CHNL’s Shipping in Arctic Waters Study

(by Centre for High North Logistics)

Background

A lot of international research has been carried out on different topics and issues regarding shipping and logistics in the High North. Little has been done to coordinate this knowledge and few of the reports have a holistic and cross-disciplinary approach.

One of the most comprehensive studies of the sea routes in the Arctic, INSROP (International Northern Sea Route Programme) was a 6 year (June 1993-March 1999) international research programme designed to create an extensive knowledge base about the ice infested shipping lanes running along the coast of the Russian Arctic, from Novaya Zemlya in the west to the Bering Strait in the east. Acknowledging the need to establish an extensive NSR knowledge base, the multidisciplinary INSROP was created to investigate all aspects of potential increased international use of the NSR. The programme, which was primarily a joint Norwegian-Japanese-Russian venture, enlisted more than 450 scholars in 14 countries and 167 technical reports on a very broad specter of subjects were published.

As we enter the 2lst century technological, political and climatic developments are again making the NSR an interesting possibility. Russia officially opened the NSR for foreign ships in 1991, and better and less costly icebreaking technology is being developed. The NSR is impeded by ice and political uncertainty, the Suez and Panama Canals have their own inherent problems such as draft and beam restrictions.

Political instability in the Middle East, the piracy problems and increased raw material prices combined with the important oil, gas and mineral reserves in the Arctic, already have increased the international commercial interests for the NSR. There are also indications that global warming may gradually improve the ice conditions of Arctic Routes.

During the past few years mineral prices have increased and a number of mines in northern Scandinavia and Russia have been opened. The growing markets for raw materials are in the Far East. Therefore, it the international commercial merchant fleet would consider the different sailing routes in the Arctic, as predictable commercial alternatives to the Suez Canal or Cape of Good Hope Routes, it will create new opportunities for the energy and mining industries in the High North, the international shipping community and for Russia as a country. The NSR provides a shorter access to Asian markets.

CHNL’s Shipping in Arctic Waters Study and the ARCTIS Database

More than 12 years have passed since the INSROP research report was presented. In 2009 the Centre for High North Logistics (CHNL) in Kirkenes, Norway, decided to allocate financial resources, with additional support from Innovation Norway, to make an update of the international research that has been carried out since the INSROP research project and the AMSA (Arctic Marine Shipping Assessment) study ended. Research scientists mainly from the Oslo-based Ocean Futures but also from DNV were hired to do the update. Based on their review, documented in a CHNL’s unpublished report from June 2010, it will now be possible to identify and initiate practically oriented cases and research projects anchored in real industrial needs. This unpublished report which has now been updated, the AMSA study and other related studies and documents on Arctic shipping and logistics make up the initial core  of  CHNL’s ARCTIS database.

ARCTIS, CHNL’s indexed and searchable knowledge database, will strive to provide quality controlled and continuously updated overview of knowledge related to logistics in the Arctic, and play a key role in informing our users about recent developments, operational conditions, technical improvements, and opportunities related to resource development, shipping and logistics in Arctic waters. ARCTIS will strive to be the preferred gateway to know-how for businesses, governments and the research community itself on Arctic shipping and logistics. ARCTIS will pursue a dissemination role for the international research community by making research results and results of demonstrations/case studies known to key stakeholders in as user-friendly way as possible. The aim is to make scientific reports more accessible and more understandable for the shipping and logistics industry so latest research results can be included in their decision-making process and business development. This might contribute to more economically viable, doable, and environmentally friendly transport and logistics solutions for the Arctic.

Main Conclusions of the CHNL’s Study

The CHNL’s Shipping in Arctic Waters Study compared the shipping conditions along the Northeast, Northwest and Trans Polar passages on the basis of a state of the art analysis. The concept of sailing conditions is defined at the intersection of a variety of interacting and interdependent factors such as geopolitics, military affairs, global warming, sea ice melting, international economic trends, resources, competing modes of transportation, environmental challenges, logistics, ocean law and regulations, corporate governance, jurisdictional matters and rights of indigenous peoples.

Thus, the study is multi- and interdisciplinary in orientation and approach, opting to define the complexity of operational parameters at work in these unique waters. The comparisons are conducted to provide an imagery of what the state of the art of regional shipping is for the Arctic Ocean as such, for the individual passages and for each of the interacting navigational factors. Within the Passages, three types of sailing routes were being addressed: Intra-Arctic routes, i.e. sailing lanes between locations within the Arctic, destination Arctic-routes, i.e. sailing lanes between harbors inside and outside of the region and transit routes, i.e. sailing lanes between harbors in the Pacific and the Atlantic via the Arctic Ocean.

The study also comprised three transportation corridors in southern waters connecting the Arctic Passages to world markets: the Northern Maritime Corridor, connecting the Northeast Passage to the European continent and to the east coast of the USA, the “Northern Pacific Corridor”, connecting the Northeast Passage, the Trans Polar Passage and the Northwest Passage to Asian markets and the western coast of North America, and the “Fram Corridor” between Greenland and Svalbard, connecting the Trans Polar Passage to the North Atlantic.

