The «Arctic competition» problem and the marine transport hubs: Is it a clash of business interests or the knockout game?
Автор: Zajkov Konstantin S.
Журнал: Arctic and North @arctic-and-north
Рубрика: Social science. Political science. Economics
Статья в выпуске: 19, 2015 года.
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Analysis of the causes and sources of the so-‐called "Arctic competition" between Murmansk and Arkhangelsk identifies strengths and weaknesses, opportunities and threats (SWOT-‐analysis) of the marine transport hubs. The focus of the article is the transport integration problem and logistics. Arkhangelsk and Murmansk marine nodes were created as the part of a single freight logistics system in the North and were not supposed to compete, but to complement each other. Nearest future will bring up the issue of the national transport and logistics integrator with the functions of the “upper-‐corporative” logistics center responsible for evidence-‐based, homogeneous and transparent re-‐distribution of traffic and freight logistics market bases in the western part of the Russian Arctic.
Arctic competition, Arkhangelsk, Murmansk, sea port, a river port, logistics, freight base, service, transport and logistics hub
Короткий адрес: https://sciup.org/148318723
IDR: 148318723
Текст научной статьи The «Arctic competition» problem and the marine transport hubs: Is it a clash of business interests or the knockout game?
The main role in the development of remote areas of the shelf of the Barents, Pechora and Kara seas and the Arctic coast of Russia is played by several transport routes, rail and water transport nodes located on the rivers Pechora, Ob and Yenisei and two large marine ports --‐ Arkhangelsk and Murmansk. Arkhangelsk Commercial Sea Port and Murmansk Commercial Sea Port are the main transport hubs in the Arctic. Today there is a marked increase in the volume of transshipment of goods through the ports associated with the intensification of work on the shelf and in the supply of oil and gas projects in the Arctic. Regional and local authorities have the opportunity to replenish their budgets, to raise the level of employment of the population, to solve social problems through the participation of regional suppliers and to provide work in the Arctic.
The growing flow of goods in the Arctic allows maximum use of Arkhangelsk and Murmansk ports. In this regard, stevedoring companies, representing the Archangelsk and Murmansk seaports are wrongly regarded as competitors. In strategic terms, with the integration processes of redistribution of traffic and freight bases, significant synergies and a multiplier effect on economic development of the whole transport logistics in the Arctic is possible. One may remember the successful experience of cooperation of ports in the twentieth century, when the ASCP and MITI worked as complementary maritime transportation hubs. Within the planned economy, transport logistics of the Northern economic district followed the principle of uniform redistribution of traffic between the two ports operating at the national level of the structural development of integration processes between regions, and the destructive competition was excluded 1. Administrations of two major northern ports and regional authorities were interested in the effective redistribution of traffic between the ports of Murmansk and Arkhangelsk. However, the failure of the planned economy led to the situation when the integrator function of transport logistics became unused, and the former relationship between the regions and ports, in some cases, became a destructive confrontation and competition for investments, resources, traffic and cargo base. Originally, the term “Arctic competition” was used in the Russian media only in the context of relations with foreign countries. But today, this concept is extended to the relations between t e RF territories 2.
Interregional “Arctic competition” background
Today and Arkhangelsk and Murmansk have their major development projects of maritime transport nodes requiring a very large federal funding and support at the highest levels of power. For Murmansk it is a project of integrated development of the Murmansk transport unit (MTU) with its cost of 132.3 billion rubles, 56.6 billion rubles comes from the federal budget and 75.7 billion — extra budgetary sources3. For Arkhangelsk it is a project of a deepwater port in Arkhangelsk with the cost up to 35 billion rubles. The port is going be built in conjunction with the implementation of the “Belkomur” project 4. According to preliminary experts’ estimates, for the “Belkomur” it is required at least 176 billion rubles (excluding construction of a separate route to Murmansk) 5. Due to the given upcoming multi--‐billion cost and the obvious financial problems it seems that both projects will not get federal investments. Only one region will receive the money, the region with powerful lobbyists at the federal level, the region able to prove that its maritime transport hub would be the most popular and necessary for the development of the Russian Arctic. Thus, the so--‐called “competitive” struggle against the neighbor port is likely to be subjective, and aimed to get support and funds for the “major project”. At the same time, the interests of
Murmansk are of interests for oil companies seeking ways to reduce the costs of setting up databases and to ensure their projects by federal investment. For example, the announced proposal
(April 2014 at a meeting with Vice--‐Premier of the Russian Government) to suspend the state contract on the MTU project and redirect part of the resources in favour of transport projects in the Crimea has met strong resistance of the oil lobby, so funding has been saved 6.
