Arctic Shipping: An Analysis of the 2013 Northern Sea Route Season by Malte Humpert

Arctic Shipping: An Analysis of the 2013 Northern Sea Route Season The Arctic Institute | Center for Circumpolar Security Studies

Europe

16%

Atlantic Ocean

Ind Oc

Europe

16%

Atlantic Ocean

9% 10% 3%

7% 2%

Pacific Ocean

150.1-200 100.1-150 50.1-100 25.1-50

Asia

57%

Chinaâ&#x20AC;&#x2122;s imports in bn USD, 2012 Percentage

Indian Ocean

12% share of imports

Source: International Trade

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Europe

16%

Atlantic Ocean

9% 10% 3%

7% 2%

Pacific Ocean

150.1-200 100.1-150 50.1-100 25.1-50

Asia

57%

Chinaâ&#x20AC;&#x2122;s imports in bn USD, 2012 Percentage

Indian Ocean

12% share of imports

Source: International Trade

Arctic Shipping:

An Analysis of the 2013 Northern Sea Route Season Malte Humpert

Cover photo: Trude Pettersen (with permission) Back cover photo: Peter Novacco/photo.polymu.com (with permission)

ÂŠ The Arctic Institute

October 2014

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, without the prior permission in writing of The Arctic Institute or as expressly permitted by law.

Executive Summary The 2013 shipping season on the Northern Sea Route (NSR) commenced on June 28 when the Russian-flagged vessel Varzuga, carrying 13,658 tons of diesel, entered the NSR at Cape Zhelaniya north of Novaya Zemlya. Over the course of 154 days a total of 49 vessels transported 1.35 million tons of cargo. A further 22 vessels transited the NSR unladen carrying 507,000 tons of ballast. The shipping season concluded on November 28 when the Russian-flagged vessel Bukhta Slavyanka exited the NSR at Cape Dezhnev in the Bering Strait. The Northern Sea Route Information Office lists 71 transits for 2013 but a closer analysis of the data shows that only 41 vessels traveled the entire length of the NSR and qualify as full transits. An additional 23 vessels either departed from or arrived at ports inside the NSR and did not fully transit it. A further seven vessels traveled exclusively within the NSR. Of the 41 ships that transited the full length only 30 carried cargo, transporting 1.19 million tons. Oil products, including diesel, fuel oil, and naphtha, made up the lion’s share of cargo on the NSR in 2013. In total 31 vessels carried 911,000 tons of oil products representing 67 percent of all cargo. Iron ore accounted for 203,000 tons representing 15 percent of all cargo in 2013. General Cargo, also called break bulk cargo, accounted for 7.4 percent of goods on the NSR. Coal deliveries represented 5.5 percent of traffic. LNG accounted for 5 percent of all NSR traffic in 2013 and a single vessel, the Arctic Aurora, carried 66,868 tons of LNG from Hammerfest to Chiba. The 2013 season saw two distinct peaks in shipping activity. In eastward direction, supplies for local communities, mainly oil products, and two iron ore shipments dominated the first two months of the season, July and August. Unfavorable ice conditions near Severnaya Zemlya and in the East Siberian Sea during the first half of September led to a drop in traffic before a second peak emerged at the end of the month. Westbound traffic commenced around July 15, about two weeks after eastbound transits. The first peak in shipping activity occurred between July 15 and August 15. Almost all volume carried during this time consisted of ballast. The second increase in shipping in late September and October included primarily oil products, general cargo and coal. The vast majority of transits, 54 of 71 journeys, originated in Russian ports and those vessels transported 705,000 tons, equal to 52 percent of all cargo. The lack of diversification, especially in terms of country of origin, is striking. The NSR is primarily utilized as a domestic supply and export route for Russia and much less as an international transportation corridor by countries in Europe or Asia. Key hubs for this regional shuttle service are Murmansk and Arkhangelsk in the west, Ob Bay in the center, and Pevek in the east. Out of 71 total transits, 43 were exclusively between Russian ports Traffic patterns on the NSR differ significantly between east- and westbound transits. In 2013, 40 vessels traveled eastbound carrying 895,000 tons in cargo and 6,000 tons of ballast. In contrast, the 31 westbound vessels carried 460,000 tons of cargo and 500,000 tons of ballast. The NSR exhibits a strong bias for eastbound journeys. Products, primarily natural resources, are shipped to the markets in Asia, with limited cargo shipped in the opposite direction. This imbalance in the flow of goods leads to a higher share of ships traveling the route empty and thus reduces profitability. In contrast to the Suez and Panama Canals, the NSR largely represents a one-way traffic route. After delivering cargo at ports in Europe or Asia few ships make the return voyage either with or without cargo via the NSR. The NSR remains a niche trade route with limited numbers of true transits. The export of Arctic hydrocarbon resources, primarily from Russia, and their transport along the NSR can be expected to grow over the coming years. However, this will not establish the NSR as a true trade route but in contrast place even greater emphasis on one-directional traffic from west to east. And Mr. Putin’s hope to establish the route as a northern export highway may yet be dashed by unfavorable market conditions, varying ice levels and the lack of available Russian icebreakers.

