Plausible Futures for Arctic Marine Navigation

(from AMSA Report 2009)

 

Marine use of the Arctic Ocean is expanding in unforeseen ways early in the 21st century. The continued depletion of natural resources in the world has led to an increase in interest in developing Arctic natural resources, and this interest has fostered a transformation of marine activity in the Arctic. In addition, regional climate change and the resulting Arctic sea ice retreat are providing for increased marine access in all seasons throughout the Arctic basin and its coastal seas. The AMSA takes a circumpolar view, but has also considered many regional and local issues where the impacts of expanded marine use may be greatest. The AMSA has also sought the views of the Arctic states, indigenous residents of the Arctic and many non-Arctic stakeholders and participants within the global maritime industry, so as to involve multiple perspectives.

The Arctic Climate Impact Assessment (ACIA) documented the recent changes in the Arctic sea ice cover: sea ice thinning, extent reduction and a reduction in the area of multi-year ice in the central Arctic Ocean. In addition, model simulations for the 21st century (using Global Climate Models) indicate increasing ice-free areas in all coastal Arctic seas, suggesting plausible increases in marine access and longer seasons of navigation. The AMSA has used the Arctic sea ice information from the ACIA and the 4th Assessment of the Intergovernmental Panel on Climate Change as guides to what marine access could be in future decades. The key task for the AMSA has been to understand more clearly the uncertainties that might shed light on the determinants of future Arctic marine operations. One way to do this is through the creation of a set of scenarios that are plausible, relevant and diverse.

During 2007, scenario workshops were held in San Francisco (April) and Helsinki (July) to create a framework of plausible futures for Arctic marine navigation to 2050. The workshops were facilitated by Global Business Network, a pioneer in the application and evolution of scenario thinking, and drew some 60 maritime experts and stakeholders. The purpose of these strategic conversations was to identify the major uncertainties that would be critical to shaping the future of Arctic marine activity to 2020 and 2050. The use of different stories of future marine activity can indicate how critical uncertainties might play in ways that can challenge the Arctic states to make timely and effective decisions. The scenario narratives provide a rich source of material for strategic discussions about the future of marine safety and marine environmental protection among a diverse group of Arctic and non-Arctic stakeholders and decision makers.

Participants in the AMSA scenario workshops identified nearly 120 factors and forces that could shape the future of Arctic marine activity by 2050. Among those factors deemed most important were: global trade dynamics and world trade patterns; climate change severity; global oil prices; the marine insurance industry; legal stability (governance) of marine use in the Arctic Ocean; the safety of other global trade routes (for example, the Suez and Panama canals); agreements on Arctic ship construction rules and global operational standards (International Maritime Organization); a major Arctic shipping disaster; limited windows of operation for Arctic shipping (the economics of seasonal versus year-round Arctic operations); the emergence of China, Japan and Korea as Arctic maritime nations; transit fees; conflicts between indigenous and commercial uses of Arctic waterways; new resource discoveries; an escalation of Arctic maritime disputes; a global shift to nuclear energy; and socio-economic impacts of global weather changes. This list of critical factors illustrates the great complexity and range of global connections surrounding future use of the Arctic Ocean (Table 6.1).

Key Uncertainties from the AMSA Scenarios Effort — Influences on the Future of Arctic Navigation (Table 6.1: Key uncertainties from the AMSA scenarios effort. Source: AMSA):

• Stable legal climate

• Radical change in global trade dynamics

• Climate change is more disruptive sooner

• Safety of other routes

• Socio-economic impact of global weather changes

• Oil prices ($US55-60 to $US100-150)

• Major Arctic shipping disaster

• Limited windows of operation (economics)