It is obvious that the project of the Arkhangelsk port area “Severny” has not such a powerful lobby. Not coincidentally, step by step, Arkhangelsk is getting a fixed image of the unpromising, shallow, freezing and expensive port and its development of does not make sense and there is no need to invest a penny of federal investments. The deputy head of the Ministry of
Transport of the Russian Federation Viktor Olersky said the Belkomur route should be focused not on Arkhangelsk but on the Murmansk Transport Hub 7. Therefore, in the nearest future,
Arkhangelsk is most likely doomed to loose in the so--‐called “competition” with Murmansk for federal investment. It is strange that the participants of the “competition” have no understanding that a further weakening of the naval component of the Arkhangelsk economy won’t help, but harm the development of Murmansk.
At the same time, we have a real Murmansk’s “Arctic competitor”, and it is not
Archangelsk, it is the “deep and not freezing” port of Kirkenes, where the company "Norterminal is planning to build stationary oil terminal with storage capacity of 1 mln tons by 2018. Kirkenes has already accommodated foreign oil and gas service companies working on projects in the Arctic with the Russian operators. According to records, in 2013 about 70% of vessels in the port were the ones served the Russian oil companies in the Kara Sea 8.
But, Kirkenes is not a competitor to Murmansk in its struggle for the Russian federal investment and probably therefore, it is not a subject for constant attacks in order to establish the primacy of the port of Murmansk in the Arctic in public oppinion. However, in the long term perspective, the Russian oil and gas operators may, because of business interests, the high level of the western maritime service, choose Kirkenes as a convenient alternative to Murmansk 9. In
Kirkenes there is a great chance to become the “main gateway to the Arctic”. In December 2014
the Ministry of Foreign Affairs of Norway, despite the adherence to anti--‐Russian regime of sanctions imposed by the United States and the EU, allowed Norwegian companies based in
Kirkenes to provide supply for vessels working for Russian offshore oil and gas projects in the Barents, Pechora and Kara Seas in 2015 10.
Due to the development of the MTU project, Murmansk aims to solve the problem of congestion of its railway. However, the rail distance from Central Russia and the Urals via Murmansk is the longest. Sooner or later, the project of building the railway line that will connect the border area by the shortest route Nickel — Pechenga (Murmansk region) to the port of Kirkenes could be actualized. Now the project is a pending one but seems to be very profitable for customers. Its goal is to switch to the ports of the Barents freight flows between China and the US East Coast. According to published data, there is a need to build a section of a length about 40 km, which is comparable with the length of new 46 kilometers railway line from the station to the output station Lavna of the Oktyabrskaya railway according to the project of the MTU integrated development 11. According to Russian experts, the road Nickel — Pechenga — Kirkenes can not only relieve the congested port of Murmansk, but also “to divert a significant portion of Russian and foreign trade cargo from Murmansk”, especially the loads of “Belkomur” so much expected by Murmansk, to huge transport corridor “N.E.W. Corridor”. Today, Murmansk region's western neighbors are planning to build a railroad from the Finnish town of Rovaniemi to the Norwegian port of Kirkenes (about 550 km) for the development of this area. We can assume that if they do so Kirkenes will be more attractive with its modern rail and sea transport hub located near Murmansk 12.
Information practices of the “Arctic competition”
Murmansk has a special position in the Arctic, primarily as a base atomic icebreaker fleet, as a center of Arctic oil transfer, as a service center for drilling in the Barents Sea and as a transit point for foreign vessels. It should be noted that the Archangelsk rail and sea transport hub essential for delivery of general cargo in the Arctic and plays a significant role in coastal freight carriage along the NSR. A coastal cargo delivery by smaller vessels is the most demanded kind of carriage along the NSR today13. In the Arkhangelsk region has all the major engineering companies, most qualified personnel in the field of shipbuilding and ship repair and all the oldest scientific and educational institutions. Arkhangelsk, in spite of serious failures in lobbying at the federal level, remains a priority area for placing an integrated production base to provide industrial Arctic projects with a proper supply. Murmansk region has not such a serious industrial, scientific and educational potential, but the creation of the Murmansk transport hub is impossible without the involvement of the respective potentials of its neighbors.
