Magnit tests shipping via Northern Sea Route

MOSCOW. Nov 1 (Interfax) - Magnit, one of Russia's largest retailers, has begun testing shipment of goods along the Northern Sea Route (NSR) in the Arctic.

Six 40-foot containers with fast-moving consumer goods were shipped from China on the Russian Arctic container ship Monchegorsk directly to the Port of St. Petersburg, the company said in a statement.

The trip is expected to take around 30 days, with the goods arriving in Russia in late November 2022. After arriving in St. Petersburg, the goods will be shipped to the retailer's logistics hub in central Russia.

Given the congestion at the Port of Vladivostok, moving products from China via the NSR is expected to be 10 days faster than using multimodal logistics, and the launch of the new route will enable the company to save up to 15% on delivery costs at the current rates, Magnit said.

Magnit said will use the pilot shipment to evaluate the financial impact of the new logistics corridor and perfect all the necessary operational processes. If the route is deemed to be effective, Magnit will start regular shipments via the NSR from the spring of 2023, using it during spring, summer, and fall, the company said.

Potentially, the company can send a significant amount of non-food products from China and Asia-Pacific countries via the new corridor, subsequently allocating the deliveries to its large logistics complexes in central and southern Russia, Magnit said.

Magnit's shipments via the NSR will also help increase the utilization of the Port of Saint Petersburg, which saw a drop in operations due to the refusal of major shipping lines to deliver to Russia, the company said.

"Magnit is the first Russian food retailer to probe the Northern Sea Route. This represents a breakthrough in the development of new logistics channels," the retailer's supply chain and logistics director, Fyodor Pavlovsky was quoted as saying in the press release.

Given "disruption of many usual logistics routes, shipping products on Russian vessels via the NSR becomes very important for us, as it creates an alternative transport corridor and enables us to diversify our import logistics," Pavlovsky said.