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Northern Sea Route is no alternative to traditional routes, and will never be

March 17, 2016 at 08:31 by Mikhail Voytenko in Opinion

Talks and discussions about feasibility of Northern Sea Route (NSR) transit recently ebbed, and not without good reasons behind it. Any of given below factors is alone capable of making the whole idea rather far-fetched, or misplaced.

Plummeting oil prices, in some cases, made even Suez transit marginal. With highly unbalanced market, when tonnage offer grossly outweights the demand, and with falling fuel prices, there is just no need in shorter routes, especially such technically complicated, as ice routes. In fact, as we already see in some cases, when route via Cape of Good Hope is preferable to Suez route, shipping industry is poised to gain more from increasing distances, than from finding shorter ones.

Global warming is as questionable as ever. Some Russian leading Arctic scholars have no doubt, that in the next decade we’ll live through mini ice period, with increasing ice cover in Artic region.

The only preference of NSR is a shorter mileage. But is it preference from the point of view of modern global economy, including shipping? One may get a feeling, looking at global economy genesis, that cheapest solutions are not the best anymore. Lower operating costs are good for a say, middle or small sized shipowner, but they don’t seem so good for global economy. Maybe the main problem lies in growing gap between tremendous production capacities and the level of the consumption.
For example, what was the purpose of replacing ALL world tanker fleet with a new double hull one, in just a decade, which in itself was a great industrial feat of tremendous scale? Ecology safety is not an answer, it’s not serious. Single hull tankers weren’t all that dangerous, but who’d say how much damage ecology suffered from producing double hull tankers? Definitely not Greenpeace or the likes, they’ve been paid to make public believe that double hull tankers are the only way to save Mother Earth. But this great undertaking (or fraud) gave a great boost to a spray if industries, including shipbuilding, mining, engineering, banking, shipping itself, etc. It will be interesting to know, how much did the creation of brand new tanker fleet (and much more expensive, being double hull) contribute to Chinese economy growth, and along with that, to oil price unprecedented hike in 00-th?
Sometimes one may think, that global economy is more concerned with wasting, than with producing, in order to keep producing on and growing. There’s simply no need in shorter waterway on a global scale, with the way things are going now.

And finally, there is another factor, which may ruin any project, on any stage, however successful or promising. It’s Russia itself, Russian ruling regime, Kremlin, and high-ranked officials.
Many people just don’t understand the fundamentals of Russian regime. They’re trying to figure out some long-term plans or calculations behind this or that action, or policy in general. But it’s very simple, because there are no long-term plans or devilish plots. Those who rule nowadays Russia just have to stick to power, if they lose power, they’ll lose freedom, enormous wealth and in many cases, life. Scratch anyone in Kremlin or parliament, or in Ministries, and you’ll immediately come up with a long list of downright crimes. Their actions, their plots and their thinking are determined not by something long-term, they don’t have such luxury (not that they’d put it to good use, if they have it), they’re determined by pressing needs of today, to live through the day, week or month. Theirs’ are tactical ways, and tactical only, there’s no strategy, and can’t be. Kafka books have a much deeper explanation of modern Russia.
Presently, they’re in near panic because of deepening economical crisis, and severe shortages of budget. Also, they’ re trying to restore or strengthen their already lost prestige, reputation and influence on international level.
Kremlin is desperately looking for projects, which may achieve all the abovementioned objectives combined, and NSR looks to be ideal. Imagine NSR turns into something serious, real alternative to traditional waterways. Kremlin is profiting from transit fares, and also, Kremlin is controlling a goodly share of global cargo flow, meaning that Kremlin can blackmail involved parties any time Mr. Putin gets angry or dissatisfied with this or that country.

A lot was said about the futility of attempts to build up containers transit via NSR, and at one stage, it seemed like even Kremlin understood it. Alas, no, Kremlin didn’t. Now they announced a new project, to design and build three ice-class Arc7 container ships, using as an example refurbished after long-time lay-up nuclear lighter carrier SEVMORPUT (the meaning of the word Sevmorput is Northern Sea Route) with 1328 TEU capacity. But the funny thing is, though SEVMORPUT is to set sail for its’ first transit run from Murmansk to Petropavlovsk in October this year, there is still no cargo to be loaded with. The way the things are done in Russia, those three container ships may be built and then put into lay-up, with no cargoes to carry.
One may say, that after all, Russian rulers aren’t that stupid. Believe it or not, but they’re that stupid, and more. Just one example:
39,600 tons of transit cargoes were shipped via NSR in 2015, which is 6.9 times less, than in 2014. But in 2013 Russian Ministry of Transport officially said, that by 2015-16 transit cargo volumes will reach 5 million tons. 40,000 against 5,000,000, actual volume125 times less than predicted for a two-year (not twenty or thirty) period – that’s the level of Russian official professionalism.

There’s a well-known person, Mr. Rogozin, vice-premier of Russian government, who’s in charge of Russian defence industry, shipbuilding and also, the development of Russian Arctic and NSR, he’s that capable and all-embracing. Two weeks ago he said, that NSR is vitally important, because Turkey may close Straits any time, and if it happens, NSR will become Russia main waterway. Anyone interested, look at school globe and try to understand, what he said and what are his geography basics. Three days ago he said, that one of NATO’s worst nightmares is NSR. What did he mean by that? I don’t know. I know Mr. Rogozin, kind of personally, I’ve had public disputes with him in the times he was Russian representative at NATO headquarters. He impressed me as apparently narrow-minded, rather illiterate man. Mr. Putin is no better. Anyone in high places in modern Russia is no better, system just can’t stand responsible professionals inside it, the system repels them.

Now, imagine a big venture for say, ore train transit via NSR, from Scandinavia to China, projected for some 20-year long period. Imagine you designed, financed and built ice-class VLOCs and ice-breakers. Imagine it was launched, and it is working. Then, one day, Russia (or personally Mr.Putin), may find itself offended by any of the involved in project countries. Russia will immediately ban the transit, you’ll go busted, and there’s nothing you can do about it. That’s what Russia did with food imports from countries which joined sanctions against Russia after Crimea annexation. That’s what Russia did with all Turkish contracts and ventures, both State and private. In one bloody day! You may find as reliable, as anywhere else, business partners in Russia, personal or corporate. The problem is, they can do nothing if Kremlin decides, that this or that country is bad, and all contracts are to be cancelled, effective immediately.

…The possibility of regular traffic along the NSR rests upon several crucial assumptions which are all subject to major uncertainties.
http://www.thearcticinstitute.org/2016/02/CBS-Maritime-Arctic-Shipping-Study.html


Maritime Arctic Shipping Study didn’t include in the list of major uncertainties maybe the main one, Russia itself. Russia is more uncertain, more unpredictable and more unreliable, than Arctic ice, oil cost and climate change uncertainties, taken together.
Anyone is welcome to do business in Russia, providing this anyone likes Russian roulette and is in vital need of adrenaline and extreme activities.

Voytenko Mikhail
March 17, 2016

Northern Sea Route is no alternative to traditional routes, and will never be

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