By Kevin Casey During this year’s Arctic Dialogue conference, we’ll be publishing a regular series of short interviews with some of the many speakers and participants at the conference. This project is a collaboration between the High North Center, the University of Nordland, and The Arctic Institute. The podcasts will be available on iTunes via The Arctic Institute, as well as on the Arctic Dialogue website. You can find a list of all podcasts here. You can download a full transcript of the interview here.
Showing posts with label arctic shipping. Show all posts
Showing posts with label arctic shipping. Show all posts
Arctic Dialogue 2014 - Interview with Willy Østreng
By Kevin Casey During this year’s Arctic Dialogue conference, we’ll be publishing a regular series of short interviews with some of the many speakers and participants at the conference. This project is a collaboration between the High North Center, the University of Nordland, and The Arctic Institute. The podcasts will be available on iTunes via The Arctic Institute, as well as on the Arctic Dialogue website. You can find a list of all podcasts here. You can download a full transcript of the interview here.
Evaluation of the Arctic Shipping Season 2013
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| MV Yong Sheng Courtesy of Oyoyoy on Wikipedia |
By Kathrin Keil The 2013 shipping season along the Northern Sea Route (NSR) concluded in late November when the Russian-flagged „Indiga“ reached its port of destination on 27 November 2013. The expectations as to the increases in Arctic transit shipping along the NSR are indeed huge – volumes shipped along the NSR are predicted to grow to 4 million per year in 2015, 65 million tons in 2020 and even 120 million tons in 2030, predominantly due to the rapid growth of oil and gas development in Russia [1]. Against this background it is necessary to give a thorough analysis of this year’s shipping season in order to get an idea about the accurateness of such predictions.[2]
This year’s shipping season indeed started five days later than the 2012 season. The first ship to use the NSR set sail on 25 June 2013 in comparison to 20 June in 2012. In contrast, the season in 2013 lasted a few days longer – the last ship to take the NSR in 2013 departed from its homeport on 17 November 2013, while the last ship in 2012 departed five days earlier on 12 November 2012. So in total, both shipping seasons were of exactly the same length with 146 days.
In terms of actual transits, 2012 saw 46 vessels using the route while in 2013 71 ships took the NSR, an increase of 54%. While this percentage looks impressive, we have to keep in mind that we still deal with quite small absolute numbers. In contrast, the Suez Canal has around 18,000 transits per year and the Panama Canal about 13,000.
Furthermore, it is enlightening to take a closer look at some of the routes that the vessels took. In fact, 17 “transits” only started or ended in Pevek in Chukotka, and did not come from or go down to the Bering Strait. This is remarkable given that the NSR is defined in Russian law as a set of marine routes from Kara Gate, south of Novaya Zemlaya, in the west to the Bering Strait in the east.[3] Also Khatanga Bay and Anabar Bay in the Laptev Sea are mentioned once and twice, respectively as a port of destination, which is not anywhere close to the end points of the NSR definition.
The volume of cargo has hardly increased between 2012 and 2013, from 1.26 million tons of cargo to 1.36 million tons, i.e. only an increase of 7.5%. Given the expected volume increases as stated above, this is a rather surprising result.
Concerning the type of cargo, 2013 saw an increase in liquid cargo (in both years the predominant cargo - 57% in 2012 and 44% in 2013 of all cargo type vessels) and ballasting. Also general cargo has become stronger in 2013 and one LNG tanker used the route. Repositioning remained the same as well as fishing vessel usage (only 1 in both years).
While more foreign countries used the route as flag states – 7 states in 2012 and 11 in 2013 – the number of foreign flagged vessels actually decreased from 2012 to 2013 (28 in 2012 and 25 in 2013). In other words, the increase in vessel number is completely due to increased Russian usage of the route. So there is currently an increasing Russian usage of the route, while international interest in using the NSR is rather humble (in 2012 39% of the vessels using the route were under a Russian flag, increasing to 65% in 2013).
[1] For example, Nadia Rodova, “Cargo Turnover via Russian Northern Sea Route Climbs 19% Past 2012 Levels,” Platts, September 26, 2013, http://www.platts.com/latest-news/shipping/moscow/cargo-turnover-via-russian-northern-sea-route-26311774; Anton Vasiliev, “Russia’s Approaches to International Cooperation in the Arctic,” The Arctic Herald 1 (2012): 12–23, http://issuu.com/arctic-herald/docs/arctic-herald-1-full; Arctic info, “Cargo Turnover at Arctic Ports to Increase 2.8-Fold by 2030,” August 29, 2012, http://www.arctic-info.com/News/Page/cargo-turnover-at-arctic-ports-to-increase-2-8-fold-by-2030; Alexei Bambulyak and Bjørn Frantzen, Oil Transport from the Russian Part of the Barents Region - Status Per January 2011 (Tromsø: Akvaplan-niva, The Norwegian Barents Secretariat, Bioforsk, 2011), http://www.barentswatch.com/innhold/oil_gas/repport_oiltransp/OilTransport2011eng_Internet.pdf; Jonas Karlsbakk, “Oil Traffic Capacity of 100 Million Tons,” BarentsObserver, April 07, 2011, http://www.barentsobserver.com/oil-traffic-capacity-of-100-million-tons.html.
