Russia's Northern Sea Route trade soars

By bne IntelliNews November 7, 2011

bne -

Russia has opened up a new trade route that cuts the distance between Europe and Asia in half. The Northern Sea Route goes round the top of the Eurasian continent, rather than the traditional route via the Suez Canal, passing India and China.

The only problem is that the sea along Russia's Artic coastline freezes solid in the winter which has made the passage impractical for commercial traffic. However, as Russia expands its fleet of nuclear powered icebreakers, the volume of traffic through the icy northern waters has started to soar.

The Northern Passage was first conquered in 1879 by Finnish-Swedish explorer Adolf Erik Nordenskiöld and making the journey was a perilous dice with death. But the same trip is becoming increasingly humdrum as Russia looks for ways to boost trade between the developed and developing worlds.

The number of ships using the route has already tripled this year to 33 from only 10 in all of 2010, and cargo shipments via the Russian part of the Northern Sea Route are expected to rocket to 800,000 tonnes in 2011 from 145,000 tonnes in 2010, Vladimir Mikhailichenko, executive director of the public partnership on coordination and operation of the route, said in October.

The explosion in traffic is partly due to the Kremlin's decision to slash transport duties, which were from four to six times higher than that of the Suez Canal last year.

Oddly one of the most important cargos is fish being shipped by the Northern Sea Route from Russia's Far East to the Russian city of St Petersburg, as "transporting fish by sea is more efficient than by railway," Mikhailichenko deadpanned.

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