Tschudi Shipping: The Northern Sea Route Should Not Be Ignored
Global warming is making the Arctic Ocean more accessible for navigation and providing the maritime industry with the means to avoid using lengthy transits to East Asia.
The Northern Sea Route (NSR) from Europe to Asia shortens the distance of traditional shipping links through the Suez Canal depending on destination. For instance, Rotterdam to Shanghai is 30% shorter, Rotterdam to Yokohama is 40% shorter and Kirkenes to Yokohama is 56% shorter.
The NSR has the potential to generate significant savings, with reduced fuel consumption, transportation time and CO2 emission. It also “subtracts” the risk of piracy, according to Mikhail Belkin, assistant general manager of the Russian state-owned Rosatomflot icebreaking fleet.
Norway’s Tschudi Shipping Company seized the initiative in 2008 when, in collaboration with the Norwegian Ministry of Foreign Affairs, it established the international and independent non-profit Centre for High North Logistics (CHNL) as the preferred knowledge network for creating efficient and sustainable logistical solutions in the High North through research projects between business, academic institutions, organisations and public authorities.
A CHNL workshop in Kirkenes in April 2010, entitled Opening the North Sea Route for bulk commodities, attracted more than 25 stakeholders from Russia, Norway and elsewhere. This was the catalyst for the development of a strong partnership between Tschudi Shipping, Nordic Bulk Carriers, Prominvest, Sydvaranger Gruve and Rosatomflot to initiate the first truly international transit shipment through the Northern Sea Route – a non-Russian cargo carried on a non-Russian flag ship between two non-Russian ports.
In September that year the Tschudi Group initiated the first non-Russian commercial shipment through the Arctic to China using the Hong Kong flag bulker Nordic Barents to transport 40,000 tons of iron ore from Kirkenes to China. The vessel left on September 4 and arrived on September 23, completing the voyage at an average speed of 12 knots.
Built in 1995, the 43,732 dwt Nordic Barents is controlled by Nordic Bulk Carriers in Copenhagen and classed by ClassNK as Ice-Class 1a, the highest conventional ice class and until this year the minimum requirement for ice class required by Russian authorities for the transit. A select few bulk carriers of this size hold this highest conventional ice class.
According to Tschudi, the potential savings are too high to be ignored. Cargo destined from Kirkenes and Murmansk for Shanghai via the Suez Canal takes 37 days at a speed of 14 knots over a distance of 12,050 nautical miles. The NSR was estimated to reduce the distance to 6,670 nautical miles and a transit of 22 days at 12.9 knots, equating to a saving of 15 days. The estimate was made prior to actual journeys and it was then anticipated that the ice would reduce the speed through the NSR.
Recent experience shows that one may, in many instances, use the same speed for both options. Assuming a speed of 13 knots for both alternatives the difference in days will then be 18 days.
Cargo destined for Busan via the Suez Canal covers a distance of 12,400 nautical miles during a transit time of 38 days, also at 14 knots. The comparison with the NSR is particularly significant: the distance is cut to 6,220 nautical miles and 18 days are saved if the vessel travels at 12.9 knots during a 20-day transit, again assuming some ice. For Busan the difference is as high as 20.3 days if one assumes a speed of 13 knots for both alternatives.
For Kobe, the days saved are even greater. Transit via the Suez Canal takes 39 days with the vessel covering 12,730 nautical miles at 14 knots. Using the Northern Sea Route reduces the distance to 5,830 nautical miles and transit time to 19 days at a speed of 12.9 knots, producing a saving of 20 days and up to 21.3 days at 13 knots.
Tschudi believes the route will be navigable for approximately two to four months a year though the route was actually open for five months in 2012 due to favourable conditions.
The NSR shortens the distance to China by about one third, resulting in a significant reduction in fuel consumption and transportation time, and it also means much lower CO2 emissions. A panamax bulker burns around 30 tons of fuel per day at current prices of around $600 per ton and the daily bunker value saving is $18,000. A trip cutting 20 days from transit would result in bunker cost savings of $360,000.
Questions as to whether the NSR is ready for international commercial traffic include concerns over which operational requirements and additional apply, whether Russia will simplify the application regime and whether ice breaker fees will be open and standardised. The latest initiatives seen from Russian authorities in this respect indicate that there is a will and a way to facilitate increased use of the route.
In 2012 46 vessels sailed through the NSR, a significant increase on the 34 vessels in 2011 and substantially more than the four vessels which used the route in 2010.
Tschudi believes that the NSR is ready for use but that the commercial and international fleet and market are not. This will change with improved information and increased attention on opportunities in the high north. The company says there is a need for a larger ice class fleet, infrastructure, regulatory regimes and operational knowledge.
This will open up opportunities for greater use of the NSR for transits between Europe and the Far East, to the provision of improved logistics solutions to the northern regions and thereby contribute to a positive cross-regional development and co-operation across the borders in this region. The Arctic ice-free ports of northern Norway and Russia (Murmansk) will come to play an increasing importance in this context.
According to analysis by Tschudi, specialised Arctic shipping will in future be characterised by tankers, dry cargo, gas carriers and offshore vessels for Russian and international companies, feeder vessels for Russian river deltas and project cargo. If this also is combined with an extended and improved rail rod grid and energy grid it could open many opportunities for the existing population and potentially for new migrants to the northern regions as a whole.
Republished with permission from ClassNK Magazine, 65th edition
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