[2] Due to data availability, the current year 2013 is compared with the 2012 shipping season. All numbers are drawn from Northern Sea Route Information Office documents “Transists in 2012” and “Transists in 2013”. This analysis only looks at transit shipping along the NSR, and not at destinational or inner-Arctic shipping.
[3] Arctic Council, Arctic Marine Shipping Assessment 2009 Report (Tromsø, 2009), 20, 23, 34, http://arcticportal.org/uploads/4v/cb/4vcbFSnnKFT8AB5lXZ9_TQ/AMSA2009Report.pdf; Leonid Tymchenko, “The Northern Sea Route: Russian Management and Jurisdiction over Navigation in Arctic Sea,” in The Law of the Sea and Polar Maritime Delimitation and Jurisdiction, ed. Alex G. Oude Elferink and Donald R. Rothwell (The Hague: Martinus Nijhoff Publishers, 2001), 269–71).
Event Report: “Humans in the Arctic”
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| courtesy of Torjus Kandal |
By Andreas Raspotnik and Kathrin Keil On November 26, 2013 the North Norway European Office held a seminar on “Humans in the Arctic”, in collaboration with Arctic Frontiers 2014, The Arctic Institute and Maritimt Forum Nord. The seminar took place in conjunction with the annual conference Arctic Frontiers, to be held in Tromsø (Norway) from January 19th to 24th, 2014.
In two sessions, one on Growth and one on Governance and Cooperation “Humans in the Arctic” addressed the emerging environmental and social challenges as well as economic opportunities that arise from the continuous development of the European and in particular Norwegian Arctic. With the European Union and its institutions, and other European stakeholders from industry and research showing increasing interest towards these developments, the Norwegian North is a key area in bringing together old and new actors, and thereby fostering a sustainable future for the European Arctic.
More than 100 participants from politics, industry, research and academia paid careful attention to the introduction by Runar Sjåstad, County Mayor of Finnmark County and the two Members of the European Parliament, Jens Nilsson and Paul Rübig.
Anne Husebekk, rector from the University of Tromsø (UiT), introduced the 1st session and gave an overview on the increased global attention on Arctic development and its expected economic growth. The Tromsø High North Cluster can play a crucial role in providing the necessary knowledge for sustainable development in the Norwegian Arctic. In that regard Dan Tuppen, Vice President for Exploration, Barents Sea and Norwegian Sea from the energy company Statoil highlighted the potentials of the Barents Sea as a future source for European energy supply. However, Tuppen outlined the risks and long-term considerations attached to Arctic maritime drilling. With Arctic shipping often being perceived as the top-seller of Arctic economic development, Hanna Lee-Behrens, Director of the Department of Safety, Environment and Innovation from the Norwegian Shipowners’ Association, discussed related maritime opportunities and challenges in the High North.
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| courtesy of Torjus Kandal |
In that regard she presented the report “High North – High Stakes. Maritime opportunities in the Arctic”, which draws on conclusions and data from a related report published by The Arctic Institute. As especially intra-Arctic shipping is expected to grow, Lee-Behrens emphasized the necessity of a mandatory Polar Code, currently developed by the International Maritime Organization (IMO) and its member states. In addition to maritime transport deliberations fishery plays a crucial role for economic considerations in the Barents Sea region. Trygve Myrvang, Managing Director from the Norwegian Fishermen’s Sales Organization, outlined questions on the sustainability of fish stocks in the Norwegian North.
In order to sustain the current success story Myrvang underlined the necessity of cooperation between the fishery and energy industry in the High North, both interested in the same offshore areas. Filip Hamro-Drotz from the European Economic and Social Committee (EESC) concluded the first session and critically assessed the interaction between civil society and businesses in the European Arctic. He urged the representatives from the European Arctic to particularly focus on their competitive advantage in the area and continuously stress their needed knowledge and skills.
The speakers in the 2nd session focused on on-going challenges concerning governance and cooperation especially with regard to the Arctic Council and the European Union’s related Arctic policy steps. Anne Kari Ovind, Deputy Director General of the Norwegian Ministry of Foreign Affairs, highlighted the official Norwegian perspectives of and approaches to fruitful cooperation in the Arctic. Nicola Payne, Second Secretary, Mission of Canada to the European Union, continued by outlining the Canadian goals set for its two-year Arctic Council chairmanship.
