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Suez Canal sat down in our favor

25 March 2021

Salikhov Marcel R. President, Principal Director on Economic Studies, Head of the Economic Department

Marcel Salikhov, President of the Institute for Energy and Finance Foundation, took part in the OTRazhenie show on the OTR TV channel in the part dedicated to an emergency shutdown of ship traffic in the Suez Canal and developing the Northern Sea Route.

"Suez sat down in our favor." The Suez Canal is experiencing the second crisis in its history - only not a military one, but an infrastructural and economic one. A 400-meter container ship that ran aground completely blocked traffic.

We understand that such logistics problems may recur. This is obvious with such traffic as on the road, where there is a bottleneck, there will always be traffic jams. What losses can we talk about in this case if it becomes systemic? Isn't it time to think about some alternative, so that the traffic jams will dissipate and everything will be easier with the movement?

Marcel Salikhov: Indeed, there are narrow necks. Here is the Suez Canal - one of these necks. The Panama Canal is one such neck. This is if we consider the world sea transport as a whole. Therefore, I agree that now it would be good to look for alternatives. And in this sense, the Northern Sea Route is one of the possible alternatives.

In my opinion, now we need to intensify our efforts to make some competitive proposals, so that both global companies and companies from other countries use the Northern Sea Route as a transit route, that is, for the delivery of goods from China to Europe, and some other goals.

We will be surprised, but the Americans are talking about our Northern Sea Route. The Washington Post has long been publishing articles calling the Northern Sea Route the Second Suez Canal. Although, perhaps, in the context of what is happening, this is already the first one. Will this whole "red group" (blocked ships) be reoriented to our waters, given that they are shorter?

Marsel Salikhov: Unfortunately, there is a problem with using the Northern Sea Route, specifically for container ships. Because now the Northern Sea Route is mainly used by Novatek and Gazprom Neft just for delivery of oil and LNG. The Northern Sea Route is not used by container ships and international shippers.

One of the reasons is the price. That is, you have to pay for the passage and for the icebreaker assistance. On the one hand, the shipper saves on a shorter distance. On the other hand, it needs to pay extra. Although the distance is short, shipping companies also complain that they need to wait until the icebreaker can approach and provide the necessary conditions.

Therefore, in my opinion, it is necessary to offer some more competitive conditions in order to interest shippers. On the other hand, it is necessary to resolve issues with icebreaking capacities, so that the delay time is minimal, in order to make the most of the competitive advantages offered by the Northern Sea Route, precisely in terms of travel speed and delivery speed.


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