• Global agreements on construction rules and standards

• Rapid climate change

• China, Japan and Korea become Arctic maritime nations

• Transit fees

• Conflict between indigenous and commercial use

• Arctic maritime enforcement

• Escalation of Arctic maritime disputes

• Shift to nuclear energy

• New resource discoveries

• World trade patterns

• Catastrophic loss of Suez or Panama canals

• Maritime insurance industry engagement

The AMSA scenarios work created six potential matrices for framing a set of scenarios. Pairs of critical factors or uncertainties were chosen and crossed to produce candidate frameworks:

• Indigenous Welfare crossed with Resource Exploitation

• New Resource Development crossed with Maritime Disasters

• Climate Change crossed with Level of Trade

• Indigenous People crossed with Rise of Asia

• Legal Regime crossed with Value of Natural Resources

• New Resource Development crossed with Legal Regime

The strengths, weaknesses and applicability to the Arctic of each of these matrices were discussed. Through brainstorming and plenary discussions, two primary drivers and key uncertainties were selected as the axes of uncertainty for the final AMSA matrix:

Resource and Trade: The level of demand for Arctic natural resources and trade. This factor exposes the scenarios to a broad range of potential market developments, such as the rise of Asia or regional political instabilities. More demand implies higher demand from more players and markets around the world for Arctic resources, including increased access for trade in the Arctic Ocean. Less demand implies fewer players interested in fewer resources.

Governance: The degree of relative stability of rules for marine use both within the Arctic and internationally. Less stability implies shortfalls in transparency and a rules-based structure, and an atmosphere where actors and stakeholders tend to work on a unilateral basis. More stability implies a stable, efficiently operating system of legal and regulatory structures, and an atmosphere of international collaboration.

The chosen axes met three key criteria: degree of plausibility, relevance to the Arctic and maritime affairs and being at the right level or threshold of external factors. The roles of global climate change and continued Arctic sea ice retreat are fully considered in the AMSA scenarios. Retreating Arctic sea ice acts as a facilitator and is assumed to provide opportunities for improved marine access and potentially longer seasons of navigation. For the AMSA, globalization of the Arctic and development of natural resources are the primary drivers for increased marine use in the region. Greater access facilitates that use, but economic drivers are considered paramount.

Table 6.2 illustrates the crossed uncertainties (Resources & Trade and Governance) and outlines four resulting scenarios central to the message of the AMSA. The Arctic Race scenario, with high commodity prices and demand for Arctic natural resources, implies an “economic rush” for development, based in part on global markets, not a geopolitical “race” for sovereign rights or new territory. This is a region where the international maritime community has moved into the Arctic Ocean for resource extraction and marine tourism at a time when there is lack of an integrated set of maritime rules and regulations, and insufficient infrastructure to support such a high level of marine activity.

Polar Lows is a future of low demand for resources and unstable governance: a murky and undeveloped future for the Arctic. There is minimal marine traffic in the Arctic Ocean in this scenario and low attention is given to regulations and standards that remain weak and undeveloped.

Polar Preserve is a future of low demand, but with a stable and developed governance of marine use. This also is a world where environmental concerns, with geopolitical and economic interests focused elsewhere, drive a movement toward a systematic preservation of the Arctic. In this scenario, Arctic oil and gas reserves are disappointing, and there is strong public concern about climate change (environmental awareness is high) and conservation impacts on Arctic affairs.

Arctic Saga is a future of high demand for resources and trade coupled with a stable governance of marine use. This world leads to a healthy rate of Arctic development that includes concern for the preservation of Arctic ecosystems and cultures, and shared economic and political interests of the Arctic states. There is improved marine infrastructure making marine transportation safer and more efficient, supporting systematic and safe development of oil, gas and hard minerals.

Challenges of the Arctic States

A significant challenge facing the Arctic states is to recognize the international nature of shipping in the Arctic Ocean and to effectively engage with a very broad range of non-Arctic actors, stakeholders and decision-makers. Recognition of this global reach of the maritime industry also includes a responsibility to work toward balancing historic navigation rights under UNCLOS with regimes and mechanisms designed to enhance marine safety and to protect the Arctic marine environment. A major task will be for the Arctic states to convince the IMO membership to take into account the uniqueness of marine operations in the Arctic and work within the IMO and other global organizations for international standards. The Arctic states must also recognize there may be a host of new maritime players at the table with a stake in the future use of the Arctic Ocean.

