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A review of Russian ice-breaking tariff policy on the northern sea route 1991–2014

Published online by Cambridge University Press:  07 July 2015

Daria Gritsenko  and
Tuomas Kiiski
Daria Gritsenko
Affiliation:
Aleksanteri Institute, P.O. Box 42 (Unioninkatu 33), 00014 University of Helsinki, Finland ([email protected])
Tuomas Kiiski
Affiliation:
Turku School of Economics, Operations and Supply Chain management, Rehtorinpellonkatu 3, 20014 University of Turku, Finland
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Abstract

In recent years, interest in the economic potential of the Arctic has been mounting, facilitated by environmental developments caused by climate change. In this context, the viability of shipping in Arctic waters is pivotal. This article explores the interplay of market considerations and the non-market drivers (climatic, navigational and political components) regarding the viability of the most prominent Arctic shipping route, the northern sea route (NSR), as a global shipping route. In particular, it concentrates on the Russian ice-breaking tariff policy on the NSR and presents a review from 1991, when the route was officially opened to international shipping, until 2014. The study integrates qualitative and longitudinal quantitative data related to NSR traffic, ice-breaking tariffs and ice conditions. The paper shows that the ice-breaking fees play a key role for the functioning of the NSR by providing a source of funding for the ice-breaking fleet, which constitutes a basis for safe shipping. However, the development of the NSR into a competitive transcontinental shipping route is determined by a dynamic mixture of factors in which the Russian ice-breaking fee represents an additional cost item for shipping companies and shippers. It is argued that the development of ice-breaking tariff policy has been guided by structural changes in external factors consequently influencing the demand for ice-breaking services (a derivative of NSR demand), which limits the extent to which tariff policy influences the attractiveness of the NSR in a global context.

Type
Research Article
Information
Polar Record , Volume 52 , Issue 2 , March 2016 , pp. 144 - 158
Copyright
Copyright © Cambridge University Press 2015 

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