Northern Sea Route: future business for Norway

Arctic ice is getting thinner and it is a great
opportunity for Norway. This will facilitate the transport of goods
to Asia (Japan, China), but also to the west coast of the U.S.,
Alaska or Canada and Norway can take a part in this “Nordic drama”.
It’s not just about the transport way, important is also the
infrastructure and facilities for ships and cargo. On the coast of
Norway, there should be service centres, logistics centres,
warehouses, assembly plants.

There are many consequences of opening Northern
Sea Route. – By the changes of energy market, there are not
excluded various forms of redirecting flows of energy resources.
Traditional importers of energy resources are now important exporters
(e.g. USA), so every new route connecting economic centres of
different continents can play a big role.

Moreover, in Norway may serve as long-term
strategic investments such as centres for the liquefaction of natural
gas and terminals for the preparation of raw materials for transport.

The reason is simple – Norway is a good place
for business thanks to political stability and neutrality of Norway.
Norway is for this kind of infrastructure an ideal place.

Competitor – Continental Railways

Northern Route has an important competitor: the
continental railway. Eastern European countries have relatively dense
rail network and well connected with Western Europe.

In the autumn of 2012 brought the train from
Wu-chan in China to the Czech town of Pardubice (near Prague)
consignment of electronics. The path led from China through
Kazakhstan, Russia, Belarus and Poland. The whole “expedition”
was controlled by the Swiss company InterRail Holding. And all was in
just 16 days. For instance, German Deutsche Bahn Schenker offers
special container trains directly from China to Europe. Transit time
may be shortened up to two weeks, compared with maritime
transportation, which takes about 21 days. This eliminates extra
delay due to bad weather or sea storms; the railway is the least
dependent on the weather of all present modes of transport.

It is also planned modernization and extension of
the Trans-Siberian Railway to Europe. The directors of railway
companies from Russia, Ukraine, Slovakia and Austria have already
signed an agreement of understanding. This plan concerns the
connection of EU, Vladivostok and even Shanghai. Important
disadvantage of rail still exist: transport of containers by rail is
now about three times more expensive than transport by sea.

Generally, now there is a struggle of strategic
routes linking Western Europe with Asia. For example, in the Czech
Republic, where it is the dominant state railway enterprise (Czech
Railways) and several private (quite small) companies trying to enter
the state-owned tracks.

Of course, it’s a business, but it should be event
the effort of different companies to reach the lucrative transit
routes. In Czech Republic there are already two companies which
successfully compete to Czech state railways. This competition
disturbs the current hegemony of state enterprise Czech Railways,
which operate on crossroads of European Railways. This erosion of
state owned railways can exploit other, stronger companies, such as
Deutsche Bahn, French Arriva or anyone else, who can by acquisition
enter on Czech railway market to gained transit railway capacity.

The importance of finding new trade routes and new
connections can be seen in the discussions of a system of canals that
would connect major European rivers – the project Danube-Oder-Elbe,
which would connect the Baltic, North and Black Sea. It is a
relatively old plan which is now keen to revive the new Czech
president Milos Zeman, who lobbied for it. It is therefore evident
that the search for new routes makes sense.

Pipes under the Northern Sea Route

Maybe, possible is connection between northern
Europe and Asia by submarine pipeline. This submarine pipeline would
duplicate the northern shipping route. If overcome technical problems
(which still complicate effective use of long subsea pipelines),
submarine pipeline is ideal due to political, economic or terrorist
threats.

Problems may cause a pipe penetration through the
territory of third countries. Terrorists could not attack the
pipeline due to the unavailability of pipe under the sea.

Another advantage: in the case of pipe passing
through the continent there is difficult to negotiate with
landowners.

Most viable way of connection between Europe and
Asia is pipe laid through arctic sea, unless you don’t want to
build a pipeline across the continent.

Analogy of canals

Commissioning Northern Route would have to
business and transport a similar stimulus, such as the opening of a
new navigable transportation canals between the oceans. The
Suez Canal has very strong positive effect on trade of Europe. The
existence of important “business” or maritime route has enormous
strategic and political implications – who control significant routes
has the power!

Similar example is the Panama Canal. Besides of
ongoing investment in Panama to enlarge its capacity there is other
plan of next canal in Nicaragua using the lake Cocibolca (so called
Nicaragua). So, finding competitors of temporary trade routes is
still attractive. But in this area there is other interesting
investment. Chinese want to build a “rail Panama canal”, as
railway, which ran through Columbia with use of terminals and ports
on Atlantic and Pacific coast. Even if it is more expensive than ride
through Panama Canal, “rail Canal” could be for a particular type
of cargo an alternative of Panama.

Of course, competitors of Panama are still in the
stage of speculation, but reviving their ideas is also a political
tool. Speculation that the Chinese can build a competitor to
“American” Panama is pushing the U.S. government for example in
older case of final ratification of free trade agreement. Similarly,
reflections of the Northern Sea Route may mean for Norway political
and strategic capital.

Return on investment

First of all, it is necessary to wait for retreat
of ice pack in incriminated area. Investment in the Northern Route
would be mainly in the form of investments in infrastructure,
capacity building of ports and terminals for the various kinds of
cargo.

Thanks to modern technologies, cheaper
transportation and international trade will become more intense. The
investments to trade routes are in the long rung (with high
probability) really profitable.

The advantage of the Northern Route would be in
(notwithstanding of shorter route from Western Europe to China)
chance to avoid of “traffic jam” and delays in front of Suez
Canal.

We must also take into account the political
situation in the Red Sea and the pirates, whose elimination is very
complicated for chaotic political situation. It is clear that the
pirates are recruited from poor people living nearby sea lanes and
this is no problem for the Northern Route. First, it is uninhabited
areas and economic situation in Russia is stable and improving. In
addition, Russia has hegemony in this area and wants to support the
trade.

It is clear, that in polar area there is a big
opportunity of Norwegian business. It is necessary to know all
consequences and be prepared until the time is right to invest to the
infrastructure of new trade routes.

Source: The Nordic Page Magazine September issue

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