MURMANSK, October 25. /TASS/. As cargo transportation along the Northern Sea Route (NSR) develops, it may become the country's one of the largest sources of export revenues in addition to the oil and gas industry, Alexey Fadeev, Doctor of Economics, Professor at the Higher School of Industrial Management at the Peter the Great St. Petersburg Polytechnic University, told TASS.
"Cargo transit along the Northern Sea Route is a new source of revenues for the Russian budget. Sea transport services may grow into the largest export direction in the Russian Federation's Arctic Zone after the export of oil and gas raw materials. By using a competent strategy of participating in international Arctic projects, Russia, as a Eurasian maritime transport nation, will be able to have a big source of revenues," the expert said.
At the initial stage already the experience of successful international transit has proven to be an effective sea cargo transportation by large-tonnage vessels along the Northern Sea Route and thus operators of natural resources' fields may prefer exports by sea to building new pipeline trains. "The New New Polar Bear container carrier is the first international vessel in Russia's recent history to have passed the Northern Sea Route. The carrier's route was: St. Petersburg - Shanghai - St. Petersburg. No matter how heavily Russian Arctic projects may be politicized, it is impossible to force foreign businesses to do what they do not want to do," he continued.
Geopolitics as Northern Sea Route development factor
The current geopolitical situation in the Middle East adds risks in the eastern part of the Mediterranean Sea, causing higher shipping costs and, consequently, affecting competitiveness of transported products in commodity markets.
"Further aggravation of the situation threatens the safe use of the Suez Canal that nowadays is the main transit route in the world. The Northern Sea Route in light of these events becomes a very promising solution to transit goods in terms of safety, time and economic benefits. The short route cuts costs of fuel and freight, which are part of the cargo cost. In addition to the general stable situation in the Arctic, the low probability of pirate attacks is another advantage of using the Northern Sea Route," he said.
The Russian government realizes the importance of cargo transportation in Russia's north. According to the recently adopted Northern Sea Route development plan to 2035, investments in its infrastructures are planned at 1.8 trillion rubles ($19 billion). The investments are expected to boost the total cargo traffic: in 2024 - 80 million tons, in 2030 -150 million tons, and by 2035 - more than 200 million tons. "Despite the current macroeconomic and foreign policy challenges, a little more than 34 million tons were shipped via the Arctic seas in 2022, that is a 3% rise year-on-year, and 2 million tons above the government's target. This demonstrates the remaining interest in the Arctic sea transportation," the expert concluded.