If the retreat of Arctic sea ice continues, marine access should improve throughout the Arctic basin. Complementing this change will be new Arctic ship designs that will also allow greater access and independent operations (without icebreaker escort) during potentially longer seasons of navigation. Such extended marine operations will require greatly expanded search and rescue cooperation and expanded regional environmental response networks. Information and data sharing may also be a key to the future of the maritime Arctic.

Expanded surveillance and monitoring of marine operations, particularly in the central Arctic Ocean, will require agreements among the Arctic states (and other interested parties such as flag states) for the rapid transfer of ship transit information. Monitoring of the environment could be enhanced by the establishment of a Sustainable Arctic Observing Network (SAON), an activity that was promoted during the International Polar Year. Expanded traffic in the central Arctic Ocean will provide new and unique challenges to the Arctic states and the global maritime community, since there will be a lack of communications, salvage and other critical infrastructure.

The AMSA scenarios effort has identified three key issues, among many, for the Arctic states: the ongoing globalization of the Arctic through natural resource development and resulting destinational marine traffic; arrival of the global maritime industry in the Arctic Ocean with Arctic voyages of large tankers, cruise ships and bulk carriers on regional and destinational voyages; and the lack of international policies, until now, in the form of maritime governance to meet this arrival.

The Arctic states will continue to be challenged by a widespread lack of adequate maritime infrastructure to cope with current and future levels of Arctic marine operations. In order to better enhance marine safety and environmental protection, the Arctic states working within the IMO could develop an integrated, or complementary, system of rules and regulations governing Arctic marine activity. The Arctic states must continue to engage non-Arctic states and global institutions that will influence the future of Arctic marine operations. More cooperation in Arctic maritime affairs among the eight Arctic states will be an imperative to address complex marine use issues in an uncertain future.

Future Natural Resource Development in the Arctic

A U.S. Geological Survey report, issued in July 2008, indicates the Arctic may contain as much as one-fifth of the world’s undiscovered oil and natural gas. More specifically, the assessment found the Arctic to potentially contain 90 billion barrels of undiscovered oil and 1,670 trillion cubic feet (47 trillion cubic meters) of undiscovered natural gas, representing 13 percent of the undiscovered oil and 30 percent undiscovered natural gas. Of the total for undiscovered oil reserves, more than half are estimated to occur in geologic provinces in the Alaska Arctic (offshore and onshore), the Amerasian Basin (offshore north of the Beaufort Sea) and in West and East Greenland (offshore). More than 70 percent of the undiscovered natural gas is estimated to be located in three areas: the West Siberian Basin (Yamal Peninsula and offshore in the Kara Sea), the East Barents Basin (location of the Russian Federation’s giant offshore Shtokman field) and the Alaska Arctic (offshore and onshore). Each of these regions would require vastly expanded Arctic marine operations to support future exploration and development. Several regions, such as offshore Greenland, would require fully developed Arctic marine transport systems to carry hydrocarbons to global markets.

Despite the recent global recession, two Arctic nations, Norway and the Russian Federation, have already made significant investments during recent decades in developing Arctic hydrocarbons in offshore Arctic Norway and northwest Russia’s offshore systems in the Pechora Sea. Arctic marine transport systems support each of these developments, and oil and LNG tanker traffic from the Barents Sea to world markets is expected to continue for several decades.

