Russia's Arctic ambitions face hurdles with ship shortages and sanctions

Russia is building new transport corridors connecting Asia and Europe. The Arctic Route is supposed to help Russia mitigate the effects of sanctions and strengthen Moscow's pivot towards Asian powers—China and India. However, Putin lacks a fleet to navigate the problematic corridor.

Russia lacks ships, including specialized units like icebreakers. The lack of a proper fleet ensuring the flow of cargo on the Northern Sea Route is confirmed by official reports, according to "Kommersant."

The current ship shortage is estimated at 53%, and by 2030 when freight traffic is forecasted to range between 55 and 165 million tons, it may increase to 55%. As experts cited by "Kommersant" add, the current shipbuilding development plans do not meet the needs of the Northern Sea Route.

According to the "Efficient Transport System" document from the end of June, by 2024, freight traffic on the Northern Sea Route will require the service of at least 57 ships. Out of this number, only 47% will be available.

As "Kommersant" notes, the gap between the available and needed fleet will grow further by 2030. Of the 160 ships needed to service the Arctic Route, only 45% have been confirmed.

According to estimates, traffic in this direction will increase to 40 million tons by 2023. By May 2024, 78 million tons are expected to be transported, but plans are much more ambitious. By 2030, the volume of cargo transported via the Northern Sea Route is estimated to be between 58 and 165 million tons, reaching 243 million tons by 2035, reports the Russian Business Daily. The cost of developing the routes reaches 744 billion rubles (approximately $7.8 billion).

According to statistics presented by "Kommersant," 30 Russian units operated on the Arctic Route last year. These included 17 gas carriers and tankers from Novatek, 7 tankers from Gazprom Neft, and 6 ships from Norilsk Nickel.

The fleet in 2024 is planned to be supplemented by 16 tankers from Novatek, 9 bulk carriers for coal transport from Severnaya Zvezda, and 2 tankers for Vostok Oil.

However, Western sanctions may thwart these plans, which have already affected the most significant project, Arctic LNG-2. Due to the threat of companies cooperating with Russia being sanctioned, more countries are withdrawing from projects and freezing cooperation.

Thus, Novatek may not receive the six ships ordered from South Korea's Hanwha Ocean. As "Kommersant" recalls, of the 15 tankers being built for Novatek at the Zvezda shipyard, 5 were supposed to be delivered to the company, but the delivery date was repeatedly postponed. The same problem applies to cooperation with China.

Putin had hoped for broad cooperation with China, which is also interested in developing routes through the Arctic. In the fall of 2022, he tested new nuclear-powered icebreakers to clear the Arctic passage to China.

In July 2023, Russians tested oil transportation through the Arctic Ocean to the port of Rizhao in the Shandong province of eastern China.

Russian Rosatom is collaborating with shipyards to expand the Russian fleet of nuclear icebreakers. At the end of last year, the ship Ural was launched. Yakutsk is expected to enter the waters next year. Arktika and Sibir are in preparation, and the fifth icebreaker, Chukotka, is expected to be ready by 2027, according to the "Global Times."

According to PISM analysts, a maritime connection through the Arctic would shorten the route from Asia to Europe by 30% compared to the southern sea route via the Suez Canal. The route from the Chinese port of Dalian to Rotterdam via the northern route would be 5,750 miles shorter than crossing the Suez Canal.

As "Global Times" noted, China must cooperate with Russia to develop new Arctic shipping routes due to its long-term strategic interests.

Putin would like to see broader cooperation between Russia and China, recognizing Beijing's potential in shipbuilding. However, Xi Jinping must tread carefully. Beijing's firm actions in the far North would elicit an immediate reaction from the West, including the USA.