From the standpoint of inter--‐regional “arctic competition”, the existing need in investment for industry, transport and logistics, educational and scientific potential of Arkhangelsk is likely perceived as a threat scenario by Murmansk authorities. The major federal financial flows would be available for the development of a single Arctic port, only one major marine transport hub, only one “investment basket”, “one pocket” and one “main gates to the Arctic”. Today the public consciousness is being actively introduced the idea of “unconditional advantages of the Murmansk port” as the “Main Gates to the Arctic”. Some articles are published belittling the importance of the Arkhangelsk port in comparison to Murmansk and leveling the role of Arkhangelsk in discovery and development of the Russian Arctic. The purpose of the information policy is to prepare the public opinion to the fact that the Murmansk would get all federal investments in its transport, infrastructure, scientific and social development. It is forgotten that both ports: the oldest Russian Arctic port of Arkhangelsk, which is over 430 years old, and the port of Murmansk, which was created in 1916, were a part of the Alexander County of Arkhangelsk province, and both ports play an unique role in transportation, logistics and economy of the North. This fact is denyed now and it is an obvious sign of propaganda. For example, a news website “Tribuna” published an interview with the governor of the Murmansk region, where, if we’ll turst the website, she said that Murmansk “... is the beginning of the Northern Sea Route, a key point at the junction areas of the Arctic and Atlantic oceans. We have all year--‐round, ice--‐free port with the necessary depth. These are obvious facks. That is why all expedition to the Arctic in the 20th century started from Murmansk...” [1].
It is obvious that such a concept is not true. First , it is so, because the Northern Sea Route begins in the area of the Kara Gates in the Nenets Autonomous District and Novaya Zemlya (Arkhangelsk region). Second , the majority of famous Arctic expeditions of the 20th century began in Arkhangelsk. However, should we pay too much attention to “arctic brands” while seriously analyzing the value of the ports? It is more important to make an objective comparison of the real advantages and disadvantages of the Arctic transport and logistics in Arkhangelsk and Murmansk.
The dark side of the cliché “ice--‐free and deep”
Considering the above--‐mentioned methods of “arctic competition”, one can see that the phrase “ice--‐free and deep” is used as the evidence of Murmansk port’s superiority. Or, as it was quoted above: “ice--‐free port with the necessary depth”. In order to objectively evaluate this cliché we should answer the key question: what’s for do we need more depth and why do the Arctic vessels need a deep and ice--‐free port? Russian Arctic — is mostly shallow and ice--‐covered region. We use vessels with a shallow draft, and, as a rule, the vessels are acompained by the icebreaker, the icebreaker fleet in Russian Arctic navigation conditions should also have ships with a shallow draft.
More important advantages of rail and water transport hubs are: less distance for delivery to the port, availability of railway tracks near the port, low service costs, the availability of warehouses, piers and platforms for industrial facilities, existing of infrastructure, its accessibility, opportunities to reduce the delivery time and quality of services. For example, in Europe, seaports of so--‐called “fourth generation” provide its clients with a possibility to accommode facilities at the port area. So, the port should have a huge area for construction of the industrial objects and facilities. In this regard, the post “sandwiched” by hills is not a good option in comparison to a one on the flat territory.
Deep--‐water and ice--‐free port of Murmansk has an undeniable advantage over the
Arkhangelsk port only when handling the export of large quantities of cargoes, first of all — coal.
This fact is well--‐known to professionals working in the field of transport logistics in the North. The depth of the Murmansk port is primarily needed for the entry of large bulk carriers, which can be loaded by large volumes of coal or phosphate rocks. These goods are unprofitable to carry in small quantities, or in small vessels, and therefore there is a need for deep--‐water port, working usually for export, to the west. However, mainly, not bulk but general cargoes are sent to the east, and to the Arctic 14. Oil and gas projects in the North and in the Arctic require vessels able to enter the mouth of the Arctic rivers and shallow approaches of the port stations. So, there is a need for vessels able to carry: pipes for gas pipelines, mobile self--‐propelled and self--‐propelled equipment, goods in transport packages, piece goods in packaging, barrels and building materials, concrete and metal structures and a large number of small packed goods. Big ships, accepted by a deep--‐ water port of Murmansk, could not be used due to their large draught, and they are not normally used for coastal shipping in the Arctic and for the import of goods to the Arctic coast territories. Not coincidentally, the major requirement for the construction of new icebreakers and ice--‐class vessels for the Russian Arctic is a maximum reduction of their draught. In particular, the requirements for a nuclear--‐powered icebreaker LK--‐60 Project 22220, suggest such a construction, which makes it possible to use in shallow water areas, including the mouth of the polar rivers .
Murmansk sea trading port accepts vessels up to 15.5 meters draught, more than 265 meters length and capability up to 150 000 tonnes, but such vessels are not usually used for short sea shipping in the Arctic and are not reqiered for the majority of Arctic oil and gas projects 16. For comparison, Arkhangelsk Commercial Sea Port accepts vessels with a draught of 10.7 m, but it is optimal for the Russian Arctic. That is why the MMC “Norilsk Nickel” has built five new ice--‐class vessels with a draught of 9.5 meters, able to enter Lena, Yenisei, Ob and other polar rivers 17.
