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9 Jun, 2025 15:59

EU frozen out of Arctic opportunities by Russia sanctions – FT

The Northern Sea Route could substantially slash costs, but geopolitical risks deter major players, according to the newspaper
EU frozen out of Arctic opportunities by Russia sanctions – FT

Western sanctions on Russia have effectively cut off EU shipping firms from tapping into the Northern Sea Route (NSR), the shortest maritime link between Europe and the Asia-Pacific, the Financial Times has reported, citing industry sources.

The route is expected to become a major trade artery for goods shipped between the continents and will drastically reduce transit times, compared to shipping via the Suez or Panama canals.

Western shipping companies are exercising caution to avoid any risks associated with geopolitics, according to Daniel Richards, a director at London-based consultancy Maritime Strategies International. The cargo vessels that use the route are primarily operated by companies with close ties to Russia or China, according to the FT.

The world’s second-largest container line, Danish giant Maersk, abandoned use of the route and ceased cooperation with Russia due to the threat of running afoul of Brussels.

The source told the newspaper that container ships in the Arctic rely on maritime hubs almost entirely within Russian territorial waters and often require icebreakers provided by state corporation Rosatom.

The journey from the Japanese port of Yokohama to the Russian Arctic port of Murmansk through the NSR is over 7,000km shorter than via the Suez or Panama canals.

Moscow has dismissed the Western sanctions placed on it since the escalation of the Ukraine conflict as illegal and insisted that they have backfired on the countries that imposed them.

Top officials, including Russian President Vladimir Putin, argue that the restrictions have failed to destabilize the Russian economy or isolate it from the global financial system.

Other business officials have admitted that EU sanctions have hurt European companies more than Russian competitors. According to Ferdinando Pelazzo, Italian-Russian Chamber of Commerce president, the restrictions have undermined business of most small companies.

President of the association of German industry BDI, Siegfried Russwurm, has said that Germany is running mounting risks of deindustrialization due to soaring costs triggered by Berlin’s refusal to buy cheap Russian energy.

Putin stated earlier this year that total cargo volumes shipped via the NSR surged from just 4 million tons in 2014 to nearly 38 million tons last year – five times the Soviet-era record. He added that the figure is expected to reach 70-100 million tons by 2030.

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