These are some of the main findings of the study:

·       Most of Arctic resources, in particular oil and gas, are to be found in the Russian Arctic. About 91% of her natural gas production and about 80% of her natural gas reserves are in the Arctic. It is estimated that 90% of Russia’s offshore reserves of hydrocarbons are located in the Arctic. According to the United States Geological Survey 22% of the world’s undiscovered oil and gas are to be found in the High North and most of it are thought to be in offshore fields in Russian controlled Arctic waters.

·       The ice-edge will steadily migrate northward along with a further thinning and weakening of sea ice. Over the last 30 years, sea ice thickness in the Central Arctic Ocean has decreased by 42%, a decrease of 1.3 meters – from 3.1 to 1.8 meters, with an accompanying reduction of some 73% in the frequency of deep pressure ridges. The influx of multi-year ice from the Central Arctic Ocean to the coastal areas has decreased by 14% from 1978 to 1998. This decrease greatly benefits economic activities in coastal waters. Model experiments suggest a further decrease in sea ice thickness of some 30 %, and an ice volume decrease between 15 and 40% by 2050. One postulate is that summertime disappearance of the ice cap is possible in the course of this century and that significant areas of the Arctic Ocean may become permanently free of sea ice in summer.

·       There is an obvious and at time considerable distance advantage involved in using the Arctic Ocean between ports in the Pacific and those in the Atlantic, as compared to the Suez and Panama Canals. Most of the North American West coast, the Russian east coast, Japan, South-Korea and China are all closer to the European Union/European Economic Area through the Arctic than by way of the Mediterranean. Thus viewed, the Arctic Ocean is indeed an ‘industrial Mediterranean’- a shortcut.

·       The Northeast Passage is by far the most attractive of the three passages when it comes to offer spaces of maneuverable ice. This implies that Russia, controlling the waters of the Northern Sea Route could have a key role in regional shipping between the most industrialized regions of the world.

·       Three factors points to the NSR as the sea route that will be favored in the foreseeable future. Great stretches of the route goes along or through parts of the Arctic where great amounts of resources are found or likely to be found both onshore and offshore. The second factor that favors the NSR is the already established and continuously developing infrastructure along the route. And, the third factor is less challenging ice conditions and the longer sailing season during the summer.

·       Several vulnerable Large Marine Ecosystems are identified on the three Arctic transportation passages. It has not been documented any significant negative impacts on the ecosystems on the Northeast, Northwest, and Trans Polar Passages caused by shipping activities to date.

·       At present, there are no internationally binding requirements when it comes to standards for ice classing of vessels, equipment and crew training to Arctic operational conditions. National regulations apply to Arctic coastal waters, but they are not harmonized, compatible nor adequate. Several nations support an initiative to establish a set of mandatory requirements to ensure safe shipping in the Arctic in the future. As of the present, there is not an adequate preparedness for oil spills, neither on the Northeast Passage nor the Northwest Passage. The lack of infrastructure, response and necessary combating equipment makes the ecosystems vulnerable if accidents should occur.

·       There are limited aids to navigation and traffic service systems in support of navigation along all passages. Available Search & Rescue facilities diverge between the Northeast, Northwest and the Trans Polar Passages. Global Positioning Systems (GPS) are adequate for the coastal and marine routes of the Northern Sea Route, but of restricted value to the Northwest Passage. The GPS coverage is not optimal in high latitudes which mean that position accuracy for the Trans Polar Passage is insufficient.

·       The Northeast Passage is the only one of the passages where sailing fees have formally been introduced. The main fee is a charge for the passage through the Northern Sea Route with icebreaker escort. The system of fees has changed several times, where the principle has been that the total traffic should cover the total costs.

·       The international insurance market is willing and able to underwrite risks in terms of shipping on the three Arctic transport corridors, but on a case to case basis as no fixed pricing system has been established.

·       The entire Arctic Ocean is subject to applicable international ocean law, most prominently UNCLOS III, but also other instruments of international law. In addition, the Northeast Passage and Northwest Passage are governed by national legislation passed by Russia and Canada, respectively, with certain related disputes with the United States in areas of conflicting jurisdiction.

·       Indigenous peoples in the Arctic have worked steadfastly towards self-determination to preserve their way of life as well as having a share in the resource development in the region. Shipping may on one hand have negative implications on their traditional way of life while on the other hand it is an integrated part of the economic development of the Arctic which is welcomed also by the indigenous peoples.

An important lesson to be learned from the history of the Arctic, in particular inside the Russian Arctic, is that the development has been at its most rapid during periods with close cooperation between Russian and foreign interests.

Centre for High North Logistics, 2010, CHNL’s Shipping in Arctic Waters Study, CHNL.©