A Record Number Of Ships Used The Arctic Northern Sea Passage In 2020

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A record number of vessels have in 2020 sailed through Russia’s Northern Sea Passage this year, according to reports from Reuters. Norway’s Center for High North Logistics (CHNL) logistics foundation has recorded 62 full transit voyages through the Northern Sea Route as of Wednesday this week (December 9). That is against 37 transits in 2019.

The number of ships using the Northern Sea Route also rose from 277 to 331 this year, according to CHNL. Russia, China and Canada are the top three nations using the Arctic route, with shipments mainly comprising iron ore, oil and liquefied natural gas.

The increase comes as Moscow places more priority on developing the Northern Sea Route, which provides a shortcut connection between Europe and Asia. President Vladimir Putin has said he wants to quadruple annual shipments on the route from 20 million metric tons in 2018 to 80 million tons in 2024. Russia has also announced the entire land mass of the Russian Arctic as a Free Trade Zone with preferential tax policies for investors. Our full report of this can be read in the article Why Investors Should Be Looking At The Russian Arctic For Opportunities.

The entire Northern Sea Route was ice-free in summer 2019, while this year, parts of the Arctic sea ice have failed to freeze at their latest expected date. Ice coverage is shrinking by about 10% each decade.

Favorable ice conditions in this navigation season are one of the reasons for the shipping growth, with Russia is warming more than twice as fast as the rest of the world. While the region has seen comparatively little shipping traffic compared to other shipping lanes, the development and growing use of the Northern Sea Passage will no doubt continue, with costs savings on transporting goods between Europe and Asia a major factor.

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Russia Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Eurasia, including China, Russia, India, and the ASEAN nations, assisting foreign investors into the Eurasian region. Please contact Maria Kotova at russia@dezshira.com for Russian investment advisory or assistance with market intelligence, legal, tax and compliance issues throughout Asia.

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