows us and our allies to transport goods from Asia to Europe,” Gadzhimagomed Guseynov, First Deputy Minister of the Russian Federation for the Development of the Far East and the Arctic.

 

“Our number of NSR participants is increasing, and new structural decisions and business ventures are emerging, involving countries in East and Southeast Asia, as well as the Arab world. These joint ventures are aimed at the development of the NSR, indicating that no sanctions can deter us. <…> On the contrary, this will lead to further growth and set new records for the NSR,” Alexey Likhachev, Director General, State Atomic Energy Corporation ROSATOM.

 

“Russia is the largest Arctic state and has made remarkable progress in developing this region. <…> We highly commend the efforts directed towards the development of the Northern Sea Route, which will play a significant role in the 21st century,” Brijinder S. Sodhi, Naval Attache, Embassy of the Republic of India to the Russian Federation.

 

“What’s most important is that, as Russia invests in the development of the Northern Sea Route, it is demonstrating its potential to the world. <…> In fact, this route significantly reduces transport times,” Fan Yusin, Chairman, NewNew Shipping Line.

 

“What happened in 2021 in the Suez Canal, the traffic jams that occurred there, provided a critical lesson for the global shipping industry. Risk diversification is essential, and in this regard, the necessity and advantages of the Northern Sea Route became increasingly apparent,” Sakiko Hataya, Research Fellow, Ocean Policy Research Institute, Sasakawa Peace Foundation.

 

Development of the Northern Sea Route is in line with Russia’s strategic national interests

“I would base my argument for the systematic, long-term, and strategically planned development of the NSR on two fundamental premises. First, this is Russian territory, part of our geopolitical interests. I believe older generations will remember the saying frequently used in the 1980s: ‘He who does not feed his army will feed another’s.’ This could be paraphrased in this context: ‘He who does not develop his territory will find it developed by another nation.’ This is not open to debate. This is our land, with its wealth of resources, its defence and security concerns, and our geopolitical influence. The second premise is that this is the most optimal route. Yes, it requires certain efforts, but these can be addressed separately. <…> The international demand for the NSR will only continue to grow. <…> The sheer volume of restrictions and sanctions currently imposed on Arctic projects, the companies operating there, and those transporting goods or providing banking, financial, and insurance support, only highlights the need for the NSR. <…> We will continue to seek even more opportunities to develop this region, not only from a technological standpoint but also in terms of our international partnerships,” Alexey Likhachev, Director General, State Atomic Energy Corporation ROSATOM.

 

PROBLEMS

Financial and investment scenarios for the NSR remain unclear

“We are aware of the infrastructure risks and challenges. The financial and investment scenarios are still not fully clear. I believe our partners from the People’s Republic of China and India would agree that we have not yet reached our full potential. Much remains to be done to make this a truly attractive, safe, and comfortable international transport route,” Alexey Likhachev, Director General, State Atomic Energy Corporation ROSATOM.

 

High cost of icebreaker services

“When we transferred control of the icebreakers to Rosatom, we understood that the icebreaker tariff should be similar to that of the Trans-Siberian Railway. An icebreaker provides traction, pulling caravans of ships. In the future, we need to return to this approach, as our icebreaking services were once priced very low because the icebreakers were built with state funds. This is a fundamental issue. The Northern Sea Route will only succeed when icebreaking services are treated as essential infrastructure. It is very important,” Igor Levitin, Advisor to the President of the Russian Federation; Special Representative of the President of the Russian Federation for International Cooperation in the Field of Transport.

 

“In the current financial climate, given the central bank’s policies, stringent lending restrictions, and conservative fiscal policies, the financial burden of developing the NSR solely on commercial principles would be too great for cargo shippers to bear,” Alexey Likhachev, Director General, State Atomic Energy Corporation ROSATOM.

 

Solutions

The State must act as a key investor in the NSR

“We need to completely modernize the icebreaker fleet. Several issues concerning the development of an ice-class cargo fleet remain unresolved. The economic model for this fleet – potentially comprising up to 100 vessels within the next decade – cannot be entirely funded by the NSR users. We do not build railways in the country solely through credit, incorporating all costs into tariffs; otherwise, no one would use them. The state’s role is to assume infrastructure risks, provide key anchor investments, and manage risks should events diverge from projected scenarios. Clearly, the state must be the primary investor. We no longer view the NSR as merely a legal route from the Vilkitsky Strait to the Bering Strait. It is now a major corridor stretching from our north-western ports, including Kaliningrad and St. Petersburg, to our Far Eastern ports, such as Vladivostok and Sakhalin. It is in these terms that we are developing the new federal project ‘The Greater Northern Sea Route,’ which I am confident will soon receive government approval,” Alexey Likhachev, Director General, State Atomic Energy Corporation ROSATOM.

 

Development of infrastructure to support the NSR

“The Northern Sea Route is not just about icebreakers; it is an infrastructure network. I would compare it to a road. A road is not just a strip of tarmac – it requires maintenance, clearing, and servicing. Similarly, the NSR is supported by a vast range of services, from satellite constellations to ground-based infrastructure and safety systems, in addition to the atomic and icebreaker fleets. This entire system ensures the route can safely accommodate shipping traffic,” Gadzhimagomed Guseynov, First Deputy Minister of the Russian Federation for the Development of the Far East and the Arctic.

 

Improving the safety of shipments on the NSR

 

“With pride, I can announce that on 15 March 2024, the first Arctic integrated emergency and rescue centre will be launched in Pevek. <…> We expect that by the third quarter of 2025, a second centre, out of the four planned, will be operational. We still need to complete facilities in Tiksi and Dixon, along with aviation units. However, today, four helicopters are already on standby in the Arctic – in Murmansk, Arkhangelsk, and Pevek. <…> We can now speak of the export potential of our safety technologies. This is a key step in fulfilling the President’s directive to position Russia as a reliable partner in the Arctic region while also creating an export capacity for our technologies,” Alexander Bondar, Director of the Department of Educational, Scientific and Technical Activities, Ministry of the Russian Federation for Civil Defense, Emergency Situations and Disaster Relief.

 

*This is a translation of material that was originally generated in Russian using artificial intelligence.

For more information, visit the Roscongress Foundation’s Information and Analytical System at roscongress.org/en

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