Additionally Mrs Payneemphasized several key elements of the recently agreed on EU-Canadian trade agreement as a platform to also bilaterally cooperate on circumpolar issues. Ole Kristian Bjerkemo, Chair of the Arctic Council’s Working Group on Emergency Prevention, Preparedness and Response (EPPR) gave an overview of the maritime cooperation efforts negotiated under the auspice of the Arctic Council, the Arctic Search and Rescue Agreement and the Agreement on Cooperation on Marine Oil Pollution Preparedness and Response in the Arctic. Matthew King, Head of Unit: Maritime policy, Atlantic, outermost regions and Arctic in the European Commission’s Directorate-General for Maritime Affairs and Fisheries, concluded the session. King advanced his opinion that the European Union has to (finally) activate its Arctic policy and related funds more effectively. Furthermore, the European Union should also seek to develop its Arctic policy ambitions outside the Arctic Council.
Final remarks were given by Ole Øvretveit, Conference Manager of Arctic Frontiers and Tomas Norvall, Chair of Nordland County Council and Board Member of the Norway European Office.
Arctic Frontiers 2014 under the theme “Humans in the Arctic” will focus on two main subject areas: 1) health, society and environment and 2) maritime operational challenges. The provisional policy section program can be downloaded here, the one for the science section here. The Arctic Institute, which will be represented by its members Malte Humpert, Kathrin Keil and Andreas Raspotnik, will host a side event on infrastructure related challenges in the Arctic.
Report: The Future of Arctic Shipping - A New Silk Road for China?
By Malte Humpert Every time Arctic sea ice extent reaches a new record low a host of new reports and studies predict a rapid increase in shipping activities in the Arctic. Expectations are high that Arctic shipping routes, particularly the Northern Sea Route, will rival traditional shipping routes and complement the Suez Canal route as a key waterway for trade to and from Asia by the middle of this century.
One of the drivers of Arctic shipping, as the logic goes, is China’s rapidly growing international trade. As China aims to diversify its trade routes and reduce its dependence on trade passing through the Strait of Malacca, the Arctic offers an alternative and shorter route to conduct part of its trade. How realistic are such scenarios?
The Myth of Arctic Shipping - Why the Northern Sea Route is Still of Limited Geo-Economic Importance
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| Courtesy of Oyoyoy on Wikimedia |
By Kathrin Keil and Andreas Raspotnik With the Chinese Yong Sheng[1] currently transiting the Northern Sea Route (NSR), the potential of Arctic shipping is being discussed by the world’s media.[2] The Yong Sheng is the first Chinese cargo vessel to transport container goods (steel and heavy equipment) from Dalian, China to Rotterdam, Europe.
Researchers and public media have often cited the development of Arctic shipping routes as the driving factor of China’s regional interests, and, vice versa, China’s interest in Arctic shipping is taken as an important factor in the development of the NSR. Consequently, the NSR is identified as the most promising Arctic seaway with a considerable potential to shorten sailing distances from Europe to Asia (and, to a lesser extent, vice versa). A closer look at the actual NSR statistics tells a more differentiated story about the future outlook of the route.
Shipping Statistics and Omitted Questions
As of September 5, 2013 the NSR Administration has issued 495 permits to navigate and operate on the NSR so far this year.[3] However, most of these permits are for only parts of the route, predominantly the western part of Russian waters, i.e. the southwestern Kara Sea. As of 31 July 2013, of the 296 permits granted only 18% (58 permits) are for actual transits and 45% (133 permits) are approved for voyages only in the southwestern Kara Sea, primarily shipping goods within the region or bringing them south-westwards to Europe.[4]
This is just one example of how current discussions on the NSR generally remain superficial, drawing an undifferentiated picture of current and future Arctic shipping. Discussions tend to ignore the complexity of global shipping and its immediate repercussions on the potential of Arctic shipping. Relevant questions such as for which goods the northern routes will be relevant and which markets can be sensibly served need to be asked. Shipping types of many kinds, including fishing, tourism, cargo, container, destinational, transit, and intra trade and supply, are lumped together, despite the tremendous differences in the economics, conditions and potential of different types of ship traffic.
Reliability and viability are key factors in global shipping operations that are often not taken into account when discussing the economic feasibility of Arctic shipping.[5] That these factors are usually ignored is a major issue given that predictability, punctuality, and economy-of-scale of Arctic shipping are currently afflicted with many challenges and uncertainties, and will continue to be for some time to come.
Thus, public discussions regarding the future of Arctic shipping must begin to include the economic considerations given to global shipping in general. Additionally, going into more detail concerning the many particularities and subtleties that are decisive when aiming to evaluate the potential of Arctic maritime routes, would be equally important. In this regard, several essential questions arise:
- Which kinds of shipping are relevant for northern routes? Will intra- and destination shipping remain the predominant shipping activity or will transit take over the leading role?
