By: Uzair Salman

A New Shipping Highway?

Since the beginning of the year 2018, the Northern Sea Route (NSR), a shipping lane between the Atlantic Ocean and the Pacific Ocean along the Russian coast of Siberia and the Far East, has experienced a significant boost in transportation volumes. Russian ministry for Maritime and River Transport recently reported that the volume of goods transported via the NSR this year skyrocketed by 81 percent. The NSR can cut journey times between Asia and Europe by up to two weeks as it allows ships to avoid travelling through the Suez Canal or past the Cape of Good Hope in South Africa.

On September 19, the container ship ‘Venta Maersk’ successfully sailed through the Northern Sea Route of the Arctic Ocean, making it a historic event as it was for the very first time in history that commercial container ship ventured successfully into the Russian Arctic. Escorted by a Russian nuclear icebreaker, this containership of the Maersk Line, the world’s biggest container shipping company, sailed via the East Siberian and Laptev Seas, and arrived in St. Petersburg on September 27th. This venture marked the latest development in maritime transport in these northern climes.

The purpose behind this venture was to gather data and determine whether the route is feasible, rather than actually to seek a commercial alternative to Maersk’s existing routes. But, looking at another aspect, experts have also interpreted it in the light of growing international interest in the Arctic.

In the past decade, melting ice-sheets have opened up previously inaccessible Arctic shipping lanes. China’s state-owned shipping company, COSCO, is among the most active players. Since 2013, it has completed more than 30 journeys in the region. And, China has poured money into the building of infrastructure along Russia’s Arctic coast and into its oil- and gas-wells there. But, for China, the Arctic is just one part of a bigger game. The stakes are higher for Russia: 30 percent of its GDP depends on the region. And, for now, Russia can set the rules. After all, it is through its territorial waters that the Arctic’s most trafficked shipping lane, the Northern Sea Route (NSR), passes.

The NSR runs from the Barents Sea,

near Russia’s border with Norway, to the Bering Strait between Siberia and Alaska. Ships sailing through the NSR need the permission of Russian authorities, who collect transit fees and provide escorting icebreakers. The NSR has been touted as a potential rival to the Suez Canal because it could dramatically slash some journey times between Asia and Europe. For example, a ship travelling from South Korea to Germany would take roughly 34 days via the Suez Canal and 23 via the NSR.

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Nonetheless, the Arctic route has drawbacks: a navigation season of three to four months each year, unpredictable ice conditions, high insurance fees, costly specialised vessels, and a lack of search-and-rescue teams and support infrastructure. These are some of the reasons why experts believe that the NSR will not become an economically feasible alternative before 2040.

While the NSR might never rival the Suez Canal as the main artery for cargo between Europe and Asia, it could still be important for the shipping of fossil fuels. To be commercially viable, large container ships using the Suez Canal route need to make deliveries to several customers along the way. This business model is unfeasible in the sparsely-populated Arctic. But, it does make economic sense for oil and LNG tankers to serve single markets, without intervening stops. The Arctic route is well suited to this kind of shipping. The prospects of the NSR would also improve if the world should become less stable. More piracy around the Horn of Africa, more congestion in the Strait of Malacca, more terrorist attacks in the Suez Canal: all render control of the Northern Sea Route strategically important. Facing little competition from America, Russia and China will have the upper hand.

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