Arctic Shipping, cold lead or warming up? Read the latest news

By Mikkel Navarro Hansen, CEO of MDC

Shipping and trading in the arctic region is not new.  The vikings did it. People have crossed the Bering Strait ages ago. Seafarers have risked their lives in runs between Greenland and the continent for centuries.

However, with global warming and the fact that the amount of sea ice is decreasing has meant that shipping and trading along the NSR (Northern Sea Route, North-East Passage) has become a real option during the 2000’s.

But the question is, if shipping on the NSR is something we should take serious? Is it then relevant for shipping companies and service providers to include these routes in their future planning?

The Arctic Circle Forum and the Arctic Partnership week which was conducted in South Korea has just come to an end. And this year, a number of Danish organisations participated - amongst them us in the TINV and MDC - upon being invited by the Royal Danish Embassy in Seoul.

This was a great opportunity to get an update on all of it, now that it has been a few years since the introduction of the Polar Code and a lot of talks about new trade lanes opening up. Here’s a few takeaways:

  1. Transit shipments along the NSR is not expected to pick up soon. The number of vessels transiting is still very low due to the relative short window for transiting, the requirements for ice class, extra training/experience needed and the fact there are no other legitimate businesses along the route for e.g. container vessels. Maersk Line had a test transit during August/September this year, it went well, but it’s not a route they expect to continue

  2. There is an increase in traffic servicing ports and rivers along the NSR. Russia has a large and expending export of especially LNG form northern Siberia with new projects underway. This leads to an increase of export and transshipment requirements both in eastern and western directions. In addition, there’s also a surprisingly amount of traffic through to Asian/Siberian rivers. Countries like Afganistan and Mongolia can be served through rivers floating into the Arctic Sea. And the traffic with companies like for example. “Lena Shipping” is increasing.

  3. Pressure from China and Korea. In addition to Russia who for obvious reasons likes to see more NSR traffic, China and Korea has the Arctic routes high up on their agenda. For China, it’s mainly as part of their One Belt, One Road strategy. For them it’s simply too risky only to have one road for export to Europe with critical and security pressured bottlenecks along the route like the Malacca Strait, Gulf of Aden and the Suez Canal. They need alternatives. Korea on the other hand, is being located advantageous as a gateway to the NSR as well as an obvious shipbuilding nation - it has its interests as well.

So, what conclusions to draw from all of this? It’s still worth keeping an eye on shipping in the Arctic, and with the expertise and skills which we build up in Danish companies by working in, with and around Greenland it’s worth considering how to exploit this in a bigger scale. For example, looking at other less obvious gateways to serve the huge Asian continent form the north.

At the same time, we we should also ensure a practise of shipping that takes the pristine environment of the arctic region into consideration. How do we utilise the NSR with as little impact as possible? Which fuels should we use to minimise pollution risks? What special considerations should we take towards underwater noise in areas previously untouched? How could we make NSR an overall more environmental friendly route for the earth as a whole?

A lot of possibilities are still out there and a lot of questions still left to answer.

For a perspective on the Arctic Partnership week, listen to Senior Researcher Piotr Graczyk from NORCE in Tromsø, Norway in these videos.

Recommended follow-up reading, is this article on CNN about China’s Arctic ambitions: https://edition.cnn.com/2018/12/29/asia/china-arctic-influence-intl/index.html