[291119.EN.BIZ] Russia's Rosatom to Start Arctic Container Shipping With US$7 Billion

RUSSIA's state-owned Rosatom Group has been holding talks with VTB Bank to secure US$7 billion in funds to acquire up to 55 ice-class containerships and upgrade port facilities along the Arctic's Northern Sea Route (NSR), a shortcut between Asia and Europe.

Shipping traffic along Russia's Arctic coastline continues to be at an all-time high, reaching 30 million tons in 2019. The vast majority of this traffic comes from the transport of oil and gas and general cargo. Container shipping, however, has been very limited, with Maersk being the first company to send a containership along the route last year, reported High North News, Bodo, Norway.

While most shipping experts remain sceptical that container shipping in the Arctic is economically viable, Russia appears set on stepping into direct competition with the Suez Canal. Just last month, the Ministry for the Development of the Far East put forth a proposal to establish a state-run box shipping company offering service between Murmansk in the west and Kamchatka in the east.

This latest Russian initiative stands in direct conflict with efforts by environmental advocates to limit the amount of shipping activity in the region. In recent months several of the world's largest box shipping companies, including CMA CGM and Hapag Lloyd, announced that they would not operate in the Arctic, citing environmental concerns.

In contrast, Russia and its state-owned companies are pushing ahead with the development of Arctic shipping routes as an avenue to export the country's vast oil and gas resources - and, if Rosatom succeeds, transport millions of cargo containers along the route.

The company plans to begin a container service along the route next year. However, it remains unclear what vessels it will be using for the service as it does not operate any containerships and ice-class containerships are commonly purpose-built for shipping operators, such as for service in the Baltic Sea.

Rosatom Group designs, builds and operates 35 nuclear plants in Russia and sells nuclear technology abroad. Its subsidiary, Rosatomflot operates the country's four nuclear icebreakers, one nuclear-powered cargo vessel and a number of other icebreakers and service vessels. In 2018 Rosatom icebreakers escorted 331 vessels transporting 12.7 million tons of cargo along the NSR.

"Serious questions have been raised about the commercial viability of establishing regular container routes, for several reasons," said Fridtjof Nansen Institute's senior research fellow Arild Moe.

"Due to shallow straits, the bigger - and most economic - container vessels can't pass, the route is only usable part of the year, and even in the summer, season ice can delay journeys, making it impossible to guarantee just-in-time deliveries."

Source : HKSG.