NORTHERN SEA ROUTE
ARCTIC POTENTIAL CAPPED Market analyst Andrew Penfold explores the viability of the Northern Sea Route and the implications for the port sector
8 MSC is among the non-believers recently confirming its commitment to avoiding the North Sea Route on environmental grounds
The continuing reduction in Arctic ice levels has been hailed as offering a potential alternative to trade between East Asia and Northern Europe. There are economic arguments in favour of this but take up has been slow and some resistance evidenced. Given recent upheavals in established container trades what are the realistic prospects for this option? ECONOMIC ADVANTAGES Routeing ships via the north of Canada has been considered but by far the greatest potential is for movements of goods between Asia and Europe. There are cost savings, but there are also major difficulties for this part of the market Of course, the key driver is the shorter haul lengths involved – Shanghai to Rotterdam via Suez is some 10,520nm, via the Northern Sea Route (NSR) its 8350nm. This means (in theory at least) lower shipping costs and no fees for Suez transit. According to the latest data from PAME (Protection of the Arctic Marine Environment) the number of vessels utilising at least a part of the NMR has increased from 784 in 2013 to 977 in 2019 – although the total has since stabilised. Fishing vessels accounted for 45 per cent of the total but there has been an increase in bulkers and tankers in the region with some experimental container voyages.
WHICH TRADES COULD BENEFIT? MPL has undertaken a review of the different trades where this short haul length could see some redirection of trade. The following have some potential: West to East 4 Steam coal and coking coal – Poland to NE Asia / China 4 Iron ore Norway/Sweden to NE Asia /China 4 Oil & oil products – northern fields to Asia 4 LNG – northern fields to Asia 4 Other bulk cargoes 4 Containerised cargoes – on a liner basis 4 Cars and vehicles 4 Frozen fish East to West 4 Containerised cargoes – on a liner basis 4 Cars and vehicles 4 Neo-bulks – steel products / forest products, etc. 4 Frozen fish There is no doubt that these cargoes could be shipped on this route but in addition to shipping costs there are several other factors that need to be considered, if the theoretical
Trade Category
Ship Size Capacity
Liner Service Feasibility
All-year Service (Seasonality)
Cost Savings
Time Savings
Potential Growth
Total
Dry Bulk
**
*****
***
***
**
***
18
Tankers
**
*****
***
***
**
***
18
LNG
***
****
**
***
**
*****
19
Containers
**
*
*
****
****
***
15
Cars/Vehicles
****
**
***
***
****
***
19
8 Table 1: NSR potential by shipping sector
Suitability of NSR * = poor, ***** = good
20 | JULY/AUGUST 2021
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