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Tazmars Nikita Markov delves into the collaborations between DP World and Rosatom, showcasing how the UAE is navigating Arctic routes to redefine its Blue Economy dreams.
The UAE economys success is the result of many factors, first and foremost being the production and export of hydrocarbon products. However, its well-developed transport infrastructure plays a vital role by providing enormous opportunities for re-export.
The countrys geographical location – halfway between the industrial economic routes of the Far East and Europe – has played a crucial role in its ongoing development as an international economic hub. At the same time, UAE companies are constantly exploring alternative logistics routes to enhance international cooperation.
One of the worlds largest port operators, Dubai-based DP World, and the Russian State Corporation Rosatom, the operator of the Northern Sea Route (NSR), signed an agreement on strategic cooperation in the global market on the margins of the UN Climate Change Conference (COP28) in Dubai. The deal, a December 2023 Reuters report noted, envisages the creation of a global logistics operator to work in the Russian and international markets.
The operator will facilitate logistics integration among the BRICS members and partner countries. The project is aimed, inter alia, to expand and improve the reliability of global supply chains and increase global trade. The backbone infrastructure of Russia (including the Northern Sea Route), Eurasia, the Middle East, Africa, and South America will be used for its implementation.
DP World is one of the worlds largest port operators. Its 2022 revenue amounted to $17.1 billion, up 58 percent compared to 2021, and profit amounted to $1.6 billion, up by a third. The operator is looking for new promising directions and, in the summer of 2023, expressed interest in the NSR.
It is not the first partnership between the Russian technology giant and DP World. The two companies have already been working together on developing the first regular Arctic container line through the NSR, for which they have established a joint venture in October 2023. The project envisions launching a year-round, fast, reliable, and economically competitive cargo delivery service between Eurasias eastern and western parts.
The pilot phase of the first Arctic container line project involves building high ice-class container ships and two transport and logistics hubs (TLH) for the transhipment of goods destined for Eurasian ports. Each TLH will be equipped with modern high-performance equipment and consist of two deep-water berths capable of accommodating ships with a capacity of up to 6,000 TEUs. The estimated throughput of each terminal will be around 10 million tonnes per year. The Northern Transit Corridor project is expected to transport over 800,000 TEUs during the pilot phase.
The projects implementation will enhance the resilience of global supply chains, create new jobs, and improve environmental safety, contributing significantly to the development of the global Blue Economy.
An important condition for the successful operation of the Northern Transit Corridor is a further development of transportation along the NSR. Passing through the seas of the Arctic Ocean, the Corridor makes it possible to shorten the distance between the ports of Northern Europe and China by almost 40 percent compared to the route through the Suez Canal, thus halving the sailing time. For more than five months of the year, cargo ships can transport cargo faster with the help of nuclear-powered icebreakers or unaided, depending on ice conditions.
Cementing UAE’s Arctic presence
For DP World, participation in the joint project will allow it to expand its geographical presence and use a new promising route to strengthen its position in the Eurasian market. For the UAE, participation in the development of Arctic shipping means expanding its strategic influence on global trade routes and strengthening its role in global trade, which has recently demonstrated high growth rates.
The country is successfully progressing along this path, with the UAEs non-oil foreign trade reaching a record AED 1.24 trillion ($337.6 billion) in the first half of 2023, up 14.4 percent year-on-year. The Vice President and Prime Minister of the UAE and Ruler of Dubai, Sheikh Mohammed, said 2023 will be the "best year in the countrys history" regarding the economy. In this context, significant diversification of the UAEs economy, increasing the export of technologies, services, and expertise, and enhancing sustainability appears crucial.
There is no doubt that participating in infrastructure projects like creating a new trade route, especially under the conditions of maximum load on existing ones, offers the opportunity to maximise all emerging possibilities.
While the UAEs growth as a prominent economic centre of the Middle East was historically driven by abundant oil reserves, it is striving to develop industries unrelated to oil extraction and refining that can stimulate economic growth, including the Blue Economy, which envisions a sustainable approach to the use of ocean resources.
The Blue Economy includes an extensive list of industries, such as shipping, port infrastructure, coastal renewable energy, fisheries, biotechnology, marine research and development, education, etc.
Today, the UAE is interested in new large-scale investment and infrastructure projects implemented on sustainability principles, including those with minimal impact on the marine ecosystem. In 2020, the country became the first Middle Eastern country to join the Global Ocean Alliance — an association that aims to protect at least 30 percent of the worlds oceans from various negative impacts by 2030. In 2023, the UAE launched the regions first research vessel, Jaywun, to monitor the marine environment and biodiversity. The UAEs Ministry of Climate Change and Environment also initiated a programme to monitor plastic waste in the sea and coastal areas. Given its 16 protected marine areas, tackling plastic waste is vital for the country.
The Blue Economy offers various advantages, creating new opportunities, especially in the maritime transport and tourism sectors. This concept demonstrates high potential for job creation, strengthening international dialogue, social well-being, and innovation while ensuring the health and sustainability of marine ecosystems. Currently, Blue Economy ranks seventh globally in terms of volume and is projected to exceed $3 trillion by 2030.
In the UAE, the maritime sector encompasses over 5,500 companies specialising in container shipping, dry cargo transhipment, shipbuilding, and other activities. The maritime industry contributes approximately 7 percent to the countrys GDP, totalling $7.3 billion, nearly double the figure from 2015.
NSR’s role in the UAE’s Blue Economy plans
Transportation through the NSR could become a harmonious part of the UAEs Blue Economy strategy. Dr Haifa Ben-Romdhane, Assistant Professor in Environmental Engineering and Geomatics Geography and Planning Department, Sorbonne University Abu Dhabi, commented that the increasing recognition of the potential of ocean resources and their sustainable utilisation has led to heightened emphasis on sectors such as marine renewable energy, aquaculture, biotechnology, and marine tourism by various countries. She stressed that achieving successful and sustainable growth in the Blue Economy requires responsible resource management, environmental conservation, and equitable distribution of benefits.
"Collaboration between governments, industries, and environmental organisations will play a vital role in realising these prospects," she noted.
According to Ben-Romdhane, the NSR route through the Arctic seas necessitates a comprehensive assessment by the UAE in terms of resource use and environmental impact. However, it offers several advantages that need to be considered. These include, firstly, the potential for reduction of emissions and fuel consumption by providing shorter distances and more direct paths; secondly, conservation of biodiversity through proper management, wherein new routes could divert traffic away from ecologically sensitive areas, reducing the impact on vulnerable marine ecosystems. Thirdly, economic growth as these routes can open up economic opportunities for trade and development in regions that were previously less accessible.
As the UAE steadily strengthens its role in the Middle East, expanding its strategic influence on global trade routes will further solidify its leadership and influence in global trade. This will be achieved, in part, through an increased emphasis on maritime territories and utilising additional sea routes, which will positively contribute to developing the countrys Blue Economy. |