One more fact, used to underline the superiority of the Murmansk port, is that: “the turnover of goods at the port of Murmansk amounted to 31.4 mln tons in 2012 and at the port of Arkhangelsk — 4.4 mln tons” 18. However, the first number is for the bulk, dry bulk and liquid bulk cargoes, coal, fertilizers, crude oil, sent in bulk for export. But the second number mainly reflects cabotage cargoes in the Arctic, delivery of containers, equipment, pipes, equipment for Arctic oil, gas and infrastructure projects. Thus, it becomes clear why the question of what post should be called “the main gates to the Arctic” Arkhangelsk or Murmansk is solved by methods of information war in t e media.
The fact that the White Sea and the Northern Dvina River freezes in winter, does not mean that the port of Arkhangelsk is freezing. Since the last century Arkhangelsk has been using icebreakers in winter. By 1917, the port of Arkhangelsk had 16 icebreakers19. Since the mid--‐twentieth century, the icebreaking in the winter has been always done. By comparison, ice conditions and the depth of the Baltic Sea are not easier for navigation than the ones in the White Sea and the port of St. Petersburg also works with icebreaker assistance in the winter. However, none of this could be disadvantage in case of good transport logistics. During the First World War Arkhangelsk port was the most popular in Russia, its cargo turnover in 1916 amounted to 2.8 mln tons. During World War II approximately 4 mln tons of cargoes of strategic importance were transported through the piers of Arkhangelsk. That time, the Arkhangelsk and Murmansk ports operated as parts of a single mechanism and had a common integrator to redistribute the traffic flows.
Advantages and disadvantages of the ports: integration perspective
According to the project manager of the LLC “Morstroytechnology” Sophia Katkova, “the most expensive in the nomenclature transportation group is a container (from 100 to 120
thousand rubles, depending on the region of delivery). That is why the maritime transshipment of containers in Arkhangelsk — the most economical way of cargo delivery to the Arctic coast and the
Barents, Pechora and Kara Seas. This applies to all rail freight of the 3rd class (the most expensive):
After the comparison of prices for transportation, Arkhangelsk is the best logistics area for cabotage deliveries along the Arctic coast. And Murmansk, certainly, is more successful starting point for placement of large export--‐import streams. Depths, ice conditions allow it to work with the vessels of a large draught in a protected bay” [2, p.10--‐12].
Unfortunately, the media rare reflects the opinion of professionals in the field of transport logistics who indicate that the objective reasons for competition between the ports of Murmansk and Arkhangelsk do not exist. Each port has its own permanent niche, its cargo base and work priorities. And with the construction of the port “Sabetta” due to the project “Yamal LNG”, offshore projects in the Pechora and Kara Seas, the cargo delivery market has, speaking the language of transport experts, “overstocked volumes” during the summer 20. And today it is necessary not to think about the competition but how to integrate and distribute uncoordinated flows of goods without any future problems for the rail and water transport hubs in Murmansk and Arkhangelsk.
In order to maximize the benefits of logistics and opportunities of both ports, we need to talk about the advantages and disadvantages of Arkhangelsk and Murmansk transportation hubs.
We need to talk about it as objectively as possible, without any clichés, such as “non--‐freezing and deep--‐water port” or “main sea gates to the Arctic”.
Objective reality is the unsolved problem of low capacity of the railway on the approaches to the port of Murmansk, which may end many plans for its development. This question is decided by the development of the railway infrastructure, including the construction of a new railway branch from the station “Vihodnaja” to Lavna and three railway stations 21. For comparison, the
Arkhangelsk port is served by two stations on the Northern Railway (NRW) without any problems.
In contrast to the access roads to the MSP that overstocked by coal, fertilizers and other bulk cargoes, Arkhangelsk railroad tracks, especially in recent decades, remain underutilized. In addition, Arkhangelsk has the pipeline “Nyuksenitsa--‐Arkhangelsk”, and there are no freight trains with fuel oil for the local power plants. For comparison, Murmansk remains without a pipeline and freight trains with fuel oil make the situation with rail transportation along Oktyabrskaya railway (ORW) even worse. At the same time, the amount of goods, imported to Arkhangelsk by rail, continues to fall. Thus, in January — November 2014 the NRW provided transported 57,707,000 tons of cargoes, which is below the level of in 2013 by 7.7%. Thus, the NRW has formed additional reserve capacity to attract new cargoes to ASCP 22.
Despite the fact that the capacity of the railway that goes to Arkhangelsk is significantly higher than the road to Murmansk, the development of port railway stations in both ports is needed. The stations should allow the possibility to place a certain amount of goods on the additional railway tracks at the entrance to the port area. In the future, this will let Arkhangelsk to avoid the sad experience of Murmansk when it comes to the railway transportation. It is easier to create such a network in Arkhangelsk, where there is a lot of space and no rocky hills like in Murmansk. According to transportation experts, Arkhangelsk urgently needs to increase the network of railway sidings and dead ends, where it will be possible to place a part of freight wagons in times of peak traffic.
