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Economy

Rough sailing ahead for Arctic shipping route

DALIAN, China -- The Arctic Ocean, which many people had hoped would serve as a nautical shortcut lopping thousands of miles off international shipping routes, has seen a falloff in ship traffic, partly due to geopolitical changes.

The Chinese icebreaker Xuelong was trapped in freezing Antarctic waters in late 2013.   © Courtesy of Arctic Portal

     The number of ships that used the Northeast Passage connecting Asia and Europe via the waters north of Russia fell 14% last year. Gross cargo tonnage sank 45%.

     The Northeast Passage is opening up as global warming causes year-round ice in the Arctic to recede. It can cut the distance between Yokohama and the Dutch port of Rotterdam by 37% compared with the traditional southern route via the Indian Ocean and the Suez Canal. But the sudden fall in oil prices has made it less urgent for ship owners to look for cheaper alternative routes.

     According to Rosatomflot, owner of Russia's fleet of nuclear-powered icebreakers, 61 ships transited the Northeast Passage in 2014, down from 71 the year before. A total of 751,710 tons of cargo made the trip, only around half as much as the year before.

     "For a long time, China Osean Shipping (Group), known as Cosco has been paying attention to the development of shipping technologies and the business development opportunities of the Arctic route, carrying out prospective studies toward commercial navigation," said Ye Weilong, executive vice president of China's largest shipping company, at the Arctic Circle Assembly in Reykjavik, Iceland, in November.

     According to Ye, Cosco sent China's first commercial ship across the Northeast Passage in August 2013. The journey from Dalian to Rotterdam took 27 days. The 7,931 nautical mile (14,688km) route shaved nine days and over 2,800 nautical miles off the trip compared with the Suez route. Ye told attendees the route saved 250 tons of fuel, cut carbon dioxide emissions by 777 tons and sulfur dioxide emissions by 14 tons. "Cosco group is optimistic about the future of the Arctic route. We will officially launch shipping services from the Far East to Europe via the Arctic route in due course," he said, but did not give a timetable.

The route less traveled

That day might be further off than the Chinese shipper has in mind because lower fuel prices have made the Suez route affordable again. Another reason cargo companies may get cold feet is fear that Russia may not be able to develop ports along the route because of economic sanctions imposed on it over Ukraine.

     Russian ports are essential to make the Northeast Passage viable. If temperatures fall suddenly, trapping a ship in the ice, getting a rescue crew to the scene from a nearby port is a matter of life and death. Chinese authorities held their breath back in December 2013 when an icebreaker, the Xuelong, became ice-bound in the Antarctic. The Xuelong was itself trying to rescue a Russian vessel when cold winds blew in pack ice, encasing the Chinese ship as well. It took two weeks to move the ship to warmer waters.

     The distance savings offered by the Northeast Passage differs for each country in Asia. Trips between Shanghai and Rotterdam can be shortened by up to 25%, and chop 11% from the Rotterdam-Hong Kong route. But for Ho Chi Minh City, the distance to Rotterdam via the Suez Canal and the Northeastern Passage are roughly equal. The new route mainly benefits Northeast Asia -- China, Japan and the two Koreas.

     China, however, seems to be focusing much more on the southern route now that President Xi Jinping has begun pushing for a revival of the ancient Silk Road, which he has dubbed the Silk Road economic belt and the 21st century maritime Silk Road.

The maritime Silk Road envisions China building a series of ports in countries on the Indian Ocean littoral -- including Myanmar, Sri Lanka, Pakistan and Tanzania -- to strengthen ties with those countries.

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