Northern Deliveries: Business Problems and Solutions

Photo: Reconstructed Section of the Portovoe Highway in Magadan

Timely deliveries of materials is one of the hot topics in the construction industry of the Far North. As the winter season begins, deliveries can stop completely, thereby causing a failure to meet the deadlines under contracts. Development of new legislation about northern deliveries could be a solution.

Northern deliveries is a set of annual state measures to provide the territories of the Far North with vital goods in anticipation of winter. It is carried out in areas with limited delivery times, located on the territory of 25 Russian regions. The bulk of deliveries falls on Yakutia, Chukotka, the Krasnoyarsk Territory, and the Magadan Region. An important role in the delivery of goods in many regions with northern deliveries is played by sea and river vessels, despite the fact that the navigation period in the north is sometimes limited to two weeks. Food, medicines, essential goods are what the state must provide for about 3 million people living in those regions.

The topic is also relevant for other countries. In global practice, northern deliveries exist in the US state of Alaska, Canada, and Greenland. The main carriers are private companies, while the transportation costs are borne by the customer, which is the state. Goods are delivered most often by water, less often by air.

Since last autumn, the largest ports of the Far East have been overloaded due to an unprecedented inflow of containers from China. As a result, in the autumn, deliveries to the North-East were behind the schedule. The Magadan Region suffered to a lesser extent, but untimely deliveries of construction materials suspended many regional construction projects.

Currently, the Ministry for the Development of the Far East and Arctic of the Russian Federation is developing new legislation about northern deliveries. “The Ministry, as instructed by Deputy Prime Minister Yury Trutnev, is now preparing an integral system that describes what northern deliveries are, what their participants are, what freight and shipping priorities should be set. And, what is very important, what institutions should be managed by the system,” said Alexey Chekunkov, Minister for the Development of the Far East and Arctic.

The Stroytransgaz Group is a diversified construction company. The wide geography of its project portfolio allowed it to accumulate successful experience both in Russia and abroad. In order to perform work at its facilities with high quality and on time, the company is very attentive to the proposed bills and changes in the construction industry.

Employees of the Stroytransgaz Group truly care about sensitive issues of their region. As proactive citizens, they lobby for various bills aimed at improving the quality of their work. Taking into account the possible benefits of decision-making by the authorities, our employees meet representatives of administrations, deputies, and governors. Results are achieved by joint efforts, promoting our interests, interests of the company and the region: an increase in productivity, independence of negative factors, proactive work, timely deliveries and, of course, an improvement in the quality of life.

The main thing is not to be indifferent!

Photo: Dmitry Uvarov, Chief Engineer for Hydraulic Construction in the Magadan Region of the Stroytransgaz Group.

Dmitry Uvarov, Chief Engineer for Hydraulic Construction in the Magadan Region of the Stroytransgaz Group, spoke out in support of restoration of the northern deliveries program. The company is implementing a number of major projects for road reconstructions, as well as improvement and strengthening of the Magadan embankment and the Portovoe Highway, in the Magadan Region.

Dmitry, please tell us, what will be the law adoption benefits? Why is it so important for the construction industry?

We, of course, have a positive attitude towards the idea of a new law on northern deliveries, as well as the creation of a special company for this purpose. This year, we plan to start coast protection works towards Marchekan – up to the current infectious diseases hospital. This project is completely dependent on logistics. This is 2 kilometres of coastline, almost six times longer than that of the Portovoe Highway, 2 thousand piles for the front wall only. The piles we need are not produced in the Far East, and they will be delivered from the central regions of the country or from Yugra. We believe in this project, so we are very interested in strengthening communication lines.

What are the consequences of late deliveries? What are the challenges?
We are fundamentally interested in timely deliveries of machinery and construction materials. Last year, starting around September, we experienced delays of several weeks. That did not affect the Portovoe Highway coast protection works, but works on a number of bridges in the region were delayed and partially carried over to 2022.

The region with logistics challenges requires an appropriate approach from both the regional and federal governments. Severe climatic conditions do not allow construction and installation works all year round, which greatly increases the dependence on timely deliveries. The challenges faced by the company are related to the impossibility of fulfilling all transportation requests in the port of Vladivostok. This resulted in the need to work during periods of low temperatures, and, accordingly, to additional costs and downtime.

Photo: Dmitry Uvarov Accompanies Sergey Nosov, Governor of the Magadan Region, at the Traffic Opening Ceremony on the Portovoe Highway

Are construction machinery and materials produced in the Magadan Region? Or are these resources completely dependent on supplies from other regions?
Almost all construction materials are delivered to the region by sea, with the exception of a number of inert materials (sand, crushed stone) and sand gravel mix. Successful performance of state contracts for the construction of roads and bridges in the Magadan Region requires uninterrupted procurement of construction materials (precast concrete, steel structures, corrugated culverts, cement for concrete preparation, barrier fencing), as well as modern specialty construction and road-building machinery (piling units, drilling rigs, graders, etc.) not available in the region.

What is the difficulty of working in the Magadan Region, in the Far North?
Severe climatic conditions lead to significant wear and tear of machinery, so new machinery is mainly used to perform production tasks. After all, the specifics of the works performed are that they are carried out in the open air. In winter, the air temperature can reach -60°C, so works become seasonal. The exception is drilling and piling into the base of the structure. The operation of drilling and pile driving rigs at low temperatures implies increased labour costs, and most importantly, depreciation of machinery and its long-term repairs due to the lack of spare parts in the Magadan Region.

How are things with worker professions, is there enough labour force? How many employees work in your Directorate? How many subordinates do you have?
In our Directorate, the planned headcount is 15 engineers and technicians. We have three key major subcontractors, one of which is a local regional company. At the height of the construction season, when projects for the coast protection of the Nagaeva Bay and bridges were implemented in the region, the total headcount was about 200, and more than 30 pieces of machinery were involved.
We have not enough labour force. Practically, all personnel, first of all, qualified professionals, is mobilised from other Russian regions.

Are you implementing a production system under your project? What are the results?
Yes, we are. A production system will undoubtedly have a positive effect on the efficiency of management and coordination of construction processes.

I wish to add for myself that the Magadan Region received a significant impetus in development, serious investments in the construction industry, and attraction of new investors under the leadership of Governor Sergey Nosov. New ambitious projects require new management decisions for their implementation.

Despite everything, work in the Far North is attractive! And not only due to its challenges, but also due to satisfaction from the success of addressing them. Romance and severe, but unique beauty of nature.