The Russian government to subsidize Arctic cabotage transportation

August 16 2022

The Russian government has begun subsidizing Arctic coastal shipping between the ports of St. Petersburg, Murmansk and the terminals of the Far East. However, the Sevmorput nuclear-powered container ship, which was used for these transportations, was actually only 10% loaded. Shippers point to a weak informational component in the organization of the route.

Attempts to organize a shipping line that would connect the European part of Russia with the Far East through the Northern Sea Route have been continuing for more than a year, but so far without obvious success. Since 2019, the Sevmorput nuclear-powered container ship (lighter carrier) has made one or two voyages per summer navigation. The schedule on the route has been flexible and based on the needs of the Far East fishermen. It should be noted that this line was launched at the initiative of the Federal Agency for Fishery, which in 2018-19 faced logistical difficulties in delivering fish from the fishing grounds (Kamchatka, Sakhalin, Vladivostok) to the consumer. The loading of the voyages of the Sevmorput has always been small, which led to high transportation costs for the shipowner (FSUE Atomflot).

Thus, in today’s work of the Sevmorput, the focus remains on the transportation of fish products, but rests on the shortage of refrigerated containers. The loading of voyages with other types of cargo is extremely low. The expert community has repeatedly held public discussions about where to get cargo to load a nuclear-powered container ship. But in addition to discussions, targeted work is needed with logistics companies that are able to attract cargo.

At the same time, the government seeks to diversify shipping in the Arctic. It is necessary to transport not only raw materials along the Northern Sea Route.

In early 2022, the Russian government launched a mechanism to subsidize regular freight traffic along the Northern Sea Route. The corresponding resolution No. 397 was signed on March 18, 2022. Reduced tariffs were established for Russian shippers for the transportation of goods along the Northern Sea Route, which was supposed to attract cargo to the line. We are talking about cabotage transportation between the ports of St. Petersburg and Murmansk and the regions of the Far East.

Each year, 560 million rubles will be allocated to subsidize the work of the Arctic cargo line. In accordance with the Development Plan of the Northern Sea Route, 7.84 billion rubles in total are provided for these purposes until 2035. The Ministry for the Development of the Russian Far East and Rosatom State Corporation have been appointed responsible for organizing voyages.

Experts note that despite the low loading and organizational problems of the routes, such transportation has real potential, given the acute shortage of carrying capacity of the railway infrastructure to the Far East, as well as the low loading of the Baltic container terminals against the backdrop of Western sanctions.




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