For the Russian Federation, future investments in developing the Shtokman gas field west of Novaya Zemlya in the east Barents Sea are evolving. This field, understood to be one of the world’s largest gas fields, lies 600 kilometers offshore and in depths of water to 2,000 meters. Exploration and development of this large, offshore region will require extraordinary levels of Arctic marine operations, most conducted in waters that are not ice-covered, but under extreme cold temperatures. Natural gas from Shtokman would be transported by sub-sea pipeline or a marine tanker system, either of which would increase marine operations in this region of the Arctic. For the United States (Alaska) and Canada, where offshore Arctic lease sales were held for the Chukchi (U.S.) and Beaufort (Canada) seas in 2008, the future remains uncertain. The leases represent long-term, strategic investments. Marine exploration of the Arctic offshore should continue during the next decade.

One of the key factors in future Arctic offshore developments is that a majority of the seabed oil and gas resources are located within the Exclusive Economic Zones (EEZs) of the Arctic states (i.e., Arctic offshore regions of Alaska, Canada, Norway, Greenland and the Russian Federation). While there remain several, regional boundary disputes where potential resources may overlap, the general jurisdictional issues are clear and do not appear to be significant obstacles to future Arctic hydrocarbon development.

Hard minerals development in the Arctic will continue to be influenced by global commodities markets and prices. However, the largest zinc mine in the world (Red Dog in the Alaska Arctic) and the largest nickel mine (Norilsk in Siberia) will continue to be solely dependent on marine transport systems - seasonal in the case of Red Dog and year-round operations for Norilsk Nickel. It is plausible that the summer, ice-free season for support to the Red Dog mine could be extended as Arctic sea ice continues to retreat in the Chukchi Sea.

The Mary River iron ore deposits on Baffin Island, Nunavut in the Canadian Arctic represent a highly valuable mineral resource (high grade iron ore of 67 percent iron). Plans have been underway for some time to develop a mining operation and ship to European markets 18 million tons of ore each year, estimated to last for a minimum of 25 years. This is a large Arctic project that would involve a fleet of ice-capable cargo carriers operating on a year-round basis between Baffin Island and Europe. Ice navigation would be required for operations in the winter and early spring.

Greenland geology records more than four billion years of earth history, preserving significant mineral deposits. For example, the Kvanefjeld Project near the southwest tip of Greenland represents a multi-element deposit containing rare elements, uranium and sodium fluoride. Potentially world class and multi-commodity ore deposits exist in other regions of coastal Greenland. The exploration and development of these mines will require Arctic marine transport systems to carry these scarce commodities to global markets.

Future Arctic Marine Tourism

Tourists now represent the single largest human presence in the Arctic and the overwhelming majority of these visitors travel aboard ships. The Arctic’s once forbidding marine environment now attracts growing numbers of tourists aboard more and larger ships to a greater diversity of Arctic destinations. The future of Arctic marine tourism represents serious challenges to public authorities and businesses seeking to address the issues of safe passage and resource management.

The growing popularity of polar marine tourism and the cruise industry’s intentions to expand and diversify its polar market are creating significant management challenges. Foremost among those challenges are ice and weather conditions, lack of reliable hydrographic information, insufficient capacity of infrastructure to respond to emergencies, remoteness of tourist transits and destinations and the sheer size of vessels serving the polar cruise market. The legal and regulatory context defining appropriate ship and tourism operations consists of international treaty conventions, national laws, adopted regulations, industry guidelines and consensus-based guidelines brokered by non-governmental organizations. Governments, the tourism industry and non- governmental organizations are all determining the operational parameters for polar marine tourism through a variety of mechanisms.

The eight Arctic nations have enacted and enforce numerous laws and regulations governing marine operations and pollution. Based on international regulations, the national laws provide a framework to protect the Arctic environment, promote human safety and provide for a coordinated response to marine incidents, as well as enabling cooperation among the Arctic archipelago of Svalbard and prohibit the use of heavy fuel oil. The new rules will limit to 200 the number of passengers allowed on board each ship that enters nature preserves on East Svalbard, and those tourists who are allowed entry are paying a special environmental tax. Another approach to the management of marine tourism, currently implemented by the U.S. government and the State of Alaska, is the use of onboard rangers who perform monitoring and pollution enforcement responsibilities. Some Arctic governments find themselves with the challenge of simultaneously trying to protect the environment while also promoting tourism.

