The Issues and Prospects of an Expanded Arctic Transportation Network

Interest in the Arctic region has recently increased among Arctic states and worldwide. The significance of the Arctic Ocean has increased dramatically owing to the depletion of this planet’s continental natural resources. The problems of inter-state competition and even rivalry for sea expanses and resources are being aggravated under the current atmosphere of globalization.

Consequently, many states, even those located far from the region, have intensified maritime activity and the fundamental and applied research called on to substantiate or refute specific claims and facilitate the adoption of optimal decisions during the study, exploration, development and exploitation of high-latitude sectors of the world’s oceans. Members of the Arctic Council, specifically Russia, the United States, Canada, Denmark, Iceland, Norway, Finland and Sweden, as well as nearly 40 non-Arctic states, have openly stated their interest in the Arctic region. For instance, Austria has established a working group for Arctic and Subarctic problems. The Robert Scott Polar Research Institute in the United Kingdom tackles the natural-science and socio-political problems of developing the macro-region. Germany’s Alfred Wegener Institute of Polar and Marine Research coordinates the relevant research, delivers equipment to polar organizations and provides logistics services to them. Japan boasts the Tokyo-based National Institute of Polar Research. China has established its own Polar Research Institute and continues to expand an icebreaker fleet. Poland, the Republic of Korea and even some Latin American states have also shown interest in the Arctic.

It is common knowledge that the Arctic abounds in natural resources. However, Russia’s Arctic zone contains tremendous oil, gas and other strategic mineral deposits, the most attractive export items. Apart from an immensely rich natural-resource base, Russia’s location facilitating the active use of Arctic territories has paramount importance for the subsequent sustained development of Russia and its Arctic zone. The underused potential generated by spatial factors implies Russia’s unique transportation and logistics capabilities. Russia can become a competitive transit state with developed service option. Russia’s Arctic zone has an opportunity to alter its foreign-trade specialization in the next 10-12 years, to discard its narrow specialization prioritizing hydrocarbons extraction, reduce the commodity bias of its economy and eliminate many disproportions in its development.

The realization of Russia’s transportation potential through a system of international transport corridors passing through Russian territory and waters but remaining under Russia’s jurisdiction, as well as its incorporation into the global network, may become a very promising prospect. Today, a unique opportunity for the cost-effective use of the high-latitude Northern Transport Corridor, Russia’s national trans-Arctic route that combines the Northern Sea Route (NSR) with river and railway lines is opening up. Murmansk and Petropavlovsk-Kamchatsky, the route’s remotest transport hubs, are called on to load consignments aboard ice-resistant vessels, to facilitate the maintenance of the icebreaker fleet and to support transit by means of feeder routes. Moreover, it is becoming increasingly more efficient to establish reduced-scheduled routes for transpolar traffic, including air routes, because these projects link the Earth’s Eastern and Western Hemispheres via the shortest routes, and to build a transcontinental route which tunnels under the Bering Strait.

The Northern Sea Route possesses some obvious competitive advantages. Suffice it to compare the length of the standard Yokohama–Hamburg run between the southern and northern routes. The NSR is free from high-seas terrorism and piracy. Regardless of the technical difficulties of Arctic navigation, the NSR is the shortest geographical trajectory linking Europe with the rapidly developing Asia-Pacific region and North America’s west coast. This route can handle transit consignments and Russian exports now being delivered to South East Asia via the Suez Canal.

A number of key problems hinder the Northern Sea Route’s full incorporation into the system of international transportation corridors. First of all, this approach implies the all-out degradation of coastal infrastructure, which is absolutely unprepared for the possible consequences of global climate change, and a specialized fleet. Such degradation has been sharply aggravated during the post-Soviet period. Of the ports in the Russian Arctic zone’s eastern sector, only Dudinka is in a satisfactory condition. The rudimentary and sometimes completely non-existent transportation and logistics infrastructure creates a discrepancy between the significance of tapping the natural-resource potential of Russia’s Arctic zone and the Arctic continental shelf and the requirements of facilitating national security and Russia’s impaired global competitiveness. Moreover, there are increasingly fewer chances for avoiding the onset of an “icebreaker pause” in 2016, due to the decommissioning of the operational icebreaker fleet, even if the keels of several versatile, multi-role and variable-draft nuclear-powered icebreakers are promptly laid.

But demand for icebreakers will not diminish even with global warming, or it will decrease less intensively than other operational parameters of marine transportation and its support elements. It appears that small ice-resistant transport vessels will be replaced with larger and lighter vessels at a snail’s pace. There are several explanations for this. First, Arctic navigation is becoming increasingly longer. Consequently, the line icebreaker fleet comprising nuclear-powered and diesel vessels, as well as combined icebreakers/transport vessels, should expand considerably in order to facilitate uninterrupted shipping. Second, all climatology forecasts usually mention several-year-old pack ice formations. At the same time, 12-month pack ice floes had been formed in the past and continue to form now not only in the shallow Arctic with its severe winters but also in the Caspian, Yellow and other seas located thousands of kilometers to the South. Third, the full-scale exploitation of hydrocarbon deposits on the continental shelf is inexorably drawing nearer. Consequently, demand for icebreaker-assisted petroleum transshipment in freezing seas, such as the Baltic Sea, the White Sea and the Sea of Okhotsk, will increase. Fourth, high-seas ice formations will become thinner and smaller. Quite possibly, such ice formations will become more dynamic in numerous regions where fast shore ice had previously formed, and where relatively stable navigation conditions had existed. This will require better service support, including icebreaker escorts, as well as more accurate ice-floe forecasts and improved technology for mapping ice migration. Fifth, the involvement of foreign operators in the NSR will require more stringent ice-navigation standards for Arctic vessels as compared to other blue-water vessels. Sixth, navigation may be complicated by more mobile ice formations along narrow shipping lanes. Various hypothetical global climate-change scenarios notwithstanding, sea-going transportation in the northern latitudes of the Arctic and sub-Arctic zones is beginning to facilitate shipments, regardless of the political situation, as well as a certain flexibility in the geography of Russian fuel and energy exports. Less importantly, it is becoming the most cost-effective means for delivering equipment and production machinery, food and the other materials required to support the life of the regional population and the operation of local territorial-production complexes.