Europe

16%

Atlantic Ocean

9% 10% 3%

7% 2%

Pacific Ocean

150.1-200 100.1-150 50.1-100 25.1-50

Asia

57%

China’s imports in bn USD, 2012 Percentage

12% share of imports

Source: International Trade

Indian Ocean

Introduction

Not All Transits are Equal

The 2013 shipping season on the Northern Sea Route (NSR) commenced on June 28 when the Russian-flagged vessel Varzuga, carrying 13,658 tons of diesel, entered the NSR at Cape Zhelaniya north of Novaya Zemlya.1 Over the course of 154 days a total of 49 vessels transported 1.35 million tons of cargo. A further 22 vessels transited the NSR unladen carrying 507,000 tons of ballast. The shipping season concluded on November 28 when the Russianflagged vessel Bukhta Slavyanka exited the NSR at Cape Dezhnev in the Bering Strait.

Russian law defines the NSR as the sea route between Kara Gate and Cape Zhelaniya at the tips of Novaya Zemlya in the west and Cape Dezhnev in the Bering Strait in the east. According to this definition Yugorski Shar in the west and Cape Shmidt in the east represent the entrance and exit ports to the NSR. The Northern Sea Route Information Office lists 71 transits for 2013 but a closer analysis of the data shows that only 41 vessels traveled the entire length of the NSR and qualify as full transits. An additional 23 vessels either departed from or arrived at ports inside the NSR and did not fully transit it. A further seven vessels traveled exclusively within the NSR. Of the 41 ships that transited the full length only 30 carried cargo, transporting 1.19 million tons.

Traffic on the NSR connected ports as far west as Ammassalik (Greenland) and as far east as Vancouver (Canada). In total, vessels traveling along the NSR called at 47 ports in 14 countries. The port of Murmansk (Russia) represented the key hub for shipping on the NSR with 24 vessels, carrying 492,000 tons of cargo, either departing or arriving here. The port of Pevek (Russia) located near the eastern entrance of the NSR, counted 18 vessels with a total of 311,000 tons of cargo. 2%

9% 10%

Asia

57%

3% 2% 2%

Indian Ocean

Europe

16%

Atlantic Ocean

9% 10% 3%

7% 2%

Pacific Ocean

150.1-200 100.1-150 50.1-100 25.1-50

Asia

57%

China’s imports in bn USD, 2012 Percentage

12% share of imports

Source: International Trade

Indian Ocean

9% 10% 3%

Indian Ocean

Asia

57%

Other important ports were Rotterdam (Netherlands), Mongstad and Hammerfest (Norway) in Europe accounting for six ships and 408,000 tons. In Asia, the ports of Yosu and Ulsan (South Korea) and Chiba (Japan) totalled six ships and 421,000 tons. About 286,000 tons of cargo, representing 21 percent of traffic departed from or arrived in Chinese ports.

Oil Products Oil products, including diesel, fuel oil, and naphtha, made up the lion’s share of cargo on the NSR in

Map 1: NSR Transits 2013

Pori

NSR Transits, 2013, Cargo + Ballast 800,000t 400,000t 200,000t 50,000t Source: NSR Infor mation Office

NSR vs. Suez Canal 1.4m tons 915m tons

Melarra Tan Cang Cai Mep Khatanga Bay Anabar Bay

imports

Ob Bay

Percentage

12% share of

Yugorski Shar

Atlantic Ocean

50.1-100 25.1-50

Rotterdam Amsterdam Mongstad Alesund Skagen Lindoe Szczecin Hammerfest Krikenes Ust-Luga Saint-Petersburg Murmansk Arkhangelsk

