Liner shipping through the Arctic could be commercially viable by 2040

Liner shipping through the Arctic could be commercially viable by 2040

New research suggests that liner shipping through routes in the Arctic Ocean could become economically viable by around 2040, if ice coverage continues to decline at its current rate.

The study, conducted by The Copenhagen Business School (CBS Maritime), aimed to determine at what point investing in an 8,000-teu ice-classed containership operating along the Northern Sea Route (NSR) between northern Europe and the Far East would be commercially preferable to investing in an 8,000-teu containership without ice class, sailing between the two regions via the Suez Canal (SCR). Transporting goods via the NSR reduces the voyage distance by up to 35% and significantly reduces the number of days at sea and fuel costs.

CBS Maritime said a favourable price differential is unlikely to be achieved any time soon. However, the study did project the total cost per teu would only be around 10% higher on the ice-classed boxship plying the NSR, in a scenario where global warming and and fuel prices reach the highest level modelled in the study, which can be downloaded here.

“This emphasizes that the feasibility of liner shipping is highly dependent on the annual number of navigation days along the NSR,” CBS Maritime said. The Arctic will become increasingly navigable for longer periods as more of its summer ice coverage disappears year-on-year due to global warming.

“Further, this reveals that the vessel operating along the NSR is relatively less affected by increasing fuel prices compared to that only navigating the SCR. This is only the case if the navigation season is sufficiently long to offset the increased fuel consumption of the ice reinforced vessel,” the report continued.

“Lastly, it can be concluded that by navigating at reduced speed along the NSR, the total cost per teu is reduced, thereby advancing the point at which an ice-strengthened vessel becomes an advantageous investment to an ordinary vessel of the same size.”

The possibility of expanding dry bulk and liner shipping and offshore service activities in the Arctic before 2050, however, depends on “major uncertainties”, CBS Maritime said. “These uncertainties include the hazardous environmental conditions, port and infrastructure availability and high costs of operation compared to the southern shipping lanes.”

“Additionally the Arctic Ocean lacks an international governmental and regulative framework in combination with high entry costs creates uncertainty for the maritime industry seeking to operate in and around the Arctic Ocean,” the report said.

 

Holly Birkett

Holly is Splash's Online Editor and correspondent for the UK and Mediterranean. She has been a maritime journalist since 2010, and has written for and edited several trade publications. She is currently studying for membership of the Institute of Chartered Shipbrokers. In 2013, Holly won the Seahorse Club's Social Media Journalist of the Year award. She is currently based in London.

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1 Comment

  1. Vasily
    February 8, 2016 at 7:54 pm

    The most important thing for economic of Arctic voyage is cost icebreaker service.!!!
    Regarding the fuel cost- steaming in arctic waters may be profitable as you can use
    cheap IFO 380 HS ( abt. USD 200 per 1 ton).
    But cost of icebreaker assistance through the tranzit on NSR (SEVMORPUT) will abt
    1 million USD for single ice convoy with nuclear icebreaker for ship with size GT 50000.
    But cost may be considerably reduced if convoy will contain 3-4 ships with one icebreaker. But bigger convoy will be not so effective.
    This time in Russia we have container line ARCTIC EXPRESS operated by NORILSKY NIKEL Company on voyages from Rotterdam -Murmansk (or Arkhangelsk)- Dudinka (or Sabetta). It is in operation more than 15 years all round the year (summer and winter) with ice class container ships (ARC7 in Rusian Register).
    So, if you find reliable icebreaker operator (such as ROSATOMFLOT or ROSMORPORT) and sign longtime contract it will be possible sail in Russian Arctic in prefarable period from july to novermber. Voyage from Nordcape (Norway) to Bering Str. will take abt. 10-12 days.
    The second thing – it is Ice Pilot service cost . But it is not expensive – abt USD600 per day for ice pilot on board the ship. Russian state Rosmorprot Company can produce such service if requred.

    brgds
    Capt. Vasily Ilin
    Russia