- What are relevant goods for northern maritime transport?
- What are the relevant import and export markets for these goods and what are their respective routes?
- What do the major, global trading routes currently look like? How will they develop in the years ahead and how do northern routes fit into the general maritime trade picture?
From a less economic perspective, debates about the future of Arctic shipping also need to include the evaluation and acceptance of risks, including environmental and human risks, linked to navigation in Arctic areas. Important questions include: How safe is safe enough? What kind of risks can be accepted?[6]
To shed some light on these questions, the following maps illustrate the regional distribution of China’s imports and exports. China is often highlighted as the driving force of potential Arctic shipping developments. However, the analysis of global trade patterns exemplified by China’s current imports and exports and its future outlook show a different picture. China conducts half of its trade with its neighbors in the Pacific region. Europe’s share - which would be relevant for Arctic shipping - is substantially smaller. Less than 20% of China’s trade is bound for or originates in Europe.
Further, the majority of trade between China and Europe is of a containerized nature, which, most experts agree, will not be routed through the Arctic Ocean, due to the seasonality of Arctic transit routes, limited reliability and predictability, and the lack of infrastructure.
National Incentives and New Administration
In addition to these geo-economic considerations, national deliberations and interests have to be kept in mind. With regard to the NSR, it is essential to discuss the immediate relevance of this seaway for the Russian Federation: What is Russia’s incentive to develop the NSR? Is it intended to be a national waterway or an internationally used sea route? Is it meant to transport regional goods, i.e. energy resources to Asian and/or European markets, or considered as a transiting route transporting goods from markets outside the Russian Federation navigating through Russian water? What is the strategic value of the NSR for Russia?
Several on-going developments in regard to the administration of the NSR currently influence the deliberation of these questions, with the “icebreaker paradox” as the most prominent. With the recently implemented Rules of navigation on the water area of the NSR[7], icebreaker assistance is no longer compulsory for each voyage through NSR straits, but now it depends on the ice class of the vessel and the ice conditions in the area in which the vessel will be traveling. Icebreaker fees will depend on the capacity of the respective ship, its ice class, the distance of the escort and the time of navigation.[8]
However, while the legal framework is now established, a detailed mechanism for the calculation of the fees still needs to be developed. Until this mechanism is in place, shipping fees for using the NSR will continue to be determined by the old rules from 1990, meaning fee determination through individual negotiations.
According to the rules, the Russian authorities only demand fees for icebreaker assistance (not only for breaking ice but also for search and rescue and other functions) and pilotage for using the NSR, which constitute the only revenue sources from the NSR. As these sources are not enough to maintain and develop the necessary infrastructure assets for safe navigation on the NSR, the Russian government has to provide significant subsidies.
One begins to question the economic viability of the NSR for the Russian Federation. And also the question remains about who will bring about the vast investments needed to modernise, maintain, and (potentially) expand the existing icebreaker fleet. The potential lack of sufficient icebreaker capabilities in the NSR will likely lead to a delay in shipping traffic and has immediate negative effects on the development of the NSR as a transit route used for international navigation. For several maritime trading sectors, time savings are crucial for any economic feasibility considerations of transiting the NSR, especially in the case of seismic and liquefied natural gas (LNG) vessels, which have very high time-charter costs per day. Waiting times of a few days due to icebreaker delays may destroy any pre-calculated cost benefits in comparison to southern routes.
Based on these considerations, it may be possible that an agreement between the Russian Federation and user states of the NSR increasing the latter’s financial contribution to the maintenance of the NSR is a reasonable option to improve and safeguard NSR usage. This is especially relevant if Russia is seriously interested in the NSR not only being a national waterway, but also a route for international transits.
Conclusion
Development in the Arctic is happening and shipping numbers are indeed increasing. But both scientific and public debates and reporting need to be directed into a more nuanced and differentiated discussion about the region’s general future and the potential of shipping along northern routes.
A realistic perspective suggests that currently the NSR is intended as a Russian sea route. International shipping and potential revenues derived from the NSR are generally welcome but most likely Arctic shipping will not change major global trading routes. Consequently, while it is of regional relevance and potential importance as a niche route for a number of goods, the NSR’s geopolitical and geo-economic relevance, especially in the sense of global trade patterns, is rather limited.
This article is part of a larger study which takes a look at China’s geo-economic interests in Arctic shipping and the future of Arctic shipping generally. The study will be released by The Arctic Institute later this year.
[1] The ship is Hong Kong-flagged but owned by Chinese state-owned company Cosco Group.
[2] See for example: The Guardian, “China's voyage of discovery to cross the less frozen north”, http://www.theguardian.com/world/2013/aug/18/china-northeastern-sea-route-trial-voyage, accessed 4 September 2013; The Wall Street Journal, “Ship Travels Arctic From China to Europe. Northern Passage Shaves Two Weeks of Travel Time Off Journey”, http://online.wsj.com/article/SB10001424127887323423804579022982364681464.html#, accessed 4 September 2013.
