The Nordic ‘Suez’ with which Russia Dreams

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“Any effort to reach the pole is complicated by this fact: unlike the South Pole, which is located in a land mass, the North Pole is in a sea of floating ice, after setting your position 90 degrees to the north – where all the directions point to the south- there is no way to mark the place, because the ice is in constant movement, “writes writer Bruce Henderson in his book True North: Peary, Cook and the Race to the Pole – in reference to Robert Peary and Frederick Cook, two explorers who claimed to have discovered separately the North Pole around 1908, whose feat was never proven.

There has long been talk of the day when the melting of the Arctic will allow large merchant ships to navigate the North Sea route, which stretches between the Bering Strait and the Barents Sea, almost parallel to the northern coast of Russia. Even more so since Maersk, the largest shipping company in the world travelled in September between Vladivostok and St. Petersburg in order to gain operational experience in an incipient route.

Despite the success of the mission, in Maersk they do not see it as “a viable commercial alternative to the current ones” and point to two major obstacles: ice, which only allows passage three months a year, and the necessary investment in ships that can operate in cold waters: icebreakers, insurance and technology.

The opening of this route, bordering the coast of Russia and Siberia or the one that surrounds the Arctic islands of Canada, “will be a reality in the medium and long-term”, augurs Antonio Marquina, manager of variable income in Solventis SGIIC.

The experts calculate the time savings in about ten or fifteen days and the distance would go from the 21,000 kilometres that an Asian ship travels to Europe when travelling through the Suez Canal to the almost 13,000 kilometres that it would sail if it did it through Cape Dezhnev, in Be-ring.

“The factors that can slow down the overcrowding of these routes are the lack of updating in the navigation charts of the area, the lack of experience of the crews and the difficulties of the marine insurance industry calculate the collection of insurance premiums according to the real risk they are willing to cover “, Marquina enumerates.

On the other hand, Maersk’s interest in the Arctic “goes against the trend, since in the southern maritime routes that are being developed with the new Silk Road, cargo ships have reached quite important levels of efficiency”, underlines Javier Santacruz, a researcher at the University of Essex. “Right now, what is traded close to the Arctic is the exchange between Baltic and Russian ports and between Russian and Japanese ports and Pacific islands,” he adds.

The great beneficiaries

The polar route arouses great interest in Asian shipping companies, especially Chinese carriers, such as Cosco, China Shipping Co and OOCL (these last two are not listed on the stock exchange). Recently, recalls Marquina, Cosco called the route of the North Sea a “new strategic route” and the Chinese authorities consider his country an almost arctic state. Moller-Maersk is the company with the largest market capitalization in the maritime transport sector, and is the largest in container transport capacity, together with the European companies CMA CGM and the Mediterranean Shipping Company (MSC), which are not listed on the stock exchange.

Maersk receives a recommendation to buy, according to the market consensus that FactSet picks up, while the German Hapag-Lloyd and the Swiss Kuehne & Nagel, as well as the Malaysian MISC, also of large size on the stock exchange, receive advice to buy, maintain and sell, respectively, by the consensus of analysts.

The role of Russia

Russia is “long” the most equipped of the Arctic countries, with several dozen ice-breaking ships, some of them powered by nuclear power, according to Michael Byers, a professor at the University of British Columbia.

“Many observers believe that Russia, which is investing billions of dollars in infrastructure – including the construction of new ports – is the most dominant country in the region, but it is also a key point for Iceland, Sweden and Finland,” they explain. from the Council of Foreign Relations, United States.

The Arctic Ocean contains 83,000 million barrels of oil and 44 trillion cubic meters of natural gas, this is 13% of the Earth’s oil and 30% of its natural gas, according to a study by the United States geological service.

The Nordic 'Suez' with which Russia Dreams

For the moment, cooperation has been imposed on the countries involved through the United Nations Convention on the Law of the Sea, but the environmental risks of opening a trade route are high. “If the ships had an accident, the cold temperatures would stop or slow down the decomposition of heavy fuel, which would stay in the middle for longer,” explains Sune Scheller of Greenpeace in Copenhagen.

“Countries need to ensure a ban on heavy fuel in the Arctic similar to the one that exists in the Antarctic,” says Scheller.

 

Source: El Economista