Experts admit that the possibility of congestion in the Archangel rail--‐sea transport hub has increased. It might occur when several large customers, acting inconsistently without total logistics integrator, could send their cargoes to the port of Arkhangelsk at the same time. According to transport experts, during the summer season in the Arctic, on the NRW lines can get up to a thousand or more wagons at the same time [2, p.12]. When the three month volume of cargoes arrives to the port each month, no port in the world would be able to cope with such volumes quickly. In this situation, in addition to other rail lines or dead ends, where it would be possible to place the freight trains, the Murmansk and Arkhangelsk need an overall integrator to coordinate their actions with shippers and stakeholders, including JSC “Russian Railways”. Today there is no such a national integrator and it damages the interests of the carriers.
Placement of the service centers for the Arctic projects
One had no doubts about benefits the companies get while placing their cargoes in the port of Murmansk, especially on the first stage of their work to ensure prospecting, exploration and drilling on shelf of the Barents Sea. Geological study of the Russian Arctic shelf requires a lot of work, deliveries and demand for good port services. The depth of the MSP allows collecting large modular systems, for example, offshore platforms. In winter the port does not need icebreaking assistance. That fact makes the work of the port services easier. To understand the
scope of work it is enough to say that the geological study of the Russian shelf is 10 times lower than the one of the US in the Chukchi Sea and 20 times lower than the study of the Arctic shelf in neighboring Norway. The density of the coating seismic work in the most promising waters of the Arctic seas, except the Barents and Pechora Seas, is not more than 0.15 km per km2, and the eastern seas — less than 0.1 km per km2 [3].
However, the MSP area is divided into areas of different owners. Creating a common production and logistics base to ensure oil and gas project requires, as a rule, combining several of these areas, so sometimes the only way is to buy or rent the port areas. As the result there is a need to conduct separate negotiations, with no guarantee that they will be successful. So far not every company has the opportunity to create a base in the port of Murmansk. For example, the case of LLC “Gazpromneft--‐Sakhalin” has created a supply base at the berths №44 and №45 of Murmansk port. LLC “Gazpromneft--‐shelf” rents moorings shipyard №35 for its cargoes. The company
“Karmorneftegaz” uses berths in the port area Lavna for its supply and “Rosneft” provides itself with the place for collecting oil plantforms in the area of the 82th (ship repair) factory in Roslyakovo. Only “Gasflot” owns piers in Murmansk today. According to A. Fadeyev, Head of the department of production of LLC “Gazpromneft--‐Sakhalin”: “industrial development of hydrocarbons, mineral and biological resources in the Arctic will continue to grow, that is why the competition for convenient infrastructure areas with high growth potential will continue to increase" [4].
Great number of contractors and subcontractors and even from the Arkhangelsk region are now trying to create their own base in the MSP area. For example, JSC “Belfreight” and its avtivity to establish and widen its own service base in the port of Murmansk. The compamy has already moved more than 300 containers for drill cuttings from offshore platforms in the Kara and Pechora Seas to Murmansk. It is worth noting that Arkhangelsk recently got a new production of offshore containers and delivers them to Murmansk by the shortest sea route. Such a logistics solution eliminates the risks associated with renting container equipment from foreign suppliers. And it proves that the industrial potential of Murmansk is very often the industrial potential of suppliers from the neighboring Arkhangelsk and Severodvinsk. In 2013 and 2014, due to the placement of Arkhangelsk supplier’s base in the Murmansk port, its customers — “Gazprom burenie” and “Rosneft” received the necessary containers fast. It was extremely important for seasonal drilling of the offshore wells, carried out in a short ice--‐free period 23.
In the future, maintenance of own servicebase seens to be labor--‐intensive and costly activity for the companies and oil and gas projects operators. Considering international experience, the operators would benefit from the establishment of one major production and logistics base in Murmansk, which would deal with all companies and operators and provide them with high international standar services. It is observed in the neighboring Norwegian town of Kirkenes. Foreign oil and gas companies, attracted by Russian operators to participate in projects in the Arctic Barents, Pechora and Kara Seas, prefer Kirkenes to Murmansk, due to the low level of bureaucracy and better logistics [5].
Maybe sooner or later Murmansk would demand service base experience of Kirkenes. But Russian companies are not ready to follow that path, and instead of creating a single base, they establish separate bases for their projects in different parts of the port's area: each base for a separate project. The lack land for large--‐scale construction and development of industrial production, so nessecary to establish a large base of industrial projects in the Arctic along with the railway traffic problems and long “rail shoulder” are the most significant disadvantages of the Murmansk port. The development of the western shore of the Kola Bay and construction of a new coal terminal, rail lines and new “Lavna” port can only partially improve the situation. But generally speaking, some problems, for example, the existence of a longer “rail shoulder” than the one in Arkhangelsk and a luck of space in the Kola Bay would still remain unsolved.