[3] The Northern Sea Route Administration, “Permissions for navigation on the water area of the Northern sea route”, http://asmp.morflot.ru/en/razresheniya/, accessed 2 September 2013.
[4] Northern Sea Route Information Office, “Brief statistical analysis on the Permissions issued by the NSR Administration as of 31 July 2013”, http://www.arctic-lio.com/node/190, accessed 4 September 2013.
[5] For a current assessment about the potential of the Transpolar Sea Route (TSR) see Humpert & Raspotnik 2012: http://www.thearcticinstitute.org/2012/11/the-future-of-arctic-shipping-along.html. The four outlined variables influencing shipping considerations along the TSR can also be used for future shipping scenarios along the NSR and the NWP (Northwest Passage).
[6] The Norwegian classification society Det Norske Veritas (DNV) identifies risks related to Arctic navigation by contrasting probability with consequences and concludes several main risks elements: design, emergency, evacuation and rescue, the environment, regularity/logistics, long term commitment and estimation of costs; see presentation by Morten Mejlænder-Larsen, Discipline Leader Arctic Operation and Technology, DNV; presentation at Nansen-NVP Summer School, 19 August 2013, Longyearbyen, Svalbard.
[7] Rules of navigation on the water area of the Northern Sea Route, unofficial English translation taken from Northern Sea Route Information Office, accessible at http://www.arctic-lio.com/docs/nsr/legislation/20130425185806en-Rules_unof.pdf.
[8] Ibid., p. 5 f.
Review: Arctic Governance and Japan’s Foreign Strategy
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| Japanese Icebreaker Shirase |
By Aki Tonami The Japan Institute of International Affairs (JIIA), a private Japanese policy think-tank focused on foreign affairs and security issues, released a report on Arctic Governance and Japan's Foreign Strategy. The institute has traditionally had a close relationship with the Ministry of Foreign Affairs, acting as an external advisor. Every year, the Ministry commissions a series of project reports from JIIA containing policy recommendations on specific topics. The most recent report focuses on the Arctic and is based on seven workshops held with selected experts in international law, shipping, defense, and international relations. At present, the report is not available in English and this article summarizes the main content of the report.
The 97-page report, written in Japanese, is divided into 8 Chapters covering various aspects of the Arctic. While the report has not garnered much attention outside of Japan, it stands out as one of the first ‘official’ Japanese reports on the Arctic from an organization closely linked to the government. The Japanese government has not released an Arctic strategy, but the commissioning symbolizes the government’s attempt to gather opinions and understand the topic. There has been ongoing discussion about the Arctic in various business sectors and academic fields, and the report closely mirrors these views. In this regard, the report is not ground breaking but should rather be understood as a comprehensive analysis of the general mood of the current and potential Arctic actors. It includes detailed data and analysis, which will be especially valuable for Japanese policymakers.
In Chapter 1, Kazuhiro Nakatani, a renowned professor of international law, gives a general overview of the Arctic ’issues’. He contends that for Japan, the most desirable option is decision-making by the Arctic “stakeholders”; if impossible, decision-making by the Arctic Council would be second best. This is a rather frank opinion considering that Japan has been relatively quiet about what happens if the Arctic Council rejects Japan’s application for Permanent Observer Status, and that the Icelandic Prime Minister has recently suggested a new, more open forum to discuss Arctic affairs.
In Chapter 2, Masumi Kimura, who is a principal researcher at the Japan Oil, Gas and Metals National Cooperation (JOGMEC), reminds the reader why Japan needs to participate in energy developments in the Arctic. Energy development projects are highly profitable for any country that has capital and technology, and Arctic resources could be important for Japan’s energy security as well.
While the overall tone of the report is positive about greater Japanese involvement in the Arctic, the shipping industry is not shy in voicing its cautious stance. The Japanese shipping industry has been skeptical about the economic feasibility of the use of the Northern Sea Route (NSR). Chapter 3, by two people from major Japanese shipping companies, stresses that it is still more expensive to use the NSR for container shipping: “There is no reason to use a shipping route if it does not make economic sense, even if it is the shortest route…shipping companies do not exist to enhance the national prestige.” (p.30)
In Chapter 4, Hideaki Kaneda, a former Vice Admiral of Japan's Defense Forces, discusses the Arctic and Japan’s defense. Kaneda argues that, in the short-run, Japan should promote the use of Arctic sea routes by the international community. In the medium to long run, however, as a maritime nation Japan must strengthen its independent defense capabilities. It is because as maritime and fishery activities in the Arctic eventually increase, such activities in the Sea of Japan will increase as well, and as a result straits such as Soya, Tsugaru and Tsushima will be more congested than they currently are. Further deepening the US-Japan alliance would be useful for Japan as the US is one of the Arctic 5 and considering its nuclear deterrence capability. Kaneda also argues for taking a multilateral approach and expanding Japan’s maritime defense coalition would be necessary.