Expedition cruise ship companies operating in both the Arctic and Antarctic are utilizing self-imposed guidelines to enhance marine operations, visitor safety and provide environmental and cultural resource protection. The creation and application of self-imposed industry guidelines for the conduct of environmentally responsible and safe polar tourism began with the formation of the International Association of Antarctic Tour Operators (IAATO) in 1990. The guidelines specifically address the management issues of ship operations, visitor behavior ashore, emergency response plans, the protection of Antarctica’s marine and land resources and the preservation of Arctic states. National attempts to regulate marine tourism extend from exceedingly stringent controls to considerably more flexible management techniques. Norway’s government, for example, plans to significantly restrict cruise ship traffic around the the southern continent’s heritage resources. IAATO’s Emergency Contingency Plan has been successfully implemented on several occasions and is constantly updated to improve emergency response capabilities. Given the fact that these guidelines are directly relevant to polar conditions, marine tourism operations and the management of tourists when ashore, Arctic governments, communities and tour operators should benefit from their application to Arctic tourism.

The Association of Arctic Expedition Cruise Operators (AECO) was founded in 2003 for the purpose of “managing respectable, environmentally friendly and safe expeditions in the Arctic. The members agree that expedition cruises and tourism in the Arctic must be carried out with the utmost consideration for the vulnerable natural environment, local cultures and cultural remains, as well as the challenging safety hazards at sea and on land. AECO members are obligated to operate in accordance with national and international laws and regulations and agreed upon AECO by-laws and guidelines.” AECO’s offices are located in Longyearbyen, Svalbard, Norway and its geographical range in 2008 was Svalbard, Jan Mayen and Greenland. AECO developed its guidelines with considerable input from the Governor of Svalbard, Norwegian Polar Institute, World Wildlife Fund for Nature’s Arctic Program, as well as Greenland Tourism, Greenland Home Rule, The Environmental and Nature Agency, and others. Participation by all Arctic coastal states would strengthen the association and its goals.

The WWF’s program, in cooperation with tour operators, conservation organizations, managers, researchers and representatives from indigenous communities, has created the Principles and Codes for Arctic Tourism. The 10 principles encourage tourism development that protects the environment as much as possible, educates tourists about the Arctic’s environment and peoples, respects the rights and cultures of Arctic residents and increases the share of tourism revenues that go to northern communities.

Infrastructure, defined for the purpose of marine tourism management, includes both the physical and human resources needed to prevent harm potentially arising from ship operations. Polar tourism currently operates in regions of the world that have either few or no infrastructure resources (See page 154). In many regions of the Arctic, the capacity to prevent loss of human life, protect property, contain environmental contamination, monitor sensitive resources and enforce laws is greatly diminished by remoteness, lack of capacity and severe environmental conditions.

Arctic nations, both individually and collectively, are legally responsible for providing infrastructure in order to prevent loss of life, property and environmental damage. These responsibilities are clearly within their sovereign domain of providing for the health, safety and welfare of their citizens, visitors and their environmental resources. The amount of information, facilities, equipment and human resources is not sufficient to meet the Arctic’s current and anticipated volume of vessel traffic. For example, the number of passengers aboard polar cruise ships far exceeds the capacity of search and rescue assets, medical facilities and shelters needed to protect evacuees from the cold.

A plausible future for Arctic marine tourism is that it will continue to grow, diversify and geographically expand as current obstacles are overcome. The most significant barriers influencing Arctic tourism include physical access, the ability of tourists to pay, the time and cost associated with traveling to remote destinations, the availability and capacity of infrastructure, environmental conditions and jurisdictional restraints that prohibit or restrict entry.