Choice of the port dependents on «railway shoulder»
Today, the companies planning to work and working on the Arctic shelf use, mainly, the area of the MSP. This, according to the general director of “Belomortrans” (Moscow) Mikhail Sisin, is naturally, because at the stage of drilling in the Barents Sea it is convenient to place a supply base on the Kola Peninsula. But at the next stage of field development, when companies go into the Pechora and Kara Seas, the Gulf of Ob River, some of the service bases will certainly be relocated to the port of Arkhangelsk. The distance to these areas through the Archangelsk rail and marine transport hub is shorter for hundreds of kilometers than through the Murmansk transport hub. In addition, Arkhangelsk port plays an important role of a leading reserve in the winter 24.
These facts are well known to transport and logistics companies, who to develop the scheme of cargoes delivery in the Arctic. Thus, Project Manager of “Morstroytechnologija” (St.--‐ Petersburg) Sophia Katkova emphasizes that the “rail shoulder” of delivery for different cargoes to Arkhangelsk is shorter than the rail delivery to Murmansk. “Shorter “rail shoulder”, and, accordingly, the value of the railway tariff are the most determining factors in the delivery of goods from Central Russia and the Urals. At the same time, the railway tariff in the supply chain occupies a significant part of the costs (for deadweigt — up to 30--‐40%, depending on the region of delivery). It should be noted that according to other experts, the railway tariff may occupy only 15--‐
20% of the cost, which is quite a lot. If we compare sea freight and the project points in the Arctic, the difference between Murmansk and Arkhangelsk won’t be seen when it comes to the vessels of equal tonnage and deadweight for transportation of goods. If we compare the logistics for bulk goods, including large--‐diameter pipes and equipment (including a variety of metal constructions and etc.), the proportion of freight charges for the supply will be higher — 55--‐80%. Nevertheless, the delivery through Arkhangelsk remains attractive for these goods” [2, c.10--‐12].
Choosing a port on the Arctic, the main criterion is a distance of delivery: 20 hours — the minimum time of delivery by train Moscow — Arkhangelsk. For comparison, a freight train from
Moscow to Murmansk takes about 40 hours, plus downtime. The transit of Russian goods to the
Arctic areas through Arkhangelsk is shorter than through any other port of the North--‐West, and the delivery is faster. Today, transport companies prefer to send some categories of goods to the area of the Gulf of Ob through Arkhangelsk, not Murmansk. Thus, today the Government of the Arkhangelsk region should concentrate on the development of cabotage cargo delivery in the Russian Arctic — the most profitable for Arkhangelsk, and the main flow of imports and exports, especially exports of coal, as long as the “Belkomur” project won’t be implemented, should be left to Murmansk 25.
Cargo traffic and bases
Murmansk port has traditionally deals with large volumes of bulk cargo, and this is the main reason for its high turnover compared to Arkhangelsk. But these are goods which are often not for the Arctic, it is coal mainly. Murmansk port exported more coal than the ports of St. Petersburg, Kandalaksha, Vyborg and Vysotsk combined. The main direction of export is Western Europe26. Due to the increase in the volume of coal handling the capacity of the railway to the port of Murmansk does not allow it to attract more large cargoes. And the port, due to the fact that it is mainly a coal port, can not fully develop other directions until the construction of a new coal terminal on the western shore of the Kola Bay will be completed.
In the port of Arkhangelsk some cargo areas are often idle due to the lack of new cargoes. ASCP can handle up to 4.5 million tons of cargo a year — three times more than the port does. Transshipment large volume of bulk cargos, including coal, via Arkhangelsk port will be available after the “Belkomur” project and the construction of a deep--‐water port area "Severny". However, a
Ibid.
reasonable question is about the reality of these plans in future. Therefore, objectively Arkhangelsk is not sucssessful in handling bulk cargoes and does not make any competition to Murmansk.
