During the launch ceremony of the nuclear icebreaker Chukotka in St. Petersburg in early November, Alexei Likhachev, Director General of the Russian State Corporation “Rosatom,” announced that international transit cargo via the Northern Sea Route (NSR) had already exceeded last year’s figures by 40%, setting a new record. He believes that joint initiatives with China, like the “Arctic Express,” established in 2024, primarily fuel the expansion of transit. This initiative enables the transportation of products from China to the port of Arkhangelsk and subsequently to other regions in the northwestern and central regions of Russia. Furthermore, the NSR successfully transported cargo from Shanghai to Belarus (via St. Petersburg) for the first time in October of this year.
China aspires to become a “great polar power” by 2030, positioning itself as a “near-Arctic state,” despite its relative distance from the northern frigid latitudes. Furthermore, China has started building its own nuclear icebreaker, which, if Russia and China reach mutually beneficial agreements, could enable China to conduct ice navigation in the Arctic. In 2023, Russian President Vladimir Putin and Chinese President Xi Jinping announced the formation of a joint working group to advance the NSR following their meeting. The 29th regular meeting of the prime ministers of these countries in August 2024 confirmed the agreements to expand and deepen cooperation.
In the meantime, the Rosatom Director General observed that the number of journeys between Russian and Chinese locations has “already crossed 30” this year. The NSR enables the delivery of containers from Shanghai to Moscow at a rate that is approximately two weeks quicker than through the Suez Canal and Black Sea straits. Additionally, a Russian-Indian working committee has been concentrating on the NSR since 2021. “Of course, we are working with our international partners on plans to construct and operate container ships for transportation along the Northern Sea Route,” added Likhachev.
Initiatives and Key Partners
Specialized companies from the United Arab Emirates, China, India, Singapore, and numerous Southeast Asian nations makeup these partners. Starting this year, the NSR has become navigable year-round, with an icebreaker escort from November to April. These partnerships are particularly optimistic.
The NSR operator, Rosatom, and the UAE port operator, DP World, formed a joint venture in late October 2023 to facilitate the transportation of containers along the NSR. This includes the joint venture LLC “International Container Logistics,” which is 51% owned by LLC “Rusatom Cargo” (a Rosatom subsidiary) and 49% by DP World Russia from the UAE. Furthermore, the supply of liquefied natural gas (LNG) from Yamal (Sabetta terminal) to the EU and China via the NSR is on the rise.
An alliance between the Norwegian company Golden Ocean Management and the Swiss firm SUEK AG has been a notable participant in NSR transit since 2021. This alliance carried out 18 voyages using vessels with a deadweight capacity of up to 80,000 tons to transport iron ore concentrate to Chinese ports. United Heavy Lift, a German operator that specializes in the conveyance of general and container cargo, has arranged 14 voyages in both eastern and western directions. In the same vein, Oldendorff Carriers, a German company, and COSCO Shipping, a Chinese company, have each completed numerous trips that involved the shipment of iron ore concentrate and coal. These collaborations persist in spite of sanctions against Russia.
Increasing global demand
The recent introduction of a regular container line by Chinese operator NewNew Shipping, which connects St. Petersburg, Kaliningrad, and Arkhangelsk with Chinese terminals in Tianjin, Qingdao, and Shanghai, serves as an indication of the NSR’s increasing international demand. The average transit duration is approximately 28 days, which is 1.5 times faster than the Suez Canal route (45–50 days), depending on ice conditions.
Indian economic analysts from Business Standard emphasized in a September 2023 study that India should engage in NSR development with Russia as a result of the substantial risks associated with the Suez-Red Sea route. Among the primary challenges identified are the military-political instability in the Red Sea basin, high costs, exorbitant navigation fees, and unresolved piracy issues.
NSR Advantages
The NSR is also more competitive than the Cape of Good Hope route, which is located near South Africa. Currently, cargo flows—particularly crude and LNG from Southeast Asia and Australia—are on the rise as a result of Red Sea instability. Compared to the Red Sea-Mediterranean route, the route length is increased by up to 40% and the number of days is increased by 10–20 by diverting ships around the Cape.
In summary, the NSR’s competitiveness is not only a result of its cost-effectiveness but also of its substantially shorter length in comparison to the Suez and Cape routes. Nevertheless, in order to achieve its ambitious objectives for transit cargo turnover, it is necessary to modernize its infrastructure. Andrei Chibis, the Governor of Murmansk, underscored the necessity of private capital investments to accomplish this.
Military and Strategic Factors
Russia is concurrently addressing the development of NSR infrastructure and defense in the Arctic, as NATO’s militarization of the region continues to escalate. Admiral Alexander Moiseev reported at the XIV International Forum “Arctic: Present and Future” that Russia has thoroughly modernized its naval nuclear forces.
Transit Fee
Rosatom has proposed the implementation of a new Arctic investment levy for NSR cargo shippers beginning in 2028, as Kommersant has learned. Rosatom intends to address financial deficits associated with the construction of new, powerful nuclear icebreakers, despite the potential for varied implications.