Arctic marine tourism’s most likely future is that larger numbers of tourists, traveling aboard increased numbers of ships of all types, will be spending more time at more locations. The Arctic’s environment, community infrastructure, social institutions and cultural values will be increasingly vulnerable to tourism-caused impacts. Simultaneously, Arctic governments, communities and businesses increasingly promote tourism and invest their resources to expand this type of economic development. The cruise ship industry, responding to the popularity of polar tourism and clear evidence of profitability, is committed to send more ships with larger passenger capacities to Arctic destinations. All of these significant investments and aggressive promotion by industry, governments and communities insures that Arctic marine tourism will continue to grow and that its management is essential.

Challenges of Trans-Arctic Navigation

For more than three centuries explorers and entrepreneurs have envisioned a direct route across the top of the world between the Pacific and Atlantic oceans. However, the Arctic sea ice cover – more than 2,100 nautical miles of sea ice present except in summer – has always been a significant physical barrier to developing such a global trade route. Although no commercial cargo ship has yet to cross the central Arctic Ocean, there have been trans-Arctic voyages during the summer season along the Russian Federation’s Northern Sea Route and the Northwest Passage in the Canadian Arctic. Support was normally required by modern icebreakers leading ice-strengthened merchant ships in convoy. This system of transport was particularly the norm during the era of the Soviet Union when cargoes were carried during a short summer navigation season across the length of the NSR. In recent years, there were no cargo ships undertaking trans-Arctic voyages along either the NSR or NWP. Several ice-strengthened cruise ships and icebreakers have carried tourists on recent trans-Arctic voyages in summer. The fact remains that only six, high-powered polar icebreakers (nuclear and diesel-powered) have successfully navigated across the central Arctic Ocean and each of these voyages was conducted in summer.

The AMSA is focused on marine safety and environmental protection consistent with the Arctic Council’s mandates of environmental protection and sustainable development. Neither the Arctic Council nor this assessment are the appropriate vehicles to determine the economic viability of any potential Arctic trade route, whether destinational or regional, intra-Arctic or trans-Arctic using the NSR, NWP or the central Arctic Ocean. For the purposes of the AMSA, the marine safety and environmental protection measures to be developed and implemented in accordance with international laws are essentially independent of the mode of Arctic marine transport. It is the global maritime industry that will decide if and when the potentially shorter Arctic routes can be safe, efficient, reliable and economically viable in comparison to other routes across the world’s oceans. The marine insurance industry and ship classification societies will have significant influence in these route determinations, as will a host of other stakeholders and actors including investors and shipbuilders.

The AMSA has indicated, using a scenario-based strategic approach, that the primary mode of marine transport throughout the Arctic Ocean is destinational traffic related to natural resource development and regional trade. New economic linkages in the Arctic to global markets are influenced by commodities prices for scarce natural resources such as oil and gas, nickel, zinc, palladium, copper, platinum and high grade ore. Current and new Arctic marine transport systems and commercial ship traffic are primarily tied to the global demand for these resources.

The international media and proponents continue to provide broad visibility to the possibility of trans-Arctic navigation, postulating that commercial routes will be viable and fully functional in the near future. This premise is based in large measure on the recent and extraordinary retreat of Arctic sea ice that has garnered worldwide attention. Touted are the large distance savings on global trade routes by using the Arctic Ocean; one example is the nominal 11,200 nautical mile route between Rotterdam and Yokohama (using the Suez Canal), versus a 6,500 nautical route across the top of the world. Many maps are shown promoting these potential marine trade routes without indicating a key factor - that the Arctic’s sea ice cover will be present for a majority of the year during the century. Just how plausible is trans-Arctic shipping given that the Arctic sea ice cover remains, but is a less imposing physical barrier?

