[070413.EN.SEA] Norway and Russia Prepare For Arctic Route Cargo Shipping Demand

ADVANCED icebreaking and ice-strengthened hulls as well as the high price of commodities opening Arctic shipping channels over Eurasia and North America.

Container trade through this route is forecast to grow between five and 14 per cent by 2020, with 10 per cent of projected trade to create US$683 billion, according to Norway's Department of Transport.

The growth in icebreaker vessels coupled with ice cap melting opens up the Northern Sea Route (NSR) to Europe as early as year-end.

Russian and Norwegian ports on the routes, such as Narvik, are being developed to meet demand from rising traffic which they expect from Chinese and Korean shipping companies. Trade will be traditional but industrial raw materials shipments to and from Europe is forecast to increase, said Norwegian parliament's transport deputy chairman Bard Hoksurd.

In a report from Lloyd's Loading List, Mr Hoksurd said the NSR is a "win-win situation" allowing carriers to make huge savings in fuel and travel time between major trading areas such as the Europe/US east and west coast and East Asia or NW Europe/EastAsia trades.

"Both China and Korea are expected to become leading miners of iron, nickel, copper and uranium ore in Greenland over coming years," he said. "China's offer to invest an initial EUR3 billion (US$3.8 billion) into new mining openings in Greenland by 2016 speaks for itself."

Last year's Arctic voyage led by the Polar Research Institute of China using the icebreaker Xuelong (Snowdragon) to Iceland has "greatly encouraged" Chinese shipping in time and money savings to Europe and also to North America.

Its director Huigeng Yang said that the journey will reduce the distance of a roundtrip from Shanghai to Hamburg by 5,185 kilometres compared to via the Suez Canal.

The doubling of traffic figures on the NSR from 2011 to 2012 from 2010 when it saw just four vessels is testament to the route's potential. The route saw an increase in tonnage of 53 per cent to 820,789 tonnes from 2011.

Source : HKSG.