Glogos Project Fortnight Review May 2020

In the last days of May, a railway bridge over the Kola River collapsed on the haul between the “Kola” and “Vykhodnoy” stations of the Murmansk branch of the Oktyabrskaya railway due to intense snowmelt and water rise. The affected area is the only railway connection to the Murmansk Commercial Seaport and enterprises in the Northern part of the Murmansk region. Restoration work is expected to last at least four months, with partial traffic scheduled to open by June 23. Due to the inability to deliver cargo to or from the Murmansk port by rail at the end of May, the cost of sea freight from Murmansk to Rotterdam, Turkey and Morocco fell by 45-55% as compared to December 2019. In our opinion, in the next six months, the Murmansk port should not be considered as an entry point for the delivery of oversized cargo, if their further movement into inland Russia is assumed to be by rail. We think that the best option is to use river-sea type vessels that may reach the Central part of Russia via inland waterways and then go down to the Caspian and Black seas.

________

The national plan to support the Russian economy includes the construction of the Bagaevsky hydroelectric complex, which sought to solve the problem of the Don River shallowing. As a result, the water level in the lower reaches of the river should rise by 2 meters, and the capacity of inland waterways should increase by 19 million tons per year. The work is planned to be completed by the end of 2023. This is the largest infrastructure project on inland waterways since the Soviet period. The timing of its completion looks very tight, but the fact that it has come to the attention of the Federal authorities adds some optimism. After the launching of the hydroelectric complex, the last 114 km long section of the Don River, which is problematic for navigation, should disappear. It is located below the Kochetovsky hydroelectric complex, which will provide a guaranteed depth of 4 meters (today’s level is 2.8 meters). This will enable to expand the range of vessels for transit transportation of oversized cargo from the Black Sea to the Caspian Sea; this also will help to reduce the cost of freight and make transportation into inland Russia even more attractive.

________

Water transport in Russia is included in the list of the most affected by the COVID-19 pandemic branches of economy. This means that enterprises connected to river transport in one way or another will be able to rely on state support, including cheap state loans. The total fleet of river transport vessels in Russia consists of 9700 units with an average age of 44 years. On May 29, 2020, JSC "United Shipbuilding Corporation" presented its own project 23640 Finval-8000, a river-sea type cargo vessel, which has Volga-Don max type dimensions, a record deadweight of 8000 tons and hull forms optimized to reduce fuel consumption. Under favorable circumstances, the first vessel may be built as early as 2021. Construction is planned to be carried out at factories owned by "United Shipbuilding Corporation", and the corporation promises "almost 100% use of Russian components". In case of successful implementation of the project, the Russian river fleet may be widened by a series of transport vessels designed by Russian naval architects, built at Russian shipyards by using Russian components. The deadweight of 8000 tons promised by the developer gives some hope that heavy and oversized cargo may be transported in the holds of these vessels, and not on top of hatch covers, as it is currently done. This should simplify such transportation and reduce its cost.

________

The construction of a combined automobile and railway bridge over the Lena River in the Yakutsk region is under implementation. It is planned to complete the design in 2020, start construction in 2021 and put the bridge into operation in 2025. Currently, experts are studying and testing metal structures that will be used for the construction of the Lena bridge. Considering the poor development of the production base in this area, the main part of the bridge structures will have to be manufactured well beyond Yakutia. At the same time, the most convenient way to deliver oversized cargo to the construction site will be river transportation. The opening of the bridge over the Lena River in the Yakutsk region will ensure year-round transport accessibility of the capital of the Republic of Sakha (Yakutia) with the Amur, Magadan, Irkutsk regions and the Khabarovsk Territory. In the future, a new logistics route is being opened along the transport corridor: China – Amur-Yakutsk railway – the Yakutsk River port – the Lena River – the Northern Sea Route – Europe.

________

The site in the village of Belokamenka (Murmansk region), where the Center for the construction of large-capacity marine structures is being built, is included in the territory of advanced socio-economic development "The Arctic Capital". We observe a large cargo flow, following or planned for delivery to Belokamenka. When developing a logistics route, it is necessary to keep in mind that cargo delivery to the construction site is only possible by road or by sea. However, there are a number of circumstances that complicate the situation. Firstly, the Federal highway R-21 "Kola" is undergoing repair work, and many of its sections are "impassable" for oversized cargo. Secondly, the berthing facilities in Belokamenka itself are currently incomplete. In particular, the berth for RO-RO vessels has not been put into operation, and there is no crane equipment for handling heavy and oversized cargo. Thirdly, the inclusion of Belokamenka in the free customs zone has simplified customs procedures, but did not exclude them. For now, the under-construction port does not have the "international" status with the corresponding customs control zone; only Russian-flagged vessels may enter it, or those that have passed the customs clearance procedure at the nearest port with the "international" status.

________