Russian seafood industry warms to use of North Sea Passage

A warming climate has opened up a new shipping passage that may allow Russian seafood companies to bypass a national rail transportation system overwhelmed by high cargo volumes and quarrels over pricing.

Systemic problems in Russia’s rail system and its ability to transport the country’s domestically-caught seafood over the vast distances between the Far East to the country’s metropolitan areas are leading Russians to explore shipping their wares via the North Sea Passage, a frigid route through the Arctic Ocean off Russia’s northern coast.

The North Sea Passage, also known as the Northeast Passage, is a 14,000-kilometer route running from the port of Vladivostok to Saint Petersburg that has become more feasible as global warming has warmed up the oceans and the world’s polar extremes. Picturesque and still dangerous, the route features vast distances of snow and ice as well as extremely low temperatures. 

Seven years ago, Russia’s federal government moved to prioritize the commercialization of the North Sea Passage, dedicating significant state resources to the goal of turning it into an international shipping corridor. Aided by icebreakers, the first commercial convoy traveled through the passage in 2011. In August 2017, the first cargo ship traveling without the aid of icebreakers made it successfully across the entire route. Of the 300 or so commercial trips along the route, the average travel time from the port of Vladivostok to the port of St. Petersburg has been 35 days. 

As the Russian rail system has faltered and occasionally failed Russian seafood firms in recent years, companies such as Norebo and Dobroflot have increasingly turned to the North Sea Passage to ship their products across the country. 

In August, Dobroflot, the leading producer of canned fish in Russia, had 3,000 metric tons (MT) of salmon delivered by its own refrigerated ship from the Sea of Okhotsk to the region of Arkhangelsk in the northwestern part of Russia. The product was further transported by road to end consumers throughout western Russia. It’s the third year in a row that Dobroflot has used the Arctic route to transport its salmon. 

Dobroflot Communications Manager Olesya Parshikova told SeafoodSource the company’s August shipment was its only dispatch that used the North Sea Passage in 2018. Parshikova said her company has found the northern route is 20-percent cheaper than transportation by rail. In addition, she said the deliveries by sea result in a higher-quality product reaching end-consumers, as salmon transported by rail often goes through more temperature fluctuations as it is repeatedly inspected and run through control procedures. Parshikova said the company will probably continue to use the North Sea Passage when feasible due to the significant savings and quality differential.

Dobroflot isn’t the only Russian seafood company increasingly relying on the new sea route for transporting its products. According to the Association of Owners of Refrigerated Rolling Stock (AORRS), transport of Russian seafood by sea increased from 10,000 MT in 2016 to 23,000 MT in 2017 (transportation of seafood by road also increased, from 37,000 MT in 2016 to 48,000 MT in 2017). In 2018, more than 50,000 MT is expected to be delivered by sea routes, AORRS Director Mikhail Sinev told SeafoodSource.

Dobroflot wasn’t the only seafood company to ship its products via the North East Passage in August 2018. Sergey Sennikov, the deputy director of international affairs and public relations for Norebo, Russia’s largest seafood company, told SeafoodSource his company organized a shipment that included products from Ocenarybflot, Kolkhoz imeni Lenina, Peoples of the North, Russian Fish Company, and Tymlat, as well as Norebo’s own products. Nearly 600 reefer containers were loaded with those companies’ seafood at Norebo’s terminal in Seroglazka, in Kamchatka, and then shipped to Vladivostok, where they were loaded by the Vostochnaya Stevedoring Company (VSK) onto the Maersk container ship Venta. 

The Venta is currently en route to Saint Petersburg and is expected to arrive in Russia’s second-largest city by early October, Sennikov said. He said the effort required significant logistical handiwork, but that it was meant as a test of the commercial and technological effectiveness of the route for transportation of fish. Sennikov said that the companies saw a 10 percent savings over rail transportation by using the North Sea Passage, which encouraged the companies to pursue similar future endeavors.

“We are going to develop this route as it’s a good alternative to rail transportation during a high salmon season in the Far East regions,” Sennikov said. “Upon completion of Norebo’s Seroglazka terminal, there will be no need in transshipment via the port of Vladivostok. The direct route will cut delivery time and cost.”

Norebo is currently working to build out the Seroglazka terminal with a deeper port and more cold storage facilities in an effort to make the port a full-service destination for shipping out of Russia’s Far East, according to a company press release. The company has invested RUB 876 million (USD 13.5 million, EUR 11.7 million) in increasing the port’s cold storage capacity to 15,000 MT and its storage area to hold up to 300 refrigerated containers. The company has said it will begin offering direct shipping lines between Dutch Harbor, Alaska, and Yokohama, Japan and that it expects to handle 300,000 to 350,000 MT of fishery products annually once construction is completed.

On the other end of the line, there are three ports contending to be the main landing zone for Russian products shipped from the Far East. Between St. Petersburg, Murmansk, and Arkhangelsk, it appears the latter has the edge, with the region’s authorities more active in pursuing the opportunity. Arkhangelsk Governor Igor Orlov said at a recent meeting of the region’s Public Fishery Council that the port is conveniently situated for organizing logistics to transport the catch to Russia’s major population hubs, and that he expects more than 10,000 MT of fish from the Far East fish to be delivered annually to the port of Arkhangelsk over coming years.  

The deputy head of the Russia’s Federal Agency for Fisheries Pyotr Savchuk said at the same meeting that the Arkhangelsk region’s factories had processing capacity for handling up to 50,000 MT of fish from the Far East. Savchuk and Orlov said Russia’s national fishery authorities and the regional government are in negotiations with seafood and shipping companies on adjusting the seafood supply chain to solidify the commitment to Arkhangelsk as a seafood hub.

Alexey Bezborodov, the CEO of InfraNews, a consultancy specializing in transportation and logistics in Russia, told SeafoodSource the North Sea Passage represented a golden opportunity for the Russian seafood industry.

“The NSP is a commercially viable option,” Bezborodov said. “And all market participants are ready to develop this route.”

Photo courtesy of Alexander Piragis