Ever Given is no longer blocking the Suez Canal, but Russia sees a long-term benefit from it being stuck – Business Insider

  • The Ever Given, a container ship, has been freed after a week stuck in the Suez Canal.
  • Russian officials capitalized on the blockage to tout the Northern Sea Route, which Moscow wants to develop.
  • The Northern Sea Route remains treacherous for commercial activity.
  • See more stories on Insider’s business page.

Ever Given, a 1,300-foot container ship, was freed Monday after being grounded in the Suez Canal for six days, blocking hundreds of ships from traversing the important transit corridor.

Even as crews worked to free Ever Given, Russian officials seized on the incident to tout the Northern Sea Route, an Arctic maritime corridor on which Moscow is betting big.

On March 25, an Arctic development official with state nuclear firm Rosatom, which is in charge of the development of the route, said the incident showed “how fragile any route between Europe and Asia is.”

“The Northern Sea Route’s development hedges logistical risks and makes global trade more sustainable,” the official, Vladimir Panov, told Russia’s Interfax news agency. “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.”

Arctic tanker Christophe de Margerie
The Arctic tanker Christophe de Margerie, operated by Russia’s largest shipping company, in the Gulf of Ob in the Kara Sea, February 18, 2019.
Alexander Ryumin\TASS via Getty Images

A day later, Russia’s senior Arctic official, Nikolai Korchunov, said the canal incident “highlighted” the need for alternatives to the Suez Canal, “primarily the Northern Sea Route.”

“Accordingly, the demand for the Northern Sea Route will grow in the short term and the long term. There is no alternative to that,” Korchunov told state-media outlet Tass.

Russia has invested heavily in the Northern Sea Route, which cuts some 4,000 nautical miles off a trip between Europe and Asia via the Suez Canal. President Vladimir Putin decreed in 2018 that cargo moved along the NSR should rise to 80 million metric tons by 2024, up from about 11 million metric tons in 2017.

Russia’s Energy Ministry has said cargo traffic on the route in 2020 was almost 33 million metric tons, and that amount “has a great potential for expanding” after the blockage of the Suez Canal, the ministry said Monday.

The time during which the route is navigable “continues to expand and in 2020 reached 9-10 months,” the ministry added.

Russia tanker Arctic Yamal LNG
Christophe de Margerie loads liquefied natural gas at the Yamal LNG plant in the port of Sabetta on the western coast of the Gulf of Ob, February 19, 2019.
Alexander Ryumin/TASS via Getty Images

Warming has allowed more traffic, with 62 transits of the route through early December 2020, compared to 37 in 2019.

A tanker made the earliest eastward transit ever in May, and Russia hopes to beat that this year. The same tanker sailed westward from China in February, becoming the first commercial vessel to transit the route at that time of year.

While receding ice in the Arctic has made human activity more viable, the Northern Sea Route “is not really an alternative in a competitive commercial sense,” Elizabeth Buchanan, a lecturer of strategic studies at Deakin University based at the Australian War College, told Insider.

The unpredictability of Arctic ice means insurance is still expensive compared to other routes, the treacherous conditions on the route and Moscow’s stringent access requirements are likely to turn shippers off, and the lack of ports and other transportation links along the route “also factors into commercial considerations,” added Buchanan, a fellow at West Point’s Modern War Institute.

While the 33 million metric tons of goods carried along the route in 2020 was a record, most of that was on the western portion, and transit between Europe and Asia remains modest. Rosatom has asked Russia’s Ministry of Transport to lower the cargo goal to 60 million tons by 2024.

Coast Guard icebreaker Polar Star Alaska Arctic
A US Coast Guardsman removes ice from the hull of icebreaker Polar Star while in the Chukchi Sea, December 28, 2020.
US Coast Guard/PO1 Cynthia Oldham

While the blockage of the Suez Canal may give Russia’s overland transit routes and pipelines more appeal, absent the ongoing addition of major energy projects that use the Northern Sea Route and the development of infrastructure to support shipping there, “I don’t see the global maritime corridor business case for” the route, Buchanan said.

Climate change, which has had severe effects on the Russia Arctic, also raises doubts about Moscow’s long-term plans in the region.

The geopolitical considerations driving more attention to the Arctic are likely to remain strong, however.

Russia’s military has spent years refurbishing old facilities in the Arctic and stationing new units there. The Russian Defense Ministry said on Monday that the military had “commissioned 791 buildings and structures” in the Arctic since 2013.

NATO countries, wary of Russia’s military activity in Arctic, are increasing their activity there as well — particularly the US, which shares an Arctic boundary with Russia in the Bering Strait.

In March, the US Coast Guard’s top officer said the US and Canada were planning a transit of the Northwest Passage, which connects the Atlantic and Pacific oceans through the Canadian Arctic.

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Ever Given is no longer blocking the Suez Canal, but Russia sees a long-term benefit from it being stuck – Business Insider

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