10 January 2015

The New Trade Route – the northern seaway

The Arctic seaways are beginning to be busier with the culmination of rapid climate change due to global warming coupled with an estimated 25 percent of the world oil and gas reserves. Moreover, the Northwest Passage unites the Atlantic and Pacific Oceans and shortens transit routes saving time and money in commercial trade. The melting Arctic will reduce dependency of the Panama and Suez Canals.

In recent years, according to polar climate scientists and researchers, the shrinking Arctic sea ice will become passable without the assistance of icebreakers for a greater period each summer. In 2009, the German-based Beluga Group in Bremen was the first western company to attempt and succeed in the crossing without icebreaker support from Ulsan, South Korea to Rotterdam, the Netherlands, thus cutting approx. 4,000 nautical miles off the journey.
By linking the Atlantic and Pacific Oceans greatly reduces transit times for ships that have relied on the southern route through the Panama Canal. Temperatures in the Arctic are rising faster than anywhere else in the world, making the Arctic region easier to navigate. For shipping companies hoping to shorten trade routes through the Arctic Ocean it provides them quicker access to economic dynamos such as China and India.

A new geopolitical battleground

In early 2011, at an Arctic conference held in Tromsö, Norway, U.S. Rear Admiral Dave Titley stated: “We believe that sometime in the next few decades there is a good chance that the Arctic Ocean will be essentially ice-free for extended periods.”
These longer intervals of ice-free waters will likely mean more vessels trying to navigate the narrow straits and channels of the Northwest Passage, a series of waterways along the US coast that wind through Canada’s Arctic archipelago of 36,000 islands, including commercial shippers looking for shortened trade routes.

Canada, for example, has claimed it has full rights over the parts of the passage that pass its territory. While the US and EU counter by stating the passage is in international waters. Countries that border the Arctic region are Canada, Denmark (Greenland), Iceland, Norway, Russia and the US. That said, the Arctic Ocean continues to cause more diplomatic riffs pursuant to the usage of waterways. All countries in the region regard parts of the Arctic seas as “national waters” i.e. territorial waters out to 12 nautical miles. There also are disputes regarding what passages constitute “international seaways” and rights to passage along them e.g. the Northern Passage.

Energy sources under ice

As the need for energy continues to rise and while onshore oil reserves dwindle, the search for oil offshore continues to surge. This increases the risks for accidents. The harsh climatic conditions in the Arctic Ocean make the exploration and extrapolation very dangerous. The waters of the Arctic are particularly extreme for drilling because of the punishing cold, long periods of darkness, dense fogs, and hurricane-strength winds.

Increased activities, increased needs

“The Arctic seaways will increasingly become busier in coming years due to climate change and the surge in exploration of natural resources. This sea change will create major opportunities for Finnish ice-breaking expertise,” says Tero Vauraste, CEO of Arctia Shipping.

As the climate becomes warmer, the three Arctic seaways, the Northeast Passage north of Russia, the Northwest Passage north of Canada and the so-called Polar Route, will cut shipping distances by as much as 20 to 40% compared with the routes through the Panama and Suez Canals.

“The Northeast Passage is spearheading this development with its nuclearpowered icebreaker service,” Vauraste highlights. “In 2012, approximately 1.4 million tons of cargo aboard 43 vessels passed along this route. Russia aims to have some 20 million tons of cargo go through by 2020 and the reported capacity is up to 50 million tons,” he says. Knowledge and potential According to Vauraste, Finland is a world class leader with expertise in designing, building and operating icebreakers and other vessel types suitable for Arctic conditions. There will be no lack of opportunities due to the fact that the current global fleet of around 100 ageing icebreakers hardly meets even today’s needs.

“At least 20—40 new icebreakers will be required within the next 10—20 years to replace old ones and to meet new needs, and this includes proficient crews for operating them as well,” says Vauraste. Environmental issues pose a particular challenge for future development because increasing activity also increases risks. “Icebreakers should be multipurpose vessels with oil spill recovery equipment onboard coupled with search and rescue capabilities,” he states emphatically.

Additional factors that affect Finland’s position in terms of maritime logistics are the EU’s imminent sulfur emissions directive and Energy Efficiency Design Index (EEDI) which will both cut back emissions and increase shipping costs. “Arctia has used Wärtsilä’s technology for converting its multipurpose icebreakers Fennica and Nordica to comply with the new environmental regulations. The conversion reduces the ships’ SOx emissions by more than 99 percent, NOx emissions by approximately 90 percent and particulate emissions by around 50 percent,” Vauraste points out.

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