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
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
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
…The possibility of regular traffic along the NSR rests upon several crucial
assumptions which are all subject to major uncertainties.
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,
Anyone is welcome to do business in Russia, providing this anyone likes Russian
roulette and is in vital need of adrenaline and extreme activities.
March 17, 2016