The following chapters discuss the environmental problems in the Arctic, Arctic governance, and the relationship between Arctic issues and international relations in East Asia, arguing that Japan must closely watch for possible long-term impacts on Japan’s geopolitical environment as a result of changes in the Arctic.
The report concludes with six policy recommendations for the Japanese government:
- Construct a win-win relationship with Arctic coastal states regarding resource exploration and development;
- Secure appropriate implementation of UNCLOS;
- Build a closer cooperation with the United States on Arctic issues;
- Play a leading role in environmental conservation, using Japan's knowledge and environmental technology;
- More active Arctic diplomacy;
- Strengthen the government system for Arctic policy, such as establishing an Arctic Headquarters within the Cabinet Office.
It remains to be seen whether the Japanese government will implement the recommendations in full, but both the commissioning and tone of the report clearly indicate that Japan has finally recognized the political importance of Arctic affairs. There are also real actions moving the country in this direction: Just days before the report was publicly released, Japan took a step towards more active Arctic diplomacy, as recommended in the report, and assigned an Arctic ambassador for the first time.
Aki Tonami is a researcher at the Nordic Institute of Asian Studies at the University of Copenhagen. You may contact her at aki.tonami@nias.ku.dk
Aki Tonami is a researcher at the Nordic Institute of Asian Studies at the University of Copenhagen. You may contact her at aki.tonami@nias.ku.dk
The EU as a Shipping Actor in the Arctic - Characteristics, Interests and Perspectives
Arctic Institute research analyst Andreas Raspontik recently co-authored a working paper on The EU as a shipping actor in the Arctic. Below you can find a short excerpt of the working paper first published by SWP (German Institute for International and Security Affairs). You can download the full article (Working Papers FG 2, 2012/Nr. 04) here.
Andreas Raspotnik and Bettina Rudloff The European Union (EU) depends heavily on maritime trade as 90% of its foreign trade and 40% of its internal trade are seaborne. In particular, the growing trade patterns between Asia and Europe are of major future importance. Although the European shipping sector was considerably affected by the on-going economic crisis, the EU remains a strong global shipping actor with specific direct and indirect economic powers. These strengths comprise relevant port capacities, space logistics, research and development capabilities as well as the EU's global dominant role as trading partner.
Consequently, Arctic shipping and the potential opening of Arctic shipping routes may have a decisive impact on EU shipping considerations. Yet a sound economic forecast remains rather vague and scientifically insufficient as too many different variables still influence and limit Arctic development in the field of navigation and transportation. The few existing and uncertain calculations offer only very small margins on both possible benefits and costs. This makes respective calculations even more vulnerable to uncertainty as any small change may alter the overall benefit assessment.
From today's perspective, the EU's future role in Arctic shipping will most likely center around technology-related maritime issues. Additionally, it is expected that the EU will adhere to its general rights and duties as port and flag state, e.g. with regard to vessel-source pollution or port state control as it may relate to Arctic shipping.
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About the Working Paper: The authors identify the current and future role of the European Union and (relevant) EU Member States in shipping activities in and across the Arctic region. First, the paper analyzes the general character of the EU as a shipping actor and categorizes whether and in what specific sector of the shipping industry the EU may follow future proactive shipping activities. Second, the authors compare existing economic assessments on the potentials of Arctic shipping in order to analyze range and uncertainty of possible costs and benefits of the Northern Sea Route (NSR). As a result, the EU’s future shipping potential in the Arctic is seen in its dominant role as trading partner attracting seaborne trade and technology-related issues, e.g. research, surveillance and monitoring.
The Future of Arctic Shipping along the Transpolar Sea Route
Below you can find a short excerpt of a paper on the Transpolar Sea Route published by the Arctic Yearbook, a research project by the Northern Research Forum and the University of the Arctic Thematic Network (TN) on Geopolitics and Security. You can read the full article and many others here.
By Malte Humpert and Andreas Raspotnik The Transpolar Sea Route (TSR) represents the most direct route for trans-Arctic shipment but has yet to attract significant commercial interest, as multi-year ice remains a formidable obstacle for most of the Arctic shipping season. The effects of climate change are, however, increasingly observed throughout the region and the Arctic is now warmer than it has been at any time during the last 2,000 years. Summer ice extent has declined by 40% since satellite observation began in 1979. Over the same period, Arctic sea ice has thinned considerably, experiencing a decline in average volume of 70%. Within the next decade this warming trend may transform the region from an inaccessible frozen desert into a seasonally navigable ocean and the Arctic Ocean may be ice-free for short periods as early as 2015.
