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More ships take shortcut via less icy Arctic

A Danish shipper says it saved a third of the cost and nearly half the time in shipping goods to China by taking advantage of receding Arctic ice to sail north of Russia instead of via the Suez Canal.
The Sanko Odyssey just completed a trip to China via Russia's Arctic waters.
The Sanko Odyssey just completed a trip to China via Russia's Arctic waters.Nordic Bulk Carriers
/ Source: Reuters

Danish shipping company Nordic Bulk Carriers said it has saved a third of the cost and nearly half the time in shipping goods to China by taking advantage of receding Arctic ice to sail north of Russia instead of via the Suez Canal.

As the climate warms up and ice melts, many shipping companies are eyeing the Northern Sea Route as a way to cut voyage times and costs in the future.

"We see great potential in this," Nordic Bulk Carriers Director Christian Bonfils told Reuters. "When we save 22 days on transportation, it is very, very good business for us."

The company plans to make four to five such trips next summer, he said.

On Aug. 30, its Sanko Odyssey, the world's biggest ice-classed bulk carrier, set out from the Russian port of Murmansk along the Northern Sea Route to arrive in China on Sept. 23 after 23 days at sea, which according to Bonfils is 22 days less than sailing through the Suez Canal.

It was the second voyage by a commercial bulk carrier through the icy sea lane.

Depending on the particular ports of a route, the distance to China is roughly 30 percent shorter. Another Nordic Bulk Carriers ship made the trip in the summer of 2010.

The ship was carrying 70,000 tons of iron ore concentrate and was escorted by a Russian icebreaker through the Arctic. It arrived at the Chinese port of Jingtang.

"It is a good alternative to the Suez — especially for goods leaving countries like Norway, Finland, northern Russia or the Baltic countries," said Bonfils.

Even if the Arctic summer route does become a feasible alternative, however, it is unlikely to get heavy traffic.

"This route will never be the Suez. It would be like having a Suez that was only open four months a year, and you didn't know which months those were because it depended on the weather," Bonfils said.

Those drawbacks are offset by the time and fuel saved, Bonfils said. In the latest voyage, its Japanese-built vessel saved 1,000 tons of fuel by taking the northern route.

The biggest obstacle in sailing the remote icy waters is not ice, but Russian bureaucracy, Bonfils said. Permission from the Russian authorities and at least one Russian atomic icebreaker as an escort are required to use the route.

"The biggest bottleneck is that tariffs, rules and regulations that need to be settled on the Russian side," he said.

Still, negotiations for the 2011 trip were markedly easier than for the 2010 voyage, Bonfils said.

"Now we know the decision-making process — it just has to be sped up and simplified," he said, adding that Russia has promised to simplify the system.

Russian Prime Minister Vladimir Putin last week predicted Arctic shipping routes along Russia's northern coast would soon rival the Suez Canal as a quicker trade link from Europe to Asia.

Officials at the Arctic Forum in the White Sea port city of Arkhangelsk said Russia must develop infrastructure to guard against oil spills, revamp ports and build more icebreakers to realize Putin's vision of shipping year-round.

"The shortest route between Europe's largest markets and the Asia-Pacific region lie across the Arctic. This route is almost a third shorter than the traditional southern one," Putin told participants, who included Iceland President Olafur Grimsson.

"I want to stress the importance of the Northern Sea Route as an international transport artery that will rival traditional trade lanes in service fees, security and quality," Putin said. "States and private companies who chose the Arctic trade routes will undoubtedly reap economic advantages."

With scientists across the globe predicting a thaw linked to climate change could deliver ice-free Arctic summers within a decade, Russia's Sovkomflot cargo line and others have increased test shipments via the polar region.

The Arctic was crossed in a record eight days last month by the STI Heritage tanker, owned by Scorpio Tankers Inc., powering from the United States to Thailand.

In August, Sovkomflot's supertanker, the Vladimir Tikhonov, ferrying 120,000 tons of natural gas condensate, became the largest vessel of its kind to forge the passage.

Russia's Novatek, which is eyeing the short-cut as part of an ambitious project to ship liquefied natural gas from the Yamal peninsula, estimates the route will slash 10-15 percent off shipping costs.

In another marker of rising interest, Rosatomflot, which sends one of its 10 atomic-powered icebreakers to smash through ice as thick as six feet, received 15 requests to escort Arctic voyages in 2011, against four in 2010.

To meet demand, Putin said Russia will spend $1.2 billion through 2014 on adding to its atomic icebreaker fleet and plans to build three more by 2020.

One of the chief lures of the Arctic transport corridor is as a means of avoiding pirates in the waters off East Africa, Sovkomflot's deputy chief Evegeny Ambrosov told forum guests.

Worried over tanker traffic in the Arctic's pristine waters, in addition to oil and gas drilling, environmentalists warn it could be far harder to stem any oil leaks, for instance, than in the Gulf of Mexico after BP's catastrophic spill in 2010.

"Each company that produces risks in the Arctic — from oil production to transportation — should ... donate a certain amount per barrel to a fund that would secure rehabilitation and capacity for urgent action," said the World Wildlife Fund's Evgeny Schwartz.