• 2022 August 17

    Questioned efficiency of subsidized shipping by NSR

    Photo by Vadim Tolbatov. Wikipedia

    RF Government started subsidizing coastal voyages in the Arctic from the ports of Saint-Petersburg and Murmansk to the Far East terminals. From the beginning of the year, annual allocations for those purposes make RUB 560 million. However, nuclear-powered container ship Sevmorput deployed for this purpose is only 10% loaded. Shippers say the route organization lacks awareness.

    It is not the first year of attempts to organize a shipping line linking the European part of Russia with the Far East by the Northern Sea Route but there is no apparent success so far. From 2019, nuclear-powered container ship Sevmorput made one or two voyages in the summer navigation period. There was no fixed schedule. It was based on the demands of the Far East fishery companies. It should be noted that the line was initiated by Rosrybolovstvo (Russian Federal Fisheries Agency) which faced logistic challenges in 2018-19 when delivering fish from the fishing areas (Kamchatka, Sakhalin, Vladivostok) to customers. The loading of Sevmorput was always low, hence high expenses of the ship owner (FSUE Atomflot) and high cost of transportation.

    Today, operation of Sevmorput is still focused on transportation of fish products which is hindered by the deficit of refrigerated containers. Loading with other types of cargo is very low. The expert community have frequently held public discussions to find cargo for loading the ship. Apart from interaction with experts, targeted work with logistic companies is needed. Unfortunately, this work is insufficient so far. Logistic companies interviewed by IAA PortNews found it difficult to comment on successfulness of the voyages made by the nuclear-powered container ship or to forecast its loading prospects amid lack of information.

    Data on coastal voyages of Sevmorput in the Arctic in 2019 – 2021 collected by IAA PortNews :


    One voyage in late August from Petropavlovsk-Kamchatsky to Saint-Petersburg delivered 204 reefer containers with fish and 66 containers with other cargoes.

    The second voyage was cancelled due to absence of cargo for the back voyage.


    In late August, Sevmorput made a voyage on Murmansk – Petropavlovsk-Kamchatsky – Saint-Petersburg route. No data on cargo.

    The second voyage began on September 8. 206 reefer containers with fish products (6.5 thousand tonnes) delivered from Petropavlovsk-Kamchatsky to Saint-Petersburg.


    All the 4 voyages planned for the year were cancelled due to pandemic restrictions.

    Image source: Atomflot

    Subsidizing of lossmaking routes

    Meanwhile, the government is striving to diversify shipping in the Arctic. Not only raw materials are to be transported by the Northern Sea Route.

    In early 2022, RF Government launched a mechanism for subsidizing of regular cargo transportation by the Northern Sea Route. Order No 397 was signed on 18 March 2022. Decreased rates were offered to Russian shippers to attract cargo to a coastal line linking the ports of Saint-Petersburg and Murmansk with the Far East regions.

    “Amid the sanctions against Russia it is essential not to stop active development of the Northern Sea Route. Those are safe and reliable lanes within territorial waters and exclusive economic zone of our country,” said Prime Minister Mikhail Mishustin at the meeting with his deputies held on 21 March 2022.

    RUB 560 million will be allocated for that purpose annually. A total of RUB 7.84 billion is foreseen by the plan for NSR development until 2035. Ministry for the Development of the Russian Far East and Arctic and Rosatom are responsible for organization of the voyages.

    Navigation reality of 2022

    On 16 June 2022, nuclear-powered container carrier Sevmorput left the port of Murmansk for Saint-Petersburg. On June 23, Atomflot’s ship was placed for loading at the berth of Petrolesport JSC. Two days later, Sevmorput left Saint-Petersburg for Petropavlovsk-Kamchatsky and on July 2 called at the port of Murmansk to take additional cargo. On July 8, the ship left Murmansk and arrived in IAA PortNews on July 21. Sevmorput left for Murmansk on July 29 and completed transition from Petropavlovsk-Kamchatsky to Murmansk on August 11.

    The loading of the voyage was quite low – just 10%. A total of 2,579 tonnes of cargo was transported including 79 loaded containers, 56 general cargo units and 103 empty containers. The capacity of the ship is 26 thousand tonnes.

