Shipping’s New Arctic Routes Won’t Thaw Cold Economic Reality
When the Venta Maersk sailed out of Vladivostok late last month, the container ship was laden with far more than just a load of seafood.
With its progress across Russia’s frigid arctic coast, the vessel also carried the promise of a new route across the globe that would shave time off major trade trips and cut the shipping industry’s rapidly rising fuel bills.
The reality for vessel operators is more complicated, however, and the economic and operating barriers to predictable, scheduled services may be more difficult to break through than the fast-melting ice along the Arctic Circle.
Arctic routes are drawing greater attention as the global climate warms up and polar ice recedes, potentially opening new paths between Asia, Europe and North America. The Northern Sea Route, a mostly frozen seaway, is considered a likely lane because it already is used in warmer seasons to move part of Russia’s massive energy exports.
The NSR runs from Alaska to the Baltic Sea and is open from July to November.
A shipping route along Russia's Arctic coast can save time and expense over a vessel voyage through the Suez Canal.
Moscow now is promoting the lane as the shortest distance to ship containers from Asia to Europe, and a possible rival for routes that now take ships through the Suez Canal.
Cargo volumes along the route grew substantially this year as tankers with ice-breaking capability and liquefied natural gas carriers began to move through the region, carrying crude oil and natural gas from the Russian Far East to Western markets.
Then Maersk Line, the world’s biggest container line, decided this summer to send its small, 3,600-container ship on the NSR from Vladivostok to St. Petersburg. The Venta Maersk reached its destination this week, saving more than 10 days of sailing time compared with travel via the Suez. Maersk said the trip’s goal was to collect data and that it doesn’t see it “as an alternative to our usual routes.”
The potential sounds enormous: Container shipping carries 98% of the world’s consumer goods, and more high-value cargoes would draw bigger investment and still more shipping to arctic routes.
But in today’s ocean-shipping world, trade between Asia and Europe is handled by massive ships that can carry some 20,000 containers each. These behemoths sail with enormous economic benefits over smaller ships. And as more of these ships hit the water, Chinese state-owned companies Cosco Shipping Lines and China Merchants Holdings Ltd. are investing billions into expanding or linking ports with roads and rail to move cargo inland as part on the new Silk Road initiative, seeking to connect the two continents on a route far from the Arctic.
The NSR may be a more direct path, but that doesn’t make it smoother. The route has no transshipment ports to allow the efficient transfer of goods, and has other important operating constraints. Parts of the route are too shallow for big container ships and issues such as how to contain an oil spill on ice or where to evacuate the crew in an emergency are unresolved.
Before the ice began melting some 20 years ago, the Arctic was the domain mostly of local tribes and visiting scientists and explorers. But it is now a major energy-producing region with easy access to the sea to move crude and liquefied natural gas.
The U.S., Russia, Canada, Denmark and Norway are asserting rights, and China has made investment there a priority to advance its energy and shipping interests, even though it is thousands of miles away from its borders.
Cargo volumes in the eight months to August were up 80% over the year-earlier period, to around 10 million tons, according Norway’s Nord University, which monitors the NSR.
Tankers, operated by Russian state shipping giant Sovcomflot, crossed the NSR more than 100 times this year, handling crude exports from Gazprom ’s OGZPY -1.13% Novy Port oil facility in northern Russia, which has access to the Arctic’s Kara Sea. Crude tankers account for about 45% of ship traffic on the NSR.
Other sailings originated at Russia’s massive Yamal LNG project, also near the Kara Sea, with five ice-class, purpose-built tankers moving natural gas from the Port of Sabetta to Europe.
Cosco has sent about a dozen general cargo vessels. That leaves the Maersk Venta as the only container ship so far in those waters. It’s unlikely the route will see many more such vessels anytime soon.
Source :- Wsj.com