Russia To Subsidies The Northern Sea Route

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Vladivostok will be unrecognizable within 5 years.

Russia has been very active over the last few months as Putin has ordered he wants shipping all year round travelling this route. He needs cargo ships operating 12 months of the year and to take on the Southern routes. He is a man on a mission and very few like to disappoint him.

You have to ask how they plan to do this and the simple solution is to throw enough money at it that everyone uses it. The aim is to be cheaper and I mean way cheaper than the Suez Canal and any other rail transport being offered.

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The first of 3 train modules that will supply LNG Gas by 2024. The Russians are estimating each train will produce 6.6 million tons per year.

This kinds of reminds me of how the Chinese became so big so quickly doing something similar. How were the Chinese able to provide items cheaper than the West? The Government incentivized the factories to undercut everyone else guaranteeing the flow of foreign capital to China. The factories ran at cost and the profit was on how may orders they managed as they received Government kick backs. The deals they made never had profit factored in because they didn't need to. Quality became an issue when the factories tried to make profit on cost by lowering the specifications.

The Russians are going to do something very similar as shipping companies will undercut everyone else and run at a loss or cost, but make no profit for an estimated 5 years. For every shipment the Russian Government will pay a subsidy fee which is the shipping companies profit. The more the route is used the cheaper the operating costs become and possibly in 5 years will be the number one route being used.

The Russians are in a fortunate space right now as they will be able to smash any competition out of the sea literally. The natural resources (gas) in the area will help pay for what will be a lucrative business. The Suez Canal after hearing this must be wondering what they are now up against. Unless they are offering basic costs I don't see how they can survive. The so called cash cow that they bragged about during the Suez Blockage in March makes Egypt a reported $5.9 Billion per year in revenue. These are serious numbers and one Egypt will not want to give away, but will have little choice if they want to keep operating.

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India has wasted no time jumping in as they sniff a deal to be had here.

The Russians have been signing deals with ship yards to help speed up their plan of having a fleet of container ships to add to their fleet of giant ice breakers that are already on order. It is no surprise that an Indian ship builder was named the same day as a 20 year deal to supply LNG Gas was signed. Putin wants this route functioning properly before the end of 2022 and within 5 years open all year round.

This may sound crazy to some looking from outside in but if the will and finances are in place then anything is possible. The plan is to make Vladivostok the main container hub transforming what is mainly a fishing port into something way bigger. This is a boom time for anyone living in these areas as these towns or cities will be unrecognizable within 5 years. The plan is to have a test route running next year from Vladivostok to St Petersburg supplying the city with all of it's goods through container ships.

Rosatom the State owned Nuclear Power Company has signed an agreement today to make Putin's plan come to fruition. They have the resources and expertise to make this happen as they cannot afford to let this fail. This must be one of the biggest projects ever under taken with such strict time limits.

Posted Using LeoFinance Beta



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