Cargo Shipping on Northern Sea Route Collapses – and Most of It is Now Chinese

Paul Goble

            Staunton, February 15 – Fewer than 40,000 tons of cargo was shipped across the Northern Sea Route north of the Russian Federation in 2015, down from more than a million tons just two years earlier, a decline reflecting lower fuel costs and recession in the major economies of Europe, Russia and the Far East.

            But perhaps most disturbing to Moscow is that 75 percent of the cargo was carried by China-flagged vessels, a far higher percentage than ever before and an indication Beijing is bypassing Russia not only via its own Silk Road project but also by the Northern Sea Route as well (thebarentsobserver.com/industry/2016/02/historical-low-northern-sea-route).

            In 2012-2013, 71 ships made the transit carrying 1.35 million tons, as global warming lengthened the season for shipping.  Moscow enthusiastically expected that this trend would continue and predicted dramatic expansion over the next 15 years to a point where it would rival the Suez Canal (government.ru/news/18410/).

            During 2015, 18 vessels travelled via the Northern Sea Route. Of these, The Barents Observer reports, “ten were Russian, two were Chinese, one Dutch and one Swedish. The Chinese general cargo carrier ‘Yong Sheng’ which shipped twice along the route, alone accounted for more than 75 percent of the 2015 NSR cargo.”

            Sergey Balmasov, a spokesman for the Northern Sea Route Information Office, says the decline reflects current economic conditions, but he also says that “icebreaker assistance rates on the route have been reduced in half following the low value of the ruble.”  Thus, given Russia’s slide, no recovery is likely anytime soon.

            “It is difficult to predict” when things will turn around, Balmasov says. “But if round-the-year shipping becomes possible” – something few are predicting for the next few years at least – “then the situation could seriously change,” especially if Russia opens new oil fields in the Arctic Ocean.  Those are now on hold because low oil prices make such development unprofitable.