Russia Is Promoting A Much Colder Shortcut To Asia
Firework over Kremlin in Moscow at Russia

The Suez Canal, which links Egypt’s Nile River to the Red Sea, is one of the world’s most important trade routes.  Up to 8% of world trade travels through the canal, with as many as 50 vessels passing through its narrow confines every day.  The Canal occupies a difficult neighborhood; regional geopolitical tensions and threats of piracy have encouraged a search for alternatives.  But the shipping industry is famously competitive, and companies continue to employ the Canal in order to preserve their narrow margins.

Lately the Russia has begun to emphasize a shorter – and much colder – alternative.  The Northern Sea Route passes along Russia’s northern coast, and can reduce the distance from Rotterdam to Shanghai by as much as 2,000km.  For a larger Panamax shipping vessel paying current market rates for bunker fuel, that could theoretically mean up to US$ 150,000 in savings.  But the lack of any viable coast guard or navigational infrastructure along the Arctic route means that a critical element of the shipping industry — insurance — will be difficult to obtain.  In June, the Kremlin signed off on a comprehensive plan to develop infrastructure that it claims will enable a dramatic increase in shipping traffic, with a goal of increasing total shipping volume as much as twenty times by 2030.

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