Rosatom to invest billions in polar shipping to compete with Suez Canal

The Sibir icebreaker at the Atomflot port.
The Sibir icebreaker at the Atomflot port.
Anna Kireeva

Publish date: December 10, 2019

Rosatom, Russia’s state nuclear corporation, has announced it will invest some $7 billion in commercial container shipping as part of an effort to capture more ocean freight business for the Arctic Northern Sea Route, Russian media have reported.

With the move, Rosatom hopes to siphon traffic away from more traditional routes between Europe and Asia like the Suez Canal, diverting it through the forbidding and icy polar artery, which is becoming more accessible due to climate change. The new freight services could begin as early as next year.

The company revealed its intentions late last month, though it remained unclear what vessels the corporation would use to create a major goods shipping line to rival more established competitors.

But this week Rosatom announced it would take a stake in the Russian transport conglomerate Delo Group in a bid to establish an enormous shipping and logistics operation for Arctic maritime traffic, according to a company statement.

The new venture comes at a disastrous time for the world’s ailing climate. Ice levels in the Arctic are decreasing at an alarming pace – a decline that will only be accelerated by more maritime traffic. According to NASA data, ice cover around the North Pole has been retreating by more than 12 percent each year since 1979. Because of this the Arctic is absorbing more solar radiation, causing polar temperatures to rise twice as fast as anywhere else on earth.

The impact of these changes is felt on a global level. A hotter arctic skews the jet stream, causing more and more catastrophic weather events like hurricanes, droughts and wildfires. Coastal areas –where 40 percent of the world’s population lives – are threatened by the rising sea levels brought about by melting polar glaciers.

In a nod to these dire conditions, some of the world’s largest container shipping companies, like Hapag-Lloyd and CMA CGM ­– joined by many major clothing brands like Nike, H&M, Gap and Columbia – have pledged to avoid shipping freight loads through Northern Sea Route

Despite this, Moscow is on nearly warlike footing to harness the melting Arctic’s maritime potential. Some 10 percent of government investments are tied up in Arctic projects like port construction and fossil fuel recovery. Russian government ministries are meanwhile scrambling to fulfill President Vladimir Putin’s demand that cargo volumes shipping through the Northern Sea Route reach 80 million tons by 2024 – a more than twice as much as present levels.

Yet most of what gets hauled out of the Arctic causes the climate further harm. According to recent statistics, nearly 30 million tons of oil, coal and natural gas has been shipped on the Northern Sea Route this year.

At the center of these efforts is Rosatom, which last year was given a broad mandate to oversee nearly all aspects of Arctic development – a task it is accomplishing in various ways. First, it has sought a massive build out of its nuclear icebreaker fleet, mounting a multi-billion dollar effort to launch as many as five new ice-busting vessels by the middle of this decade. It has also been tasked with revitalizing port infrastructure along the 5,600 kilometer sea corridor, which stretches from Novaya Zemlya to the Bering Strait. The bureaucracy that issues permissions to shippers to sail through the Northern Sea Route – and collect tolls for icebreaker escorts – has also been put under Rosatom’s command.

The company projects that by 2026, it could net as much as $5.6 billion from its container shipping endeavors. That may be overly optimistic. Despite the polar thaw that climate change is bringing, there are still only about two ice-free months on the Northern Sea Route each year. That makes establishing the kinds of schedules container shippers demand problematic.

Yet should things get worse for the climate –as they surely will – there will be bigger things to complain about than late freight.


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