Russia to make Northern Sea Route cheaper than Suez Canal as country seeks to benefit from Ever Given blockage & climate change

The Russian government is making plans to turn the Northern Sea Route into an alternative to the Suez Canal, with the country’s deputy prime minister revealing that state subsidies could be used to reduce transportation costs.

The 3,500-mile shipping route stretches almost the entire length of Russia, and, in recent years, has become a commercially viable path for vessels to take, as the Arctic’s melting icecaps open up spaces for large ships to pass through. It is also significantly faster for transit from East Asia to Europe than the traditional route through the Suez Canal. 

In 2017, for the first time ever, a commercial tanker transporting liquefied natural gas entered the northern passage without the use of a dedicated icebreaker.

On Wednesday, Russian Deputy PM Yury Trutnev revealed that the state may help reduce the cost of transportation through the Northern Sea Route, as the country looks to profit from the falling confidence in Egypt’s Suez Canal after the six-day Ever Given blockage. The huge container ship ran aground and blocked the access of other vessels, resulting in a traffic jam of several hundred ships.

“I think the whole world felt that it would be good to have a backup option. And there is only one option: the Northern Sea Route,” Trutnev explained. “[Suez] is becoming bigger in terms of the amount of transported cargo, and it is taking longer in terms of the navigation period.”

As things stand, transportation across Russia’s north is currently 30% more expensive than the Suez Canal.

“We are obliged to make cargo transportation along the Northern Sea Route cheaper. If this requires a separate government program and separate support, it should be done,” he suggested.

Last year, Trutnev revealed that Russia would continuing growing its icebreaker fleet to keep the route open all year, and expressed interest in foreign investments in ports along the Arctic coastline. He said the entire Russian Arctic region would be made into a special economic zone with tax incentives.

Speaking to Moscow newspaper Nezavisimaya Gazeta, maritime transport expert Alexander Buyanov explained that the Ever Given incident showed the world that it needed to create other routes.

“At the moment, the Northern Sea Route remains difficult and unpredictable for cargo owners and fleet operators,” he explained. “It seems to me that Russian companies should take the initiative and show the whole world the convenience of using the route year-round.”