16%

150.1-200 100.1-150

Ammassalik

Europe

Pacific Ocean China’s imports in bn USD, 2012

Source: International Trade

J HL

MN O

K A I EC B F D G

A Chiba B Mizushima C Ulsan D Busan E Yosu

F Beilun G Mailiao H Qingdao I Lanshan J Xingang

Vancouver

Nome

imports

Dutch Harbor

16%

Atlantic Ocean

Percentage

12% share of

50.1-100 25.1-50

Source: International Trade

Nevelsk Korsakov Magadan Sea of Okhotsk Petropavlosk Kolyma River Pevek Cape Shmidt Provideniya

Europe

Pacific Ocean China’s imports in bn USD, 2012 150.1-200 100.1-150

The first full transit of 2013 began on July 3, when the Nordic Orion entered the NSR at Cape Zhelaniy traveling from Murmansk to Lanshan (China) with 66,000 tons of iron ore. The transit shipping season concluded on October 28, when the Nordic Odyssey, carrying 73,500 tons of coal from Vancouver (Canada) to Pori (Finland), left the NSR via Cape Zhelaniya.

K Daesan L Rajin M Slavyanka N Vladivostok O Nakhodka

* includes: diesel, gas condensate, fuel oil, naphtha, gas oil

Source: NSR Infor mation Office

2013. In total 31 vessels carried 911,000 tons of oil products representing 67 percent of all cargo. The flow of oil products was predominantly eastbound with 23 vessels carrying 589,000 tons traveling from Europe to Asia and 8 vessels transporting 323,000 tons moving westbound from Asia to Europe. Key ports for oil products were Rotterdam, Mongstad and Murmansk in Europe and Yosu and Busan in Asia. Out of 31 vessels delivering oil products, 11 vessels supplied local communities and ports along the NSR. Only 17 vessels transited the full NSR and transported oil products from Europe to Asia or vice versa. The prevalence of vessels supplying local communities helps to explain the small vessel size. On average ships carried less than 30,000 tons of oil products. Only eight ships carried more than 50,000 tons, the largest one being the Propontis transporting 109,000 tons of gas oil from Ulsan (South Korea) to Skagen (Denmark). Vessels carrying oil products

Provideniya

Petropavlosk-Kamchatsky Kolyma River Pevek

Melarra

NSR Transits, 2013, Oil Products* 400,000t 200,000t 50,000t

Mailiao Yosu Daesan Busan Slavyanka Mizushima Nakhodka Chiba Nevelsk Magadan

Khatanga Anabar Bay

Ob Bay

Yugorski Shar

Ust-Luga Murmansk Arkhangelsk

Rotterdam Skagen

Mongstad

Map 2: NSR Transits 2013, Oil Products

spent an average of 14.7 days on the NSR. Iron Ore Europe

16%

50.1-100 25.1-50

Iron ore accounted for 203,000 tons representing 15 percent of all cargo in 2013. Three vessels, the NS Yakutia, the Nordic Orion and the Nordic Odyssey departed from the port of Murmansk delivering between 66,000 and 70,000 tons of iron ore each to the ports of Lanshan and Qingdao (China). The Nordic Orion departed Murmansk on July 1 and had to contend with medium to heavy ice conditions reducing its average speed along the NSR to only 5.4 knots. It took almost 20 days for the Orion to transit the NSR. The Nordic Odyssey and the NS Yakutia left port on August 11 and September 21 respectively and were able to take advantage of improved ice conditions. They traversed the NSR in 10.8 and 12.9 days respectively.