Seaborne trade currently accounts for 90% of world trade and is dominated by the transportation of raw materials, tanker trade, and other dry cargo, including containerized cargo. The growing importance of the trade relationship between Europe and Asia and the resulting increase in seaborne traffic between the two regions will result in further congestion and a higher risk of collisions along the existing sea routes and their choke points, e.g. the Suez Canal and the Strait of Malacca.
Trans-Arctic shipping, regardless of the actual route used, will not serve as a substitute for existing shipping routes, but will instead be supplemental and provide additional capacity for a growing transportation volume. For the foreseeable future, the limited seasonal window for trans-Arctic voyages must be taken into account in any projections. Nonetheless, the development of Arctic offshore hydrocarbon resources and related economic activities will result in an improved integration of the Arctic economy in global trade patterns.
The Arctic region has become increasingly politicized, affecting its future development and influencing the policy decisions of Arctic countries. The Arctic Ocean’s potential economic and geostrategic importance has also begun to attract the attention of non-Arctic actors, who are in the process of defining their interests and intentions. The People’s Republic of China, in addition to the European Union (EU), is arguably the most important non-Arctic actor and will be instrumental to the development and future of the TSR.
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About the article: The authors highlight the future potential of the Transpolar Sea Route, an Arctic shipping route which has thus far been neglected in the realm of academia and in the public eyes. The article represents the first comprehensive assessment on the feasibility of the TSR from a climatic and economic standpoint and discusses how legal and geostrategic considerations will influence the development of this shipping route. The authors conclude that the opening and future development of Arctic shipping routes will not only depend on favorable climatic conditions across the Arctic Ocean, but will also be influenced by a shift in economic and political spheres of influence. The development of the TSR and its significant economic potential may in part be determined by key geostrategic considerations as the center of economic and political power continues to shift towards Asia.
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About the article: The authors highlight the future potential of the Transpolar Sea Route, an Arctic shipping route which has thus far been neglected in the realm of academia and in the public eyes. The article represents the first comprehensive assessment on the feasibility of the TSR from a climatic and economic standpoint and discusses how legal and geostrategic considerations will influence the development of this shipping route. The authors conclude that the opening and future development of Arctic shipping routes will not only depend on favorable climatic conditions across the Arctic Ocean, but will also be influenced by a shift in economic and political spheres of influence. The development of the TSR and its significant economic potential may in part be determined by key geostrategic considerations as the center of economic and political power continues to shift towards Asia.
The Future of Arctic Shipping
The North West Passage (NWP), first ice-free in 2007, and the Transpolar Sea Route (TSR) may also open up to shipping traffic over the coming decades. An in-depth assessment of the viability of shipping along the TSR will be published in the upcoming Arctic Yearbook 2012, which will be available from the Northern Research Forum’s website from October 2012. The development of Arctic offshore hydrocarbon resources and related economic activities will also improve the integration of the Arctic economy in global trade patterns. Multi-year ice and the limited seasonal window for trans-Arctic voyages however, will for the foreseeable future remain formidable obstacles to the development of Arctic shipping and its economic viability. Trans-Arctic shipping routes will thus not serve as a substitute for existing shipping lanes, but will instead provide new and additional capacity for a growing transportation volume.
A navigable Arctic Ocean?
Summer ice extent has declined by 40 percent since satellite observation began in 1979, and over the same period sea ice has thinned considerably, experiencing a decline in volume of 70 percent. Studies differ widely in their predictions of when summer sea ice will melt completely. The latest findings suggest that Arctic sea ice may have entered into a new state of low ice cover. A recent article by Valerie N. Livina and Timothy M. Lenton on the bifurcation of Arctic sea-ice cover describes it as "distinct from the normal state of seasonal sea ice variation." Arctic sea-ice may have crossed a tipping point which could soon make ice-free summers an annual feature across most of the Arctic Ocean.
Longer ice-free periods
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| Sea ice extent observations (1970 to 2007) and forecast (2030 to 2100) reproduced using data from the NOAA GFDL model. Yearly extent represents an average 80 percent sea ice concentrationn |
Significant obstacles remain
Nonetheless, significant obstacles to shipping remain such as icing from sea spray, wind chill, remoteness as well as their implications for rescue and emergency operations, and the lack of reliable weather forecasts. During the winter and spring months ice conditions along Arctic shipping routes will remain heavy, and the amount of floating sea ice and number of icebergs - a hazard to the safety of marine transport, may increase during the early melt season as more ice floes break apart and drift across the Arctic Ocean.
Shorter sailing distances
Routing shipping traffic through the Arctic allows for shorter sailing distances resulting in shorter trips. Shipping operators can achieve cost savings through a reduction of number of days at sea, energy efficiency improvements due to slower sailing speeds, or a combination of both.
