Felix A. Shamrai

State Marine Technical University, St. Petersburg

Abstract: The Northern Sea Transit Corridor (NSTC) project was initiated in 2019 and is currently being implemented by “Rusatom-Cargo”, a subsidiary of “Rosatom” State Corporation. The project is aimed at attracting international transit sea cargo transportation along the Northern Sea Route waterways, as well as developing the appropriate infrastructure, including transport and logistics hubs and a commercial fleet. The article analyzes the prerequisites and conditions for the project to reach commercial profitability after the start of its full-scale operation in 2027. Based on complex modeling, specific options for organizing linear container transportation in the NSTC format are proposed, including the creation of a new global carrier operating nuclear-powered heavy-duty container ships.

How to reduce the cost of container shipping and compete with the Suez Canal by developing the domestic Arctic routes

The Northern Sea Transit Corridor (NSTC) project was initiated by “Rosatom” State Corporation in 2019 with the aim of creating a new option for global logistics market – the delivery of goods between North-Western Europe and North-East Asia via the Northern Sea Route (NSR).

The NSTC project corresponds to the goals and objectives outlined in the decrees of the President of Russia:

• No. 204 of 05/07/2018 “On national goals and strategic objectives for the development of the Russian Federation for the period up to 2024” in terms of the development of the digital economy, a comprehensive plan for the modernization and expansion of the backbone infrastructure;

• No. 164 of 03/05/2020 “On the foundations of the state policy of the Russian Federation in the Arctic for the period up to 2035” in terms of the main national interests of Russia in the Arctic in the direction of the development of the Northern Sea Route as a globally competitive national transport artery of the Russian Federation;

• No. 270 dated 16/04/2020 “On the development of engineering, technology and research in the field of atomic energy use in the Russian Federation” in terms of the development of new materials and technologies for promising energy systems”[1].

“The Northern Sea Route, currently the only alternative to traditional routes via the Suez and Panama Canals, can significantly reduce the cargo delivery time, and also it has a high degree of reliability,” – said Mr. Alexander Novak, Minister of Energy of the Russian Federation greeting the conference participants.

The idea of ​​attracting foreign cargo to the NSR began to sound actively after the May 2018 decree of Russian President Vladimir Putin. According to the document, by 2024 the cargo turnover of the NSR should increase to 80 million tons. For comparison, in 2018 this figure exceeded 20 million tons, in 2019 – 31.5 million tons.

Attention to the NSR transit potential increased after “Rusatom Cargo” (the logistics operator of the “Rosatom” state corporation) announced its intention to become a leader in the logistics services market by attracting international transit cargo traffic to the Northern Sea Transport Corridor. The basis of transit flow, according to the idea, should be containerized cargo. The issue of creating hub ports in Murmansk and Petropavlovsk-Kamchatsky remains controversial.” [2]

“The NSTC project is aimed at attracting international transit sea cargo transportation, as well as the development of the corresponding infrastructure, including the construction of the necessary transport and logistics hubs and a commercial fleet.” “The start of NSTC commercial operations (start of shipments) is planned for 2027”[3].

It is clear from the above that “Rosatom”, in accordance with the Decrees of the President of the Russian Federation, is working on the implementation of the Project for the creation of the NSTC. We believe that it ensures the strengthening of Russia’s geopolitical stability and its economic potential. To test various options for the NSTC implementation we created its technical and economic mathematical model. Its reliability has been verified in one of the global TOP-3 container shipping companies. We carried out modeling of various configurations of the Project structure. In our opinion, the results obtained will allow “Rosatom” group of companies to select the most effective decision on NSTC implementation.

Container transportation lives at the expense of customers, for whom the most important factor is the cost of logistics. The reliability of the container service (its rhythm) is perceived by customers as a matter of course. All container lines (services) operate like a tram: on the same route and strictly according to the schedule. As a rule, once a week a container ship of the line leaves the port, and another one gets up for loading. If the service does not provide stable container delivery characteristics, then it is simply impossible. The cargo base of the container line depends, first of all, on the cost of container delivery – $ / TEU.

Figure 1 shows that the delivery of a container from port to port, without intermediate transshipments on the route, is somewhat more profitable by LNG-fueled vessels (~ 8%) via the NSTC than along the southern route (Suez Canal). But this benefit is not enough to shift from the South to the North the already established ‘habitable’ container flows, in which tens of billions dollars have been invested.  

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