Lanshan Qingdao

Murmansk NSR Transits, 2013, Iron Ore 200,000t

9% 10% 3%

7% 2%

150.1-200 100.1-150

Map 3: NSR Transits 2013, Iron Ore

Source: NSR Infor mation Office

Atlantic Ocean

Pacific Ocean

Asia

57%

China’s imports in bn USD, 2012 Percentage

12% share of imports

Source: International Trade

Indian Ocean

NSR Transits, 2013, General Cargo

PetropavloskKamchatsky Pevek Cape Shmidt

Rajin Vladivostok

Tan Cang Cai Mep Anabar Bay Xingang

Ust-Luga Saint-Petersburg Arkhangelsk

Rotterdam Amsterdam Szczecin

Map 4: NSR Transits 2013, General Cargo

Busan

66,000t Source: NSR Infor mation Office

Atlantic Ocean

9% 10% 3%

7% 2%

50.1-100 25.1-50

Asia

57%

Percentage

12% share of imports

Indian Ocean

Coal

General Cargo, also called break bulk cargo, accounted for 7.4 percent of goods on the NSR. General cargo is carried in bags, boxes, crates or barrels rather than in inter-modal containers. Thirteen vessels, including the much-publicized Yong Sheng owned by COSCO Shipping, transported 100,000 tons of these goods. Two ships, the Nordic Bothnia and the Yong Sheng, accounted for more than half of all general cargo. The Bothnia departed Xingang (China) on September 22 bound for Amsterdam (Netherlands). It spent 14.8 days on the NSR traveling at 10 knots. The Yong Sheng departed Busan on August 17 bound for Rotterdam. It recorded the highest average speed of all vessels in 2013, traveling at 14.1 knots and spending just 7.4 days on the NSR. The remaining 11 general cargo vessels, carrying between 120 and 9000 tons, predominately supplied local communities along the Russian coastline. Seven vessels departed from the port of Arkhangelsk bound for either Anabar Bay, Kolymar River and Pevek within the NSR.

Coal deliveries accounted for 5.5 percent of traffic. A single vessel, the Nordic Odyssey, carried 73,500 tons from Vancouver (Canada) to Pori (Finland). The vessel departed Vancouver late in the shipping season on October 4 and did not enter the NSR until October 16. It recorded an average speed of 9.1 knots and sailed for 12.2 days along the NSR. The Odyssey’s journey represented the last major vessel to transit the NSR in 2013. All subsequent vessels constituted either local deliveries of oil products or traveled under ballast. Thus, as a transit route, the NSR shipping season concluded a full month before the last smaller vessels left the route. Liquefied Natural Gas LNG accounted for 5 percent of all NSR traffic in 2013. The NSR saw the first transit of a LNG carrier in 2012 when the Ob River carried LNG from Yosu to Montoir (France). In 2013 a single vessel, the Arctic Aurora, carried 66,868 tons of LNG from Hammerfest to Chiba. Despite the fact that the vessel

Map 5: NSR Transits 2013, Coal

Vancouver

16%

150.1-200 100.1-150

General Cargo

Pori

Europe

Pacific Ocean China’s imports in bn USD, 2012

Source: International Trade

NSR Transits, 2013, Coal 73,500t Source: NSR Infor mation Office

Map 6: NSR Transits 2013, LNG

Chiba

Hammerfest

NSR Transits, 2013, LNG 66,000t Source: NSR Infor mation Office

16%

Atlantic Ocean

9% 10% 3%

7% 2%

Pacific Ocean

150.1-200 100.1-150 50.1-100 25.1-50

NSR Transits, 2013, Ballast 225,000t 75,000t Source: NSR Infor mation Office

Ob Bay

Hammerfest Krikenes Murmansk Arkhangelsk

Lindoe

Ammassalik

Alesund

Map 7: NSR Transits 2013, Ballast

Nome

In contrast to the Suez and Panama Canals, the NSR largely represents a one-way traffic route. After delivering cargo at ports in Europe or Asia few ships make the return voyage either with or without cargo

Oil products made up 65 percent of eastbound volume (cargo + ballast), followed by LNG with 23 percent and iron ore at 7 percent. Only three of 40 vessels transited the NSR under ballast in the easterly direction accounting for 0.1 percent of total volume. In contrast, ballast accounted for 52 percent of the westbound volume followed by oil products with

Dutch Harbor

Differing Traffic Patterns

Traffic patterns on the NSR differ significantly between east- and westbound transits. In 2013, 40 vessels traveled eastbound carrying 895,000 tons in cargo and 6,000 tons of ballast. In contrast, the 31 westbound vessels carried 460,000 tons of cargo and 500,000 tons of ballast.

Pevek Cape Shmidt Provideniya

In addition to the 49 vessels carrying cargo, 22 ships traveled the NSR unladen and under ballast.2 Ballasted journeys accounted for 31 percent of the official 71 transits. The vast majority of ballast traffic, 19 out of 22 journeys, traveled the NSR in westward direction and 12 trips arrived in and departed from ports between Murmansk and Pevek.

