Investment Portal of the Arctic Zone of the Russian Federation

The measure of responsibility is 3 million lives

The Ministry for the Development of the Russian Far East and Arctic has drafted a law on northern delivery

9 september 2022

The draft law clearly defines the very meaning of 'northern delivery' as well as the roles that the new players—a general forwarder and a single maritime operator—will play in it. Simplification of procurement procedures, categorisation of cargoes according to their importance, creation of a system for monitoring their movement and a list of transport and logistics backbone networks—all these measures will help to prevent a repeat of the northern delivery crises.

A draft federal law on northern delivery has already been submitted for discussion to all executive authorities and 25 Russian regions, including all Arctic regions of the country. This was announced by the First Deputy Minister for the Development of the Russian Far East and Arctic Gadzhimagomed Guseynov during the session 'Northern Delivery: A New Supply Chain' of the Eastern Economic Forum.

For the first time, the notion of 'northern delivery' was legally defined in the document as 'a set of organisational, transport and logistical measures and financial mechanisms for regular, uninterrupted supply of the Far North and similar areas with a limited supply of goods (products).'

The lives of 3 million people living in settlements that are only accessible for a very short period of the year depend on how the northern delivery will go. Traditionally, northern delivery was considered to be the delivery to such settlements of vital goods: socially important food and non-food items, medicines, medical products, fuel and energy resources and fuels and lubricants.

'We suggested that the northern delivery should be considered not only as life-support cargo but as all cargo to settlements with a limited delivery period,' , – said Guseynov.

The Ministry for the Development of the Russian Far East and Arctic proposes to divide all cargoes into 3 categories of varying degrees of importance. The first is life-support cargo. The second is cargo for state and municipal needs, as well as for national projects. The third is all other cargoes that are purchased by organisations or individuals. The document introduces mandatory planning for the first two categories of cargo so that their formation is not spontaneous.

«There are many innovations in the bill that are designed to make the northern delivery procedure more efficient. In particular, it is proposed to create a single federal digital platform for the purchase of necessary goods in large batches. The bill also envisages the emergence of a general freight forwarder, who will be responsible for the cargo at all stages, providing information on its movement.

«Another novelty is that we are creating a single maritime operator on behalf of the president. It will be a state-owned operator that will provide maritime shipping in two basins: the North Sea Route and the Pacific Basin», – informed Guseynov .

When discussing the bill at the EEF session, representatives of the Arctic regions concluded that it would help solve a number of existing problems. However, additional financial support measures and preferential lending should be envisaged, attention should be paid to new sanctions risks, the division of responsibilities and powers between the federation and the regions, and the regional specifics of freight logistics should be taken into account in the law.

For example, the head of Yakutia, Aysen Nikolaev, believes that the new law should spell out standards for the maintenance of winter roads, which at the moment do not exist in any regulatory act. Meanwhile, northern delivery in the republic would not have been possible if the authorities in Yakutia had not dealt with their condition

Chukotka also has its own specifics: all cargoes are brought to the peninsula only by sea, and in the period from April to June when no winter fuel can be purchased. Therefore, the region has to buy fuel at inflated prices and then deliver it by sea without subsidies. The Chukotka authorities have therefore proposed extending the transport subsidy mechanism for the northern delivery to the maritime component, as well as drawing attention to the centralised purchase of winter fuel. This would seriously reduce purchase prices.

Initiatives from the Arctic regions will make it possible to refine the draft Northern Transport Act and make it truly effective..

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