Russia is Turning Ever Given’s Plight into a Marketing Tool for Arctic Shipping. But It May Be a Hard Sell

When one of the world’s largest container ships became wedged in the Suez Canal last week, it raised questions about impacts to global supply chains, the dangers of a globalized economy of goods and how to dislodge a 200,000 ton ship that doesn’t seem to want to budge.

But for Russia, the misadventures of the Ever Given provided a rare chance to pitch what it’s framing as a golden marketing opportunity: shipping via the Northern Sea Route rather than the crowded Suez Canal. Successfully convincing other countries that this route is viable could yield a financial windfall for Russia.

“The Northern Sea Route’s development hedges logistical risks and makes global trade more sustainable,” Vladimir Panov, a Russian Arctic development official told Russia’s Interfax news agency on March 25. “Undoubtedly, such Asian countries as China, Japan, and South Korea will take the precedent of the Suez Canal’s blockage into consideration in their long-term strategic plans.”

The Northern Sea Route, which passes along Russia’s icy shores en route from Europe to Asia, is one of several options for shipping by way of the Arctic. The other routes are the Northwest Passage, which cuts through the Canadian archipelago and Alaska as it travels across the North American Arctic, and the Transpolar Sea Route, which passes through the central Arctic.

The Northern Sea Route, which can cut 4,000 nautical miles off a trip from Europe to Asia taken via the Suez Canal, could benefit Russia in several ways—through tariffs and administrative fees, and by breathing new life into the Russian oil and gas industry.

That is, as long as the ice doesn’t get in the way.

The Arctic has long been cut off from major commerce by sea ice that blocked off much of the region. But in recent years, as ice levels have declined because of climate change, Russia has promoted the Northern Sea Route as an attractive option.

In part, that’s because even though the diminishing ice is beckoning more ships to the Northern Sea Route, they’ll still need icebreakers to lead them through areas where the ocean remains frozen or where ice cover is unpredictable, Arctic experts say.

Russia has more than 50 icebreakers—the largest fleet in the world of the vessels, which have strengthened hulls that can clear the way for cargo ships passing through. Thanks to the unpredictability of the ice, traversing the waters without their accompaniment can often be risky for cargo ships, and the opportunity for Russia to hire out its ice-breaking fleet just adds to the potential economic benefit.

The Northern Sea Route Open for Business

Russia’s PR campaign for the Northern Sea Route seems to be working, to an extent. In 2020, a record 62 ships carrying more than 32 million tons of goods traversed the route, up from 37 ships the year before. That’s still a fraction of the traffic in the Suez Canal, which an average of 51.5 ships pass through each day. But Russia wants to see a major ramping up of traffic through the Arctic passage. In 2018, President Vladimir Putin set a goal of shipping 80 million tons of goods along the route by 2024. According to a spokesman for Russia’s Ministry of Energy, they are on target to meet that goal. 

“Russia’s unique geographical position gives natural advantages in the global energy market in terms of access to the main consumer markets, as well as the speed of delivery of fuel and energy complex goods,” said the ministry spokesman.

But Russia needs to make good on the Northern Sea Route’s promise—fast, according to Marisol Maddox, an Arctic analyst at the Polar Institute of the Woodrow Wilson International Center for Scholars.

“Putin wants to commercialize the Northern Sea Route and realize the short term economic potential of their oil, gas and coal reserves before the global economy starts to make a major shift towards decarbonization,” she said. “They really want to limit their stranded assets.”

Included in those assets is a vast amount of liquefied natural gas, or LNG, in the Yamal Peninsula, in the northwest of the country, which Russia wants to send to markets in Asia or Europe while natural gas is still a desirable commodity. 

But as of last week, the Russian icebreakers may have competition. Just days before the Ever Given got stuck, a Finnish engineering company called Aker Arctic announced that it had designed the world’s first Arctic container ship that was also an icebreaker, capable of traversing the Northern Sea Route in summer and winter without accompaniment. That could be bad news for Russia’s icebreakers.

“If they’re doing that with container ships, I think Russia’s economic model for the Northern Sea Route starts to really fall into question,” said Heather Conley, senior vice president for Europe, Eurasia and the Arctic at the Center for Strategic and International Studies. “That’s where technology starts to move ahead of your own economic development plans.”

A Sea of Icy Unpredictability

The National Snow and Ice Data Center announced on Tuesday that 2021’s maximum sea ice extent—the point at which Arctic sea ice has grown as large as it will before it begins to shrink in warming, springtime temperatures—was reached on March 21. At 5.7 million square miles it was tied for the seventh smallest maximum spread since record keeping began in 1978, and roughly 336,000 square miles less (an area about the size of Texas and Florida combined) than the historical average.

As the sea ice shrinks toward the central parts of the Arctic, less of it is lasting from one year to the next. And new ice is far thinner, which may be less problematic for icebreakers and ships with reinforced hulls. 

But the changes are not predictable. Though the trend is clear, no two years of Arctic sea ice have been exactly the same. And that degree of uncertainty has been enough to keep many shipping companies away.

The Arctic is a harsh place. Between the physical risk to the ships and the crew, complications from equipment freezing, poor communications and infrastructure deficiencies, Russia may have a hard sell on its hands, Maddox said.

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In January, Russia sent two ice-class Arctic LNG carriers on a winter test along the Northern Sea Route. The goal was for the ships to carry the gas from the Yamal LNG project in Russia to China, without the need for additional ships to break the ice. At first, it seemed like a success. Russian media reports that one of the ships had been damaged along the way were denied by the Kremlin, and both ships arrived at their destination.

“They were doing all of this for the media attention to promote in a very kind of edgy way that they didn’t need icebreaker escorts, and that this is a historic voyage,” said Maddox.

But not long after, one of the ships, the Nikolay Yevgenov, pulled up in a French shipyard with damage to its propulsion system—apparently a consequence of its passage through the ice. Similar shipments scheduled in February, March and April included the use of icebreakers, Maddox said.

Any increase in shipping in the region would come with risks, for the ships and for the environment.

“The Arctic is already experiencing climate change at greater than twice the global average,” said Maddox. “The ecosystems are shifting, the Arctic inhabitants and ecosystems are already having to adapt to those changes. And so we’re also introducing noise pollution and light pollution, and there are concerns about that impact.”

One effort spearheaded by the Ocean Conservancy, called the Arctic Corporate Shipping Pledge, takes aim at those risks. Consumer goods and shipping logistics companies that sign on vow to not send ships through the Arctic. So far, the list of companies taking the pledge includes Gap, Puma, H&M Group, Nike and others.

As plans to develop the route proceed, Conley, of the Center for Strategic and International Studies, said she wouldn’t be surprised to see banks take steps to reduce or halt financing of Arctic shipping similar to what banks and asset managers have done with Arctic drilling.

The bottom line, Arctic experts say, is that the Northern Sea Route won’t look like the Suez Canal in the foreseeable future. And for the climate, that’s a good thing.

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