Petropavlosk Kamchatsky

Ballast

via the NSR. The Propontis was the only large vessel traveling the NSR with cargo in both directions transporting 79,000 tons of naphtha products from Mongstad to Mizushima (Japan) in early August and carrying 109,000 tons of gas oil from Ulsan to Skagen. Two other large vessels, the Nordic Odyssey and the Arctic Aurora returned along the NSR under ballast.

Beilun Busan Vladivostok Nevelsk Korsakov Sea of Okhotsk

transited the NSR during the month of September, when ice is generally at its lowest extent, it only traveled at an average speed of 7.1 knots and spent more than two weeks on the NSR. The ship departed Hammerfest on September 13 and exited the NSR via Cape Dezhnev on October 6.

Asia

57%

China’s imports in bn USD, 2012 Percentage

12% share of imports

Source: International Trade

Indian Ocean

Figure 1: Share of Volume, Eastbound 7%

Figure 2: Share of Volume, Westbound

1% 0.1% 4%

6% 8%

23% 65%

Oil Products LNG Iron Ore General Cargo Coast Guard Ballast

34%

Oil Products General Cargo Coal Ballast

52%

Europe

16%

Atlantic Ocean

9% 10% 3%

7% 2%

Pacific Ocean

Percentage

Indian Ocean

Asia

12% share of imports

31 percent and general cargo at 8 percent. Almost half, 14 of 31 westbound vessels, traveled the NSR without cargo. Intraseasonal and Interannual Ice Variations The 2013 season saw two distinct peaks in shipping activity. In eastward direction, supplies for local communities, mainly oil products, and two iron ore shipments dominated the first two months of the season, July and August. Unfavorable ice conditions near Severnaya Zemlya and in the East Siberian Sea during the first half of September led to a drop in traffic before a second peak emerged at the end of the month. (Suslin, 2013) September saw another iron ore delivery and the season’s sole LNG shipment. Eastbound traffic largely concluded by the end of October with a few small deliveries of oil products along the Russian coastline.

this time consisted of ballast. The second increase in shipping in late September and October included primarily oil products, general cargo and coal. The westbound shipping season extended until the end of November, however, traffic consisted exclusively of unladen vessels after October 25. The fact that Arctic shipping is subject to the intraseasonal variability of ice conditions represents a key economic obstacle of the NSR. Unfavorable ice conditions between the end of August and the middle of September had a noticeable impact on shipping activity in 2013. Furthermore, interannual variations of ice conditions will also remain significant. While 51 vessels had transited the NSR by October 1 in 2013, no transits had been recorded by the same date in 2014 according to the NSR Information Office. Limited Geographic and Cargo Diversification

Westbound traffic commenced around July 15, about two weeks after eastbound transits. The first peak in shipping activity occurred between July 15 and August 15. Almost all volume carried during

The vast majority of transits, 54 of 71 journeys, originated in Russian ports and those vessels transported 705,000 tons, equal to 52 percent of all cargo. South Korean ports represented the second

Figure 3: Volume by Date, Eastbound

Figure 4: Volume by Date, Westbound

‘000 tons 300

250 200

Oil Products LNG Iron Ore General Cargo Coast Guard Ballast

250

Oil Products General Cargo Coal Ballast

200

150

100

28-Jun 5-Jul 12-Jul 19-Jul 26-Jul 2-Aug 9-Aug 16-Aug 23-Aug 30-Aug 6-Sep 13-Sep 20-Sep 27-Sep 4-Oct 11-Oct 18-Oct 25-Oct 1-Nov 8-Nov 15-Nov 22-Nov

50.1-100 25.1-50

28-Jun 5-Jul 12-Jul 19-Jul 26-Jul 2-Aug 9-Aug 16-Aug 23-Aug 30-Aug 6-Sep 13-Sep 20-Sep 27-Sep 4-Oct 11-Oct 18-Oct 25-Oct 1-Nov 8-Nov 15-Nov 22-Nov

150.1-200 100.1-150

57%

China’s imports in bn USD, 2012

Source: International Trade

Figure 5: Cargo by Origin Country

Figure 6: Cargo by Destination Country Russia

Russia

Netherlands

South Korea

China

Japan

Other

1000 1200 thousand tons

transits, 43 were exclusively between Russian ports and more than 300,000 tons of cargo, equal to 23 percent of the total, were transported domestically between Russian ports and never left the country’s Exclusive Economic Zone. Furthermore, almost 500,000 tons of cargo departed from or arrived in the port of Murmansk alone. The graphs below show the importance of the NSR as a local supply route for Russian communities. Small vessels, carrying generally less than 20,000 tons of cargo, travel along its northern coastline throughout the season delivering diesel and general cargo. Notice the sharp increase in volume at the port of Murmansk and significant descrease at Pevek. Trade Routes vs. Transport Routes One key characteristic of major trade routes is the roughly equal flow of goods in both directions. The demand of products at either end and along the trade route allows vessels to carry cargo in each direction

