Polar routes will not Replace Suez
This is short version in English of an article with the same name in Icelandic which was 4 times longer and therefore carried more details.
Due to global warming and melting of the polar ice, the possibility of direct sailings between East Asia, Europe, and even US has been discussed in various forums for over a decade.
In Iceland, the discussion about the possibility of transhipment of containers coming through the Northern Sea Route (NSR) to and from Europe and US has been driven by successive governments in Iceland and the President. The arguments presented have been in sync with a number of articles on opening of the arctic for commercial container shipping between continents, and the transhipment option repeated frequently.
As containerships on the East-West routes became larger and the slot cost reduced significantly, it became apparent that the NSR could not compete with the Suez route due to draft restrictions and fees collected by Russia for passage with or without icebreaker. Therefore, the focus shifted to vessels capable of sailing across the North Pole. Such vessels have not been built; however, the discussion is based on unlimited draught over the pole thereby no size limitation of vessels. Concept presented by Aker Arctic Technology for double acting containership/icebreakers[1] has been used for assessing the economic viability of 20,000 TEU polar vessels especially in “Northern Sea Route, January 2009”[2]
After exploring a good selection of the available material I came to a different conclusion. I wrote an article in an Icelandic news magazine, Kjarninn, which was published in May, where I reviewed the main arguments. The main ideas of the article have been summarized in three main bullet points:
1. Container transport through the NSR/ Arctic will be possible soon and the route is much shorter than the route through Suez Canal. The most common comparison is the distance from Yokohama to Rotterdam via the Arctic (7,825 NM) with the Suez option (7,825 NM)[3] or the distance from Yokohama to Hamburg via the Arctic 7,356 NM versus Suez 11,585 NM[4]. Obviously the two measurements differ while the saving is on average 33% of the Suez route between these 2 ports.
2. Suez will not meet the demand in the near future and the biggest vessels will not pass through. Therefore, global shipping needs an alternative to Suez
3. Transhipment port is needed as the main port of Europe cannot handle the biggest vessels or ever even larger vessels. Recommended transhipment hub in Iceland meets most criteria, like location relative to the route, it has enough depth, land, energy, and skills for terminal handling large volumes in a short window of time.
The first argument is rejected on multiple grounds:
1. Container transport through the NSR/ Arctic will be possible soon and the route is much shorter than the route through Suez Canal.
a) In the foreseeable future, container operators cannot rely on year round availability of passage which ensures maintaining of reliable schedule integrity, the main prerequisite for successful container operation.
b) A container operation between East Asia and Europe is based on loading and discharging at strings of ports, on both sides and a couple of ports in between, generally no less than 10 ports in leg. Therefore, any comparison in distances should be based on the last port in Asia and first port in Europe, which would be Yantian (or nearby ports) in China and Le Havre in France. The difference in distance using NSR compared with Suez is then reduced to 1,200 NM 2.6 days steaming at 19 knots instead of 9.3 days at the same speed.
The second argument is also rejected:
2. There is a need for a new sailing option as Suez will not meet the demand in the near future and the biggest vessels will not pass through.
a) Suez Canal has been widened and deepened and there is no end in sight to the capacity of both the existing canal and announced expansion being it within the same canal or totally or partially new canal alongside the existing one. The expansion will ensure faster transit time through the canal.
b) Panama Canal is being expanded to accommodate 13,000 TEU vessels.
c) There is an interest, but there may not be an obvious economic case for Nicaragua canal which would be scoped to accommodate larger container vessels than are now in operation. The biggest impact of this discussion might be to encourage the Panama authority to start planning for 250,000 DWT, 20,000 TEU+ option in the near future to ensure Panama’s place despite obvious shortening of the route by 500 NM when passing through the Nicaragua canal compared with Panama.
d) The Strait of Malacca, the historic limitation to size of containerships, might be bypassed by using canal through Krai in Thailand which on top of the opportunity for passage of larger ships shortens the distance by 600 NM between China and Europe.
The third argument is not viable on multiple grounds:
3. Transhipment port is needed as the main port of Europe cannot handle the biggest vessels or ever larger vessels.
a) There is no evidence that ports in Europe cannot adapt to even larger ships. Currently the biggest ships are 400 m long, have 23 rows across (59 m wide) and a draught of 15.5 – 16 m. 24,000 TEU ships are on the drawing board and will be longer, and probably wider. Due to the limitation of Strait of Malacca[5], it is not likely that they will have much greater draught than today. The biggest challenge is the width, as longer reach than 24 rows means that most terminals need to upgrade cranes and eventually strengthen berths for increased quay loads for STS cranes.
b) With even larger ships which are technically possible, the unit cost will reduce somewhat; however, the challenge to fill ever larger tonnage may be the biggest obstacle to larger ships. One can look at the largest super tankers ever built are replaced with lesser tonnage.
c) The only argument for looking at transhipment is that when the Arctic will become passable for specialized ships which would cost at least twice the cost of same size regular ships, the owners would like to use them exclusively in harsh waters and use regular ships in ice-free waters. Also, that such ships would have a deeper draft so they might not float into European ports. By calling only one port on the continent with the polar vessel and feeder from there the transit time and cost wouldn’t be more attractive. Alternatively look at the feasibility of container terminal in Longyearbyen, whether there is enough depth and sufficient land for container terminal I am not sure but if possible the use of polar ships will be restricted to waters requesting such tonnage .
d) The best locations for transhipment in Iceland are Reydarfjordur at 14⁰ West and Finnafjordur at 15⁰ West. The shortest route over the North Pole to the big continental ports is heading close to 180⁰. There are port options in Norway which are closer to the route by 200 NM. If the NSR is used then the deviation to Iceland is 660 NM compared with straight sailing to the Continent. Generally transhipment will delay the arrival of containers by 3-4 days, more than the potential shortening by using the Arctic.
e) Investment in container terminal is a venture with payback of 20 years or more. If there is a doubt about the lifetime of the investment the demand for return on the investment will take the risk and shorter timeframe into account which is likely to render cost of eventual transhipment investment to be unviable.
End note
The article was well received. In the Arctic discussion transhipment of goods coming through the Arctic is no longer “just around the corner”.
[1]Arctic Shuttle Container Link from Alaska US to Europe, March 2006,
http://www.marad.dot.gov/documents/Arctic_Analysis_November_08.pdf http://www.akerarctic.fi/publications/pdf/norilsk.pdf
[2] http://library.arcticportal.org/1566/1/Skyrsla_um_Nordurishafssiglingar_2_feb_2009.pdf
[3] “Fyrir stafni haf” p 25, Ministry for Foreign Affairs, Iceland, 1 February 2005
[4] Presented at IAPH World conference in Jerusalem 21 March 2012 in a presentation by
[5] http://www.marineinsight.com/marine/marine-news/headline/what-are-malaccamax-vessels/