Distance savings along Arctic shipping routes can be as high as 40 percent compared to the traditional shipping lanes via the Suez Canal. Shorter sailing distances allow for considerable fuel cost savings. The reduced number of days at sea allows a ship to make more return trips resulting in increased revenue and potentially greater profits.
Instead of realizing time savings, operators can also adopt super-slow sailing. A vessel traveling from Murmansk to Tokyo can reduce its speed by 40 percent and still arrive in Japan at the same time as a ship sailing at full speed traveling through the Suez Canal. Super-slow sailing can also double a vessel’s energy efficiency performance, resulting in a significant reduction of greenhouse-gas emissions. If a future emissions control framework was to include global maritime traffic, this reduction of emissions could thus also result in significant cost savings.
Economic feasibility of Arctic shipping
Global shipping operations are dependent on three key factors: predictability, punctuality, and economy-of-scale, all of which are currently limited in Arctic shipping. Consequently, the lack of schedule reliability and highly variable transit times along the Arctic shipping routes represent major obstacles to the development of Arctic shipping.
The majority of cargo ships that travel the world’s oceans operate on regular schedules, known as liner service. In total more than 6,000 ships, most of them container ships, follow a set route calling at a number of ports to load and unload cargo, which consequently supplies the concerned country’s hinterland. Profitability can only be achieved with large- scale shipping based on stable and predictable (year-round) operations.The ability to schedule journeys a long time in advance and to guarantee uninterrupted service is considered key for container ship operators. Bulk dry and wet carriers, on the other hand, follow less predictable schedules and their routes depend more on changing supply and demand of less time- sensitive items. Of the four kinds of Arctic voyages undertaken in the Arctic Ocean - destination transport, intra-Arctic transport, trans-Arctic transport and cabotage - trans-Arctic shipping may face the most significant hurdle to becoming part of the global trade patterns.
Draft and beam restrictions
Arctic shipping routes, especially the NSR, are subject to significant draft and beam restrictions. Ships along the NSR must pass through a number of narrow and shallow straits in the Kara and Laptev Sea. The Yugorskiy Shar Strait at the southernmost entrance from the Barents to the Kara Sea follows a channel 21 nautical miles long and 12-30 meters deep. Along the eastern section of the NSR, ships must navigate either the Dmitry Laptev Strait or the Sannikov Strait to pass through the New Siberian Islands and travel from the Laptev to the East Siberian Seas.The eastern approach of the Laptev Strait has a depth of less than 10 meters, restricting the draft of ships to less than 6.7 meters. In addition, Russia’s government only permits ships with the highest ice classification – 1A Finnish Swedish, to sail the route. Currently, only three vessels out of more than 2,000 Panamax ships have that classification.
Arctic shipping infrastructure
A key characteristic of Arctic shipping routes is the limited number of ports of call. According to the Arctic Logistics Information Office, 16 ports, most of them ice-covered for part of the year, are located along the NSR. The port of Murmansk and the port of Petropavlovsk on Russia’s far-east Kamchatka peninsula are considered essential for the development of the NSR. Both ports are expected to serve as terminals and hubs of the NSR. In November 2011 Vladimir Putin announced a major overhaul of the entire Russian transport system with special attention to maritime traffic in the Arctic. Russia plans to build up to 10 emergency centers focused on meteorological and rescue services as well as border patrol along the NSR.The capacity of Russia’s seaports is scheduled to increase 50 percent by 2015 and the country plans to invest 134 rubles (€3.4 billion) into developing maritime traffic over the next 10 years.
The port of Kirkenes, Norway and the port of Vopnafjörður, Iceland may serve as major future Arctic hubs. Iceland’s strategic location at the entrance and exit to the Arctic Ocean and Vopnafjörður’s suitability as a deep-water port with depth up to 70m, may allow development into a transshipment hub. Future development and investment will however, depend significantly on the country’s financial and economic situation and foreign investments. Over the past decade China has continuously increased its economic cooperation with the small island nation and China’s premier Wen Jiabao recently visited Iceland to further strengthen the economic ties between the two countries. A Chinese delegation also visited the Faroe Islands, a small group of islands under the sovereignty of the Kingdom of Denmark, where domestic policy makers have also identified the island’s role in future Arctic shipping as a priority.
Conclusion
Over the past decades the Arctic has witnessed a much faster than anticipated decline of sea ice and the continuation of this trend will transform the Arctic Ocean into a navigable seaway over the coming decades.Yet due to the region’s unique navigational and economic challenges Arctic shipping will, for the foreseeable future, only be cost effective for a limited number of operators.
This article was first published in the 55th Edition of Port Technology International and is republished here with permission.
This article was first published in the 55th Edition of Port Technology International and is republished here with permission.
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