geniemadmin

Arctic Railway: change the face of global logistics

Pohjoinen Means Business, a high-level gathering for policymakers organized by House of Lapland, was held in September 2017 already third year in a row. The tree hot topics discussed this year were logistic, Chinese investments and sustainable growth and the keynote was presented by Felix Tschudi, CEO, Tschudi Shipping. Read the blog post written by Felix Tschudi and see below the photos taken and interviews given from the gathering.

The Kola Peninsula and Northern Norway form an all-year ice free wedge into the Arctic – a natural platform for serving logistics to and from the Barents Sea and the Arctic. With a railway connection Finnish Lapland could act as a gateway from the heart of Europe to the Arctic Ocean and hence, the global transportation routes.

What are the needs for such a corridor, then? In the medium term, regional destinational shipping serving the developments in Siberia and Alaska will be the most relevant activities. Suitable transshipment infrastructure is a pre-requisite. In the longer term, for industrial development of the Barents Region, such as increased mining on the Kola peninsula and in northern Finland and Sweden, the establishment of railway connections for transporting raw materials in bulk is required. Such connections would serve direct export and processing and could facilitate the import of LNG as energy to the Nordic countries and Europe – a rolling pipeline.

Why is an Arctic Railway of concern in Europe?

Europe consumes 20 per cent of world’s resources and produces 3 per cent. This weakness is accentuated by the geopolitical development and is of particular concern to Germany. There is a lack of infrastructure connecting the «European High North» to Europe -the TEN-T plan does not extend beyond Helsinki, Stockholm and Oslo. The European Arctic is a joint Nordic opportunity for industrial value creation combining natural gas from the Arctic with regional mineral and metal resources close to the European markets.

Also China is eyeing the Arctic for better access to resources. China using Arctic shipping route could change the face of world trade.

How to proceed?

By building on the financial standing of the Nordic countries combined with the abundance of available capital world wide long term infrastructure investments can be financed through Public Private Partnerships without drawing directly on the national budgets. It needs to be made into an European project – connecting with Germany, which is concerned about supply security.

There is an ongoing joint Finnish – Norwegian government study underway. A realistic understanding of the cost is important – but equally important is the assessment of long term economic potential of the North – South -connection. How to compare measurable short term cost with long term potential benefit? To reach an investment decision other criteria than comparing net present values based on discounted cash flows from known projects will have to be used as this method does not capture the future value generation caused by the new infrastructure acting as a catalyst for unplanned economic developments.