Figure 8: Vessel Size by Destination Country Russia China Netherlands Japan South Korea Norway Denmark Finland Taiwan Malaysia Greenland United States North Korea Poland

tons 140000 120000 100000 80000 60000 40000 20000 0

9-Dec

Ust-Luga Szczecin Amsterdam Skagen Mongstad Hammerfest Murmansk Yugorski Shar Khatanga Bay Kolyma River Mouth Cape Shmidt Provideniya Petropavlovsk Okhotsk Sea Korsakov Nakhodka Slavyanka Chiba/Futtsu Ulsan Busan Daesan Quingdao Beilun Tan Cang Cai Mep

Oil Products LNG Iron Ore General Cargo Coast Guard Coal Ballast

500 600 700 thousand tons

19-Nov

Figure 7: Volume on the NSR by Port

400

30-Oct

The lack of diversification, especially in terms of country of origin, is striking. The fact is that the NSR is primarily utilized as a domestic supply and export route for Russia and much less as an international transportation corridor by countries in Europe or Asia. Key hubs for this regional shuttle service are Murmansk and Arkhangelsk in the west, Ob Bay in the center, and Pevek in the east. Out of 71 total

300

10-Oct

The list of destination ports was slightly more diversified. Russian ports were the destination for 48 of the 71 journeys delivering 227,000 tons of cargo. Dutch ports received four vessels carrying a total of 242,000 tons. Ports in China, Japan and South Korea each received three vessels carrying 203,000, 183,000 and 182,000 tons respectively. Together these five countries accounted for 77 percent of all cargo.

200

20-Sep

largest points of departure with four vessels carrying 293,000 tons followed by Norwegian ports with six vessels transporting 208,000 tons. Ports in these three countries accounted for 89 percent of all cargo.

100

31-Aug

800

11-Aug

600

22-Jul

400

2-Jul

200

12-Jun

Cargo only Cargo and ballast

South Korea

Other

‘000 tons 2000 1800 1600 1400 1200 1000 800 600 400 200 0

China

Cargo only Cargo and ballast

Norway

Europe

16%

Atlantic Ocean

9% 10% 3%

7% 2%

Pacific Ocean

150.1-200 100.1-150 50.1-100 25.1-50

Asia

57%

China’s imports in bn USD, 2012 Percentage

12% share of imports

Source: International Trade

Indian Ocean

Figure 9: Cargo Comparison NSR

Figure 10: Cargo Comparison Suez Canal

Other

General Cargo

General Cargo LNG

Westbound Eastbound

LNG

South to North North to South

Dry Bulk

Dry Bulk Oil Products

Oil Products

Container

Europe

16%

Atlantic Ocean

9% 10% 3%

7% 2%

Pacific Ocean

150.1-200 100.1-150 50.1-100 25.1-50

Asia

57%

Chinaâ&#x20AC;&#x2122;s imports in bn USD, 2012 Percentage

12% share of imports

Source: International Trade

Indian Ocean

100

200

300

400 500 600 thousand tons

thus avoiding ballasted journeys, which in turn increases profitability. In the case of the Suez Canal Route, the shipping lane the NSR aims to compete with, the amount of cargo shipped south to north and vice versa is almost identical. In particular the flow of containerized cargo through the canal in either direction is nearly identical. In contrast, the NSR exhibits a strong bias for eastbound journeys. Products, primarily natural resources, are shipped to the markets in Asia, with limited cargo shipped in the opposite direction. This imbalance in the flow of goods leads to a higher share of ships traveling the route empty and thus reduces profitability. The Suez and Panama Canals both count limited numbers of ships traveling under ballast, eight percent and one percent of all transits respectively.2 The NSR, on the other hand, exhibited a ballast rate of 32 percent between 2011-2013.2 A high share of ballasted journeys is the hallmark of transport routes in contrast to trade routes. While the shipping lanes passing through the Suez and Panama Canals

