Russia & China Sign MOU To Establish Year-round Container Line Via Arctic’s Northern Sea Route

Rosatom, Russia’s state nuclear agency, has signed a memorandum of understanding with China’s Hainan Yangpu NewNew Shipping Company to establish a year-round container line via the Northern Sea Route.

The agreement was signed during Russia’s annual economic forum in Saint Petersburg, highlighting a strategic shift in Russia’s trade focus to the East amidst ongoing Western sanctions.

The partnership intends to build up to five Arctic-class containerships capable of year-round operation on the NSR.

The initiative is part of a broader plan to exceed 200 million tons of freight transit by 2031 and eventually reach 1.8 billion tons by 2035.

The initial phase includes plans for 12 voyages in 2024 to transport up to 50 million tons of cargo annually.

Vladimir Panov, Rosatom’s special representative for Arctic development, emphasized the potential profitability of the NSR, mainly through ports such as Arkhangelsk and Murmansk.

Arkhangelsk, located fewer than 700 miles from Moscow, is set to become a key import and export hub.

Murmansk, which presently handles 58 million tons of cargo yearly, is expected to develop significantly, with a maximum throughput of 110 million tons.

While global warming has improved the Arctic’s navigability, icebreakers and ice-strengthened vessels are still required.

Rosatom has allowed the NSR’s first non-ice-class cargo ship.

Despite environmental challenges, the new initiative aims to use the decreasing Arctic sea ice due to climate change to make the NSR a viable alternative to regular shipping routes.

The NewNew Polar Bear, a vessel operated by Hainan Yangpu NewNew Shipping Company, has been the subject of controversy since its return voyage from Russia.

Following the discovery of a damaged anchor and drag marks near the damage location, the ship has been identified as a key suspect in the severance of the Balticconnector gas pipeline connecting Finland and Estonia.

The probe is still underway, as China and the shipping business have yet to cooperate completely.

The joint venture is expected to be completed by August, with the first meeting of the new business set for October.

No particular schedule for the new vessels has been given.

The arrangement builds on last year’s collaboration between Rosatom and Dubai’s DP World to boost container transportation over the Arctic, highlighting the NSR’s growing importance.

Rosatom reported transporting a record 2 million tons of transit goods in 2023, with expectations for 3 million tons in 2024.

Sultan Ahmed bin Sulayem, CEO of DP World, applauded the NSR as a “game-changer” for global shipping, citing supply chain concerns and geopolitical uncertainty.

Reference: Strat News Global

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