But, as it was indicated above, Arkhangelsk is still the leader in cabotage, as it is beneficial for customers. Due to the free and open area and storage facilities, the Arkhangelsk port is often used as a backup point for accumulation of cargoes prior to navigation in the Arctic by companies and it is providing all services of a co--‐called “dry port”. In Arkhangelsk it is not necessary to blast rocks and to level t e ills in order to create an industrial site for t e needs of a new business or expand the railway stations. Arkhangelsk and its industrial satellites (Severodvinsk and Novodvinsk) are supplied with gas, which reduces production costs of enterprises. By objective measures, Arkhangelsk Sea Commercial Port should experience a boom in demand for its services. But the successful development of the Arkhangelsk port is prevented by a number of factors and many of them have arisen not only for objective reasons. For many years there was a question about the rates of port charges. They were the highest not only in Russia but also in the world. Only in 2014, the rates of ASCP were managed to lower. But, before the federal government made the appropriate changes in the order of the Federal Tariff Service of Russia, 30.04.2013 № 85--‐т/1 "On approval of the rates of port charges for services rendered by “Rosmorport” in the seaports of the Russian Federation” it took the personal involvment of the President of Russia. His orders, made on the 12th of November 2013 at a meeting of the Board of the Federal Tariff Service, approved the reduction of rates: for foreign--‐going vessels by 20%; for vessels in coastal waters — 10%; icebreaking fee is reduced by 20% 27.
The new rates are used since the 1st of January 2014. However, according to transportation experts, reduction of rates does not change the situation, and it is necessary to cut rates by 50%. Deveolopment of the Arkhangelsk port is not that brilliant not only because of tariffs but also due to the degradation of traditional cargo bases of wood and pulp for export, so intensive in the 20th century. In particular, it was the main reason for the reduction of traffic through the RDP “Bakaritsa” in t e ASCP.
Development of the ASCP: example of RDP “Levyi Bereg” and PRR “Bakaritsa”
In Soviet times the ASCP was a port for delivert of pipes for the gas pipeline “Urengoy--‐ Pomari--‐Uzhgorod” and today, when it is time to update the old Soviet pipes with new ones, Arkhangelsk sea port will once again be in demand as a transshipment point for the gas pipeline modernization project. The RDP “Economia” has been a place for delivery of large--‐diameter pipes for the Bovanenkovo — Ukhta gas pipeline (the project “Yamal”, “Gazprom” company), coated pipes for “MRTS--‐Defender” complex in the Baidarata Bay in the Kara Sea. The ASCP has been working with the Vyksa Steel Works (JSC “VSW”). The company deliveres sheet steel of a large format from Germany through the port of Arkhangelsk. For 6 years, the ASCP has imported about 1.5 million tons of cargo. And the port receives large--‐diameter pipes for gas pipelines made by JSC “VSW” for export. New Arctic mega--‐project, where the ASCP is actively involved, is the construction of the port “Sabetta” and a plant for liquefied natural gas (LNG) on the Yamal Peninsula. “Yamal SPG” — is the largest new oil and gas project in Russia today. In addition to the construction of these facilities, the project includes the development of logistic and infrastructural development of the Northern Sea Route (NSR). This project is able to provide the loading capacity for 3 years and more, after the LNG plant will be operating.
It is profitable today to place individual production and complex industrial production on the territory of the Arkhangelsk port. It is not surrounded by hills, and the mouth of the Northern Dvina has a lot of free areas suitable for the construction of any large industrial facilities. The port can solve most of the production challenges faced by companies, willing to work in the Arctic. Arkhangelsk port is located in the center of the largest industrial cluster in the north of Russia. Railroad to Arkhangelsk has never seen traffic jams typical for other ports of North--‐West. Arkhangelsk is fully gasified and this fact reduces energy consumption of enterprises. Vessels coming to the port of Murmansk lose a lot of time because of the entering limitations due to the rule that the ships of the Northern Fleet pass first.
Due to these advantages, on the territory of the Arkhangelsk port, it is possible to create an integrated logistics chain, to develop a dynamic network of production and distribution of freight flows in a single transport unit. This process is not only possible, but it has already begun. Archangelsk port is working with the “Mezhregiontruboprovodstroy” company (JSC “MRTS”) specializing on the underwater engineering construction of trunk pipelines for oil and gas complexes, and the company has its own fleet. The company has chosen Arkhangelsk Sea Commercial Port and bought the territory and piers of the former coal terminal of PRR “Levyi Bererg”. In fact, today JSC “MRTS” uses the ASCP piers to service its customers, including: “Gazprom”, “Transneft”, “LUKOIL”, “Exxon--‐Neftegas Ltd”, “Rosneft”, “Norilsk Nickel” and many others. And we can predict that with the development of oil and gas projects in the Arctic, these operating companies and other customers will increasingly use the industrial potential of
Arkhangelsk and Severodvinsk, profitable rail and water transport logistics, as well as the possibility of research and educational institutions 28.