Figure 11: Cargo vs. Ballast, 2011-13 Panama Canal

Ballast

NSR

20%

40%

60%

100

150

200

250 300 million tons

are mature trade routes exhibiting low ballast rates, the NSR is and will likely remain largely a one-way transport and export route. Conclusion The NSR remains a niche trade route with limited numbers of true transits. Only 30 vessels traversed the route with cargo in 2013 while 41 ships either traveled without cargo or stayed within Russian waters. The majority of traffic originates in Russian waters and a significant share of cargo is destined for local communities along the NSR. Ice conditions will continue to have a significant impact on shipping traffic and the high interannual variability of ice coverage makes the route unsuitable for containerized cargo. East- and westbound traffic patterns are distinct, indicating that the NSR does not function as a mature trade route but primarily as a transport and export route. This predominantly one-way traffic causes the share of unladen vessels to remain high, thus reducing profitability. Large vessels are far and few between and the majority of vessels carry less than 20,000 tons in cargo. The export of Arctic hydrocarbon resources, primarily from Russia, and their transport along the NSR can be expected to grow over the coming years. However, this will not establish the NSR as a true trade route but in contrast place even greater emphasis on one-directional traffic from west to east. Mr. Putinâ&#x20AC;&#x2122;s hope to establish the route as a northern export highway may yet be dashed by unfavorable market conditions, varying ice levels and the lack of available Russian icebreakers.

Suez Canal Cargo

80%

100%

Notes 1 2

All figures based on data by the NSR Information Office unless otherwise noted. Includes subcategory of “repositioning.”

References Northern Searoute Information Office. (2014). NSR Transits 2013. Retrieved from http://www.arctic-lio.com/ docs/nsr/transits/Transits_2013_final.pdf Panama Canal Authority. (2014) Transit Statistics. Retrieved from http://www.pancanal.com/eng/op/transit-stats/ Suez Canal Authority. (2014). Transit Statistics. Retrieved from http://www.suezcanal.gov.eg/TRstat.aspx?reportId=1 Suslin, M. (2013). Arctic Shipping Development. Shipowner’s point of view. Retrieved from http://russiancouncil.ru/en/ arctic2013/presentations/

Europe

16%

Atlantic Ocean

9% 10% 3%

7% 2%

Pacific Ocean

150.1-200 100.1-150 50.1-100 25.1-50

Asia

57%

China’s imports in bn USD, 2012 Percentage

12% share of imports

Source: International Trade

Indian Ocean

About the author Malte Humpert is the founder and Executive Director of The Arctic Institute. His research focuses on Arctic shipping and shipping scenarios, China’s geopolitical and geoeconomic interests in the region, the impact of climate change on the Arctic environment, and the development of oil and gas resources throughout the Arctic region. He has been working on Arctic issues since 2007 and regularly participates in Arctic-related events and conferences in North America and Europe. He routinely publishes articles, research papers, as well as op-eds and blog posts relating to climate change in general and the Arctic in particular. His work has been quoted or cited by, among others, the Council on Foreign Relations, the Associated Press, Reuters, the Wall Street Journal, The Economist, New Scientist, Bloomberg, the Washington Post and Al Jazeera. He has also been featured on CNN, Al Jazeera, Russia Today, Rúv Icelandic Television and Radio National Australia. Comments or questions? malte.humpert@thearcticinstitute.org +1.202.656.6258

Downloads To download a PDF copy of this report go to: thearctic.in/1wo0Eb7 To download last year’s report, The Future of Arctic Shipping: A New Silk Road for China, go to: thearctic.in/1wo0kJk

Europe

16%

Atlantic Ocean

9% 10% 3%

7% 2%

Pacific Ocean

150.1-200 100.1-150 50.1-100 25.1-50

Asia

57%

China’s imports in bn USD, 2012 Percentage

Indian Ocean

12% share of imports

Source: International Trade

Europe

16%

Atlantic Ocean

9% 10% 3%

7% 2%

Pacific Ocean

150.1-200 100.1-150 50.1-100 25.1-50

Asia

57%

Chinaâ&#x20AC;&#x2122;s imports in bn USD, 2012 Percentage

Indian Ocean

12% share of imports

Source: International Trade

Europe

16%

Atlantic Ocean

Pacific Ocean Chinaâ&#x20AC;&#x2122;s imports in bn USD, 2012 150.1-200 100.1-150 50.1-100 25.1-50

Percentage

12% share of imports

Source: International Trade

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