The observed record of Arctic sea ice noted in Section 2 indicates decreases in both extent and thickness during the past five decades. Global climate model simulations of Arctic sea ice indicate trends of increasing areas of the coastal Arctic Ocean that may be partially ice-covered or even open water. No credible scientific source, though, is arguing that there will be a complete disappearance of the Arctic sea ice cover. The models do indicate a strong possibility of an ice-free Arctic Ocean for a short period of time in September sometime in the future. Again, the significance of this physical change is that multiyear ice would disappear - no sea ice would survive the summer melt season and only new ice would grow through the autumn and winter months during the long polar night. It is uncertain how long the ice-free period will be during the late summer or exactly when it will occur in any given year. It could be a window of time as brief as a few days or several weeks, or nearly ice-free conditions could last longer in the central Arctic Ocean. However, most of the potentially navigable spring, summer and autumn months should remain ice-covered with ice that may be thinner, but more mobile, than in previous decades. The year-to-year variability of sea ice in coastal seas and straits, such as those along the NSR and NWP, will surely remain a challenge in evaluating risk for insurance purposes and determining the overall reliability of Arctic marine routes. The length of the navigation season in all Arctic regions remains uncertain from a sea ice perspective, before other factors such as ship performance and icebreaker support systems are applied.

Key Questions for Trans-Arctic Shipping

The complexity of the trans-Arctic navigation can be viewed through the lens of a range of key questions and issues:

1. From the previous discussion, if all or some regions of the Arctic Ocean will remain ice-covered for much of the year, the need for polar ships designed for at least limited ice operations is obvious. The question of whether these ships will be icebreaking carriers in their own right and capable of independent ice operations is important. Will such ships require icebreaker convoy support and who will pay for the escorting icebreakers? Both are significant economic and safety issues. Relevant is the issue of whether polar icebreakers in support of navigation would be funded by commercial interests or Arctic state governments. Such commercial polar ships will also be more expensive to build and operate, and many questions remain as to their utilization beyond the Arctic Ocean on potentially long marine routes in the open ocean. Shorter routes in the Arctic imply that there is a potential for lower stack emissions into the lower Arctic atmosphere during transits. However, the presence of sea ice may require higher propulsion levels and ultimately similar or greater emissions during voyages compared with open ocean routes.

2. Can the trans-Arctic routes be used year-round in a reliable and safe manner? This is a significant question as many global fleets would wish to integrate seamlessly the new route with established marine routes. If an Arctic route is only viable for part of the year, will it be economically viable to use Polar Class ships on other routes? How viable and competitive would be a two to three month Arctic navigation season? How will shippers change and adapt their global shipping flows to a potentially seasonal operation along new and shorter Arctic routes? And what might be the response by the Suez and Panama canals to a seasonal route across the Arctic? Might they adjust their fee structures to accommodate this new competition?

3. Are Arctic routes economically viable today or in the near future? For nearly two decades the NSR has been open for international business under a fee structure. However, a limited navigation season presents the most significant challenge to the global maritime industry. The economic viability of all trans-Arctic options will be based in part on what ship speeds can be maintained in both ice-free and ice-covered waters to take full advantage of the shorter transit distances involved.

4. What are the risks assumed with using Arctic routes? For the marine insurers the risks could be higher if ships confront voyages of hundreds of nautical miles in ice. Higher risks for ice damage to ships and potential damage to cargoes in extreme cold temperatures, and the insufficient maritime infrastructure in the Arctic (such as salvage, ports and emergency response) will most likely be factors in determining future insurance rates. Navigation risks may also be compounded by operations in the polar night or during the spring/ autumn seasons where night operations in ice will be required. Shippers may also face risks with the possibility of schedule disruption and other reliability issues due to the inherent uncertainty of Arctic ship navigation. Many of these risk factors can be mitigated with the use of highly capable polar ships with experienced Arctic mariners.

5. Trans-shipment of cargoes may be a plausible option for using the Arctic Ocean for trans-Arctic shipments (See page 101). Which ports would be likely termination points at the ends of the Arctic voyages is a key question. The investment in terminals and in a fleet of Arctic ships that would operate year-round across the Arctic Ocean would be sizable. However, a key factor would be that the Arctic ships would be fully and solely employed on Arctic voyages. The addition of trans-shipment ports in the northern latitudes could add a new dimension to global trade routes and might add options for select cargoes to be carried from the Pacific to European ports, depending on the time delays associated with cargo transfers.