At the same time, possible climate change probably determining the transfer from the meridional circulation of macro-synoptic processes to their zonal circulation (which may cause local temperature decreases in conditions of global warming) may expedite the transformation of the NSR into a transit transport artery open all year and in high demand by the international community. Thus, the current advocates of internationalizing the Northern Sea Route’s shipping lanes will become even more aggressive. Notably, they will state their case under the pretext of ensuring mandatory compliance with increasingly more stringent environmental-safety standards being motivated by the international community’s pro-environmentalist sense of justice. Moreover, the problems of demarcating Arctic possessions will become even more aggravated. In an effort to solve international-law issues at inter-state levels, Russia would find it appropriate to facilitate the primacy of its own nature-conservation standards regarding the NSR. Russia should continue to be guided by Article 234 of the 1982 UN Convention on the Law of the Sea, a clause that deals with ice-covered regions. This convention allows littoral states to pass and enforce non-discriminatory laws and regulations in order to prevent, reduce and control marine-environment pollution from vessels in ice-covered areas inside an exclusive economic zone during most of the year. The need to pass the federal bill “On Amending Specific Legislative Acts of the Russian Federation Regarding State Regulation of Merchant Marine Traffic along the Northern Sea Route’s Shipping Lanes” will become more pronounced. Moreover, it would be desirable to establish a federal agency called the Northern Sea Route Administration as soon as possible. This agency would coordinate various operations in the sphere of icebreaker, navigation-hydrographics and search-and-rescue support and fulfill administrative and managerial functions.

Other problems include the underdeveloped elements of the shipping services economy, including hydrometeorology, navigation and hydrographic support, etc. At the same time, all strategic state decisions of the past few years emphasize, without exaggeration, the NSR’s key role in developing territories and resources in Russia’s Arctic zone. This approach makes it possible to substantiate the need for prioritizing the development of the coastal infrastructure, including transportation, energy, industrial and service facilities, as well as support, maintenance and affiliated production facilities and second tier production facilities.

An insufficiently flexible tariff policy is among the problems hindering the Northern Sea Route’s enhanced global competitiveness as compared to southern routes. It would be appropriate to heed the relevant Canadian experience of expanded navigation along the Northwest Passage. At the same time, the situation has started changing drastically, after the federal state unitary enterprise Atomflot received the right to stipulate floating prices for icebreaker services. The results promptly manifested themselves. Generally, annual freight traffic volumes along the NSR have reached 494,000 metric tons, approaching the psychologically important 500,000 metric tons. The substantial growth rate is what’s interesting, rather than the absolute volume, because such growth rates make it possible to confidently predict a large increase in the route’s freight volume.

Figure 1. Projected export and transit freight traffic volume along the Northern Sea Route

Figure 2. The Northern Sea Route’s potential freight traffic routes

Despite the need to overcome the negative consequences of the global financial and economic crisis, there are plans to modernize regional seaports and transshipment terminals and to build new ones. It is also planned to build a fleet of production vessels that will conduct geological prospecting operations and service facilities on Russia’s Arctic continental shelf. The NSR will experience increasingly greater loads, as it handles rival transit flows, and as new railways are built in the direction of the White, Barents, Kara Seas and the Laptev Sea. This includes a combined railway/water route via Yakutsk. These routes will increase the freight potential of the NSR and will facilitate direct access to Western Europe.

Marine transportation services could turn into the Russian Arctic zone’s second largest export item after oil and gas. Russia which positions itself as a maritime Eurasian transport state will receive another large source of revenue and will be largely insured against risks linked with possible price fluctuations on global hydrocarbon markets. The realization of the transportation potential possesses powerful multiplying and complex-forming effects, including greater workforce mobility, higher living standards along international and regional shipping lanes near the NSR, invigorated industrial and business activity in Russia’s Arctic regions, as well as additional incentives for creating telecommunications networks, etc.

An expanding transportation network will make it possible to overcome barriers to the transit potential, to make communities more accessible and to largely eliminate infrastructure restrictions hindering expanded minerals production in Russia’s Arctic zone. This will make it possible to boost the efficiency of developing large and unique oil deposits on the continental shelf and mainland of, Russia’s Arctic zone, as well as the Pechora, Sosvino-Salekhard, Taimyr and Tunguska coal deposits, the Norilsk coal-bearing region in the northern sector of the Tunguska coal deposit and the Lena basin, the Taimyr – Norilsk platinum metals province, the Severnaya Zemlya – Taimyr and Yano – Chukotka gold provinces, the Olenegorsk, Kirovogorsk, Kovdor and some other chromium and titanium deposits, the Pai-Khoi – Novaya Zemlya lead and zinc province, the Norilsk and Kola nickel deposit groups and other strategic deposits.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.