Another area of the Arkhangelsk port — PRR “Bakaritsa” almost stopped working due to the degradation of previous cargo bases and its low demand for the Arctic projects. Depth of the “Bakaritsa” was originally designed for ships of the Northern Shipping Company with a maximum allowable draft of 7--‐7.5 meters. The disadvantage of using the “Bakaritsa” is the existence of two bridges (rail and road). Ships have to go through these briges, and it is further time--‐consuming. However, the PRR “Bakaritsa” is convenient for long--‐term storage and this can significantly reduce the cost of transportation. The area is served by the railway station “Bakaritsa” of the NRR. The obvious advantage for the “Bakaritsa” is a direct access to the M--‐8 federal highway (Arkhangelsk--‐ Moscow). Thus, the PRR “Bakaritsa” is of interest to industrial companies, searching for long--‐term storage warehouses for large quantities of goods destined for delivery in the Arctic area. The PRR “Bakaritsa” has enogh available sites and storage facilities for long--‐term storage and it has good loading and unloading equipment 29.
On the relevance of the uncompleted ASCP development projects
The disadvantage of the Arkhangelsk port is its unfinished projects and transport infrastructure development started in Soviet years. In particular, today the more important role in freight logistics is played by the M--‐8 federal highway, which has recently been reconstructed. Road transportation is now a serious competitor to the rail transport, and it is not just because of the tariff policy of the NRR. Road transportation allows the customer to calculate the delivery to the port up to hours. However, the M--‐8 federal highway ends in the area of the Road Bridge over the Northern Dvina. Therefore, at the federal level, we should lobby for a decision on its extension to RDP “Economiya” through the Circle road. The region should seek the inclusion in the federal program to build a new bridge over the Kuznechikha River that will bring the M--‐8 federal highway directly to the docks of RDP “Economiya” of the ASCP. It is also required construction of a new road and a rail bridge near the Turdeevskaya timber base. A bypass road should also start there. The construction of these roads has been already put into Arkhangelsk urban plans. And the approach channels, berths, etc. will be administered by the Rosmorport.
According to the management of JSC “ASCP” Murmansk and Arkhangelsk Commercial Sea Ports have never been and will not be competitors, because each port has its own areas of transportation. A large amount of mass cargoes, such as coal could be transported via the port of
Murmansk. All small cargoes and supply, general cargo, containers, pipes, building constructions, building materials, machinery could be transported via Arkhangelsk. Specialization and experience of Arkhangelsk port workers related to the fact that the focus on small consignments gives the customer a distinct advantage in the segment. Transportation of container cargoes through Arkhangelsk is very convenient way of delivery to the Arctic and the North. Transit shipment of
MMC “Norilsk Nickel” — the main ASCP’s partner for over 70 years, today consists of approximately 40% of container cargoes. The Arkhangelsk port operates a specialized container terminal. Despite the fact that the transportation of general cargoes is a priority for the port, it is necessary to focus on universalization of cargoes and to maintain staff’s skills, tested for many decades and possible to be claimed by customers to maintain the sustainable development of the port. In any case, imported goods will be delivered to Arkhangelsk and customs clearance procedures take place here. So, the export and import trend of the ASCP remains. But the most important fact is that the ASCP has reason for the universalization of work with cargoes, because it is the only Russian sea port, received a license to work with all 9 classes of dangerous goods, which means that it can handle almost any cargo 30.
Conclusion
Competition and integration of transportation and logistics in the Arctic were the major concern of this article. It was emphasized that the Arkhangelsk and Murmansk sea transportation hubs were created as part of a single freight logistics system in the North and should not compete, but complement each other. This requires the establishment of the national logistics integrator in the form of logistics centers at the level of the regional administration, not only in Murmansk and Arkhangelsk, despite the fact that the main hubs’ managment, including administration of the ASCP, were moved to Murmansk. The Government of the Arkhangelsk needs to help development of professional skills of marine personnel and to study the tariff policy, traffic forecasting, creating conditions for attracting new profitable freight bases. Scientific data and research could be used for these purposes. All scientific work should be carried out on the basis of outsourcing specialized institutes and consulting firms commissioned by the regional government. The absence of state--‐ level logistics integrator of regional management and scientific forecasting scenarios of maritime logistics, could lead to the fact that the Arkhangelsk sea port would be busy with a variety of not coordinated actions of different companies.
For Murmansk it is important not only to solve the problems of rail transportation, but also to develop more rational use of the seaport territory, to creat a large commercial service base instead of several independent bases of oil and gas operators and to involve the industrial enterprises of the Arkhangelsk region in its infrastructure development. Along with the integration with neighboring Norway, which offered Murmansk a rather rational project of a common “Pomer Economic Zone”, one more urgent topic is the the development of normal relations between Murmansk and Arkhangelsk 31. The most important step is a common and conscientious objection of non--‐constructive ideology of the “Arctic competition” between the Archangelsk and Murmansk and the economic integration, means coordinated work of suppliers in the North and in the Arctic on the basis of mutual awareness, coordination and equitable participation in Arctic projects.
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