    The back voyage is also far from perfect:  782.5 thousand tonnes including 21 forty-foot containers with frozen fish and 8 units of equipment was transported from the Far East to the European part of Russia.

    In his letter to the Ministry for the Development of the Russian Far East and Arctic, Vladimir Panov, Special Representative for the Development of the Arctic, Rosatom – Deputy Chairman of the State Commission for Arctic development (supervises organization of coastal voyages on the Northern Sea Route), said that “key problem in organization of this kind of transportation is the lack of available refrigerated equipment for fish products and limited capacity of road facilities for delivery of heavy load containers from the port of Murmansk to central regions of Russia”.

    Potential shippers beyond the fish segment rail against lack of information about operation of the Sevmorput in the summer navigation season. In spring of 2022, some companies contacted the agency’s editorial office to learn about how to use the voyage. One of the shippers told IAA PortNews about the delivery of general cargo weighing 20 tonnes by the first voyage. It was transported from Saint-Petersburg (Petrolesport terminal of Global Ports) to Kamchatka (Seroglazka terminal). It cost RUB 378,000 with two thirds paid to Petrolesport for loading (RUB 180,000 for loading itself and RUB 65,000 for separation). Despite the subsidy, the transportation cost was very high, he said.

    Petrolesport. Photo from Petrolesport website

    In response to IAA PortNews’ request, Global Ports provided a comment with no details: “We do not disclose commercial terms. From the point of view of loading/unloading works, loading of containers onto the ship is conducted as part of a standard operation process.”

    Meanwhile, Petrolesport is not the only terminal in Saint-Petersburg where a nuclear-powered container carrier can be loaded. MSCC Bronka is also available but IAA PortNews has found out that no requests of prices and terms have been received this year. Those asked by the agency believe that higher competition between the terminals could let reduce general expenses of shippers for coastal transportation of their cargo.

    So far, underloading of Sevmorput has no impact on further implementation of the project. Rosatom and the Ministry for the Development of the Russian Far East and Arctic are planning the second voyage of Sevmorput. According to the abovementioned letter of Vladimir Panov, it is to begin on 22 – 25 September 2022. Major cargo will be fish products in both directions (export fish is transported from Murmansk to the Far East).

    What is the point?

    Here comes an issue of reasonability to use a large nuclear-powered container carrier loaded at 10% on the subsidized route for the sake of several containers with fish and several units of equipment? Why is the loading so low and are there opportunities of sufficient loading with other cargoes?

    The key factor to ensure the growth of loading is the fixed schedule. However, no dates have been officially announced for the second voyage of the nuclear-powered container ship in the season of 2022.

    Press center of Atomflot confirms that the second subsidized coastal voyage of the Sevmorput is planned for the summer-autumn navigation season to deliver cargo from the European part of Russia to the Far East regions and back. “Together with the State Corporation Rosatom, FSUE Atomplot is currently considering possible variants of the timetable and ports of call. Simultaneously, work on consolidation of possible cargo is underway,” Atomflot told IAA PortNews while not revealing any specific dates or terminals of call.

    The market stakeholders told IAA PortNews that insufficient loading on the route should be attributed not only to tariffs (which are still high despite subsidies), but also to its organization. To create a regular line, they believe, a fixed schedule is needed. Shippers should be aware of it for a long-term planning and preliminary consolidation of cargo at specific terminals. This kind of a shipping line is not created yet. It is still being developed, says the Ministry for the Development of the Russian Far East and Arctic. 

    Meanwhile, in our opinion, it is a promising idea taking into account insufficient capacity of railway infrastructure to the Far East and insufficient loading of Baltic container terminals amid western sanctions. Not only fish can be and should be transport by the line. There is a demand for transportation of general cargo and various food products (such as meat for the Far East region), furniture and other consumer goods. However, a fixed schedule with fixed terminals of call is needed. Perhaps, a smaller ice-class ship with lower freight rates can be deployed for the line.

    The big question to be addressed to the those supervising organization of regular transportation of containers and general cargo along the Northern Sea Route: why are state resources subsidizing the route spent inefficiently?

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Vitaliy Chernov