Potential Operators on Trans-Arctic Trades

The variability of Arctic sea ice and the uncertainties associated with sailing times make predictions for use by marine operators and certain vessel types (and trades) highly speculative. During the assessment’s scenarios creation effort, it was identified that large LNG carriers and oil tankers would not likely use trans-Arctic routes for trading. Today, all such ships sail from western Siberian ports and northern Norwegian ports westbound for North America and European ports. Future pipelines across Eurasia and additional pipelines to central Europe appear to be strong competitors to oil and gas carriers potentially sailing eastbound along the NSR.

The challenges for container traffic and carriers using trans-Arctic routes are many, including schedule reliability and the need to satisfy very tight customer supply chains. The potential safety of the ships and cargoes, and the actual fuel costs and time savings (with ice navigation required on portions of the routes) are significant considerations that are not well understood. The investment in ice class ships would also be a major issue since their operation would be sub-optimal in non-Arctic trades if year-round Arctic operations could not be achieved.

It is plausible that several types of dry bulk and break-bulk carriers could conceivably use seasonal trans-Arctic routes. Bulk metal ores and concentrates (many can be stockpiled at the mine or the destination port) could be shipped along the NSR and even across the central Arctic Ocean if spot charters could be arranged on an opportunistic basis. However, suitable ice class ships would have to be built or be readily available for charter. Break-bulk carriers of forest products and pulp might use the Northern Sea Route to trade from northern Europe to Pacific and North American ports. It is reasonable to assume that experimental voyages of a commercial icebreaking carrier could take place within the decade to test the operational and technical challenges associated with trans-Arctic navigation.

The Need for Economic, Comparative and Technical Studies

There is a dearth of rigorous economic studies related to the evaluation of trans-Arctic shipping routes. Comprehensive economic studies using cost-benefit-risk analyses are needed for all three potential routes of trans-Arctic shipping (central Arctic Ocean, NWP and NSR). Such studies need to fully identify the global demands and key economic needs for use of these polar routes. Additional related studies are necessary to determine the economic benchmarks and indicators for viable seasonal and year-round trans-Arctic traffic. What might be the key commodities suitable and economically viable for trading during even a partial or summer navigation season? Further economic research should be conducted on the potential for trans-shipment of cargoes across the Arctic Ocean in icebreaking carriers. An important component of such an analysis would be the economics of trans-shipment terminals/ports in Alaska, Iceland, northwest Russia and northern European sites.

Operational and technical studies are also lacking. A comparative analysis of icebreaker-assisted convoys versus independently operated, icebreaking carriers for all trans-Arctic options is required as new Arctic ship technologies emerge. Risk assessments related to Arctic ship operational challenges, the general lack of marine infrastructure throughout the Arctic Ocean and the potential for ice damages would be useful to the marine insurance industry and all ship owners contemplating trans-Arctic navigation. Cost effectiveness studies for different icebreaking propulsion systems, including nuclear propulsion, should also include analyses of future emissions controls that are socio-economic responses to global climate change. The increasing size of ships (on global trade routes) may also have significant implications for all modes of Arctic marine transport including the trans-Arctic option. Studies should identify any maximum limitations, technical challenges and operational constraints for these very large ships on Arctic trade routes.

The uncertainties and complex interactions of many driving forces of trans-Arctic navigation require significant research. While it may be technically feasible to cross the Arctic Ocean today by modern icebreaker or even using an advanced icebreaking carrier, the operational, environmental and economic implications and challenges for routine trans-Arctic voyages are not yet fully understood.

Arctic Council, 2009, Arctic Marine Shipping Assessment (AMSA), Arctic Council.©