China is dreamy-eyed about the prospects of shipping goods from Asia to Europe across the top of Russia, with visions of transpolar shipping dominating its brand-new Arctic strategy. Some specialized tankers are making headlines by crossing the Arctic alone — in the dead of winter, something that was almost impossible before.
And Russia is convinced that the melting Arctic will open up a new economic frontier rich in oil, natural gas, and lucrative transport routes between the world’s workshop and the world’s consumers. Russian President Vladimir Putin, whose government plans to invest tens of billions of dollars by 2030 to develop ships, shipbuilders, navigational aids, and ports along the Northern Sea Route, last week reiterated his conviction that polar shipping is the next big thing.
“Our goal is to make it a truly global and competitive transport route,” Putin told the Russian Federal Assembly last week. Last year, a record amount of cargo went through there, according to the Russian Ministry of Transport, and Moscow expects a tenfold increase in cargo on the route by 2025.
The Northern Sea Route, which stretches roughly from Murmansk in the west to the Bering Strait in the east, has become the focal point of both Russia and China’s Arctic strategy. That’s because it promises a route that’s one-third quicker from Asia to Europe than going the long way around via the Suez Canal, and offers a way to rejuvenate a depressed part of Russia.
The route was busy with internal traffic during the Stalin years, and again in the final days of the Soviet Union. After the Soviet Union collapsed, however, the Arctic sea link was severed.
Today, thanks to billions in Russian investment and runaway Arctic warming, it’s opening up again — but that doesn’t mean it is going to be a rival to traditional shipping routes anytime soon. While ice-free seas mean there’s a longer shipping season than there used to be, and the route is thousands of miles shorter than the long way around, the economics of shipping through the Arctic don’t make much sense today and likely won’t for decades to come.
“The Russians talk about the Northern Sea Route like it’s going to be big — and it will be big, for them,” Tuomas Kiiski, an expert on Arctic shipping at the University of Turku, tells Foreign Policy. “It just won’t be big for the rest of the world.”
Even though the route is shorter, ships have to go slower through the still-icy waters, and most vessels need to be ice-classed to operate there at all, both of which add costs. More important, Kiiski notes, for just-in-time cargo shipping, transit times are still unpredictable, and the shallow waters along Russia’s coast rule out the big container ships that dominate cross-ocean traffic.
Those drawbacks explain why, despite all the hype, shipping companies are hesitant to dip a toe in the chilly waters.
“We do not have a specific forecast for whether or when the [Northern Sea Route] will be a sustainable alternative to the traditional routes through the Suez Canal,” says Mikkel Elbek Linnet, a spokesman for A.P. Moller-Maersk, the world’s biggest shipping company.
In addition to a small window of ice-free passage, the route can only handle container ships a fraction of the size Maersk runs between Europe and Asia, he says. And the Northern Sea route bypasses markets like the Mediterranean and Southeast Asia, key hubs in big shippers’ global networks.
That reality is reflected in the traffic that actually does use the Northern Sea Route. While last year’s 9.7 million tons was an all-time record, only a small fraction of that volume — 194,364 tons — moved across the entire stretch. The rest was either internal traffic (including plenty of construction gear for big energy projects), or destination traffic, including for the first time natural gas from the $27 billion project on the Yamal Peninsula headed east to Asia.
The burgeoning fleet of icebreaking natural gas tankers that are plying the route highlights one crucial way the Northern Sea Route will be important: getting Russia’s far-northern oil and gas resources to market. Russian gas firm Novatek has ordered a fleet of 15 icebreaking tankers to carry gas. The first of their tankers transited the Northern Sea Route in the summer, while the second just made history by making the trip from South Korea to the Russian Arctic to France without any icebreaker escort — in wintertime. (The fact that some ships are able to make the trip without an icebreaker escort could be bad news for Moscow, which hoped to plow fees from icebreaking services along the Northern Sea Route back into Arctic development.)
Russia is anxious to develop its Arctic energy resources, in part because Western sanctions imposed in the wake of the 2014 annexation of the Crimean Peninsula. Those measures limit Russia’s access to new technology needed to keep its traditional oil and gas fields productive, says Heather Conley, a specialist in Europe, Eurasia, and the Arctic at the Center for Strategic and International Studies.
Now that the Yamal project is finally up and running, Russia aims to snag a bigger share of the global market in liquefied natural gas — just the energy export market that the United States recently jumped into in a big way. The gas in the Yamal Peninsula is low-cost and can undercut rivals including the United States, but without easier transit to and from the Arctic, those resources would be stranded much of the year. As it is, Yamal is projected to double Russia’s share of the growing global liquefied natural gas market by the time it reaches full capacity in 2020.
That energy trade across the Arctic is cementing closer ties between Russia and China; Beijing ponied up $12 billion to help build the Yamal gas project and is expected to be a big customer for Russian gas. Arctic shipments will help meet China’s huge demand for natural gas, especially in the dense northeastern part of the country. And the Arctic route is a way to avoid the Strait of Malacca — a maritime chokepoint whose vulnerability to blockade has for years haunted Chinese leaders.
“After Crimea, everything has changed,” Kiiski says. “It seems now that Russia wants to turn the [Northern Sea Route] into its own export route and build up cooperation with China.”
Beijing’s vision for the Arctic — dubbed the “Polar Silk Road” — has now been lumped into its sprawling, trillion-dollar Belt and Road initiative, the signature foreign-policy project of President Xi Jinping. “Now that the Polar Silk Road is part of the Belt and Road, it gets even more focus and attention, as we’re seeing with Russia and China in the Arctic,” Conley says.
Meanwhile, the United States is still at sea when it comes to the Arctic. Under the Barack Obama administration, the region got lots of attention, usually for climate-change reasons. The Donald Trump administration is pushing Arctic energy development off the coast of Alaska, but otherwise hasn’t made the region a priority. Unlike in years past, there is no Arctic envoy at the State Department.
“It’s in no one’s urgent inbox, and there’s no budget behind it,” Conley says. “Meanwhile, Russia and China’s interest and activity in the Arctic is only increasing.”