The amount of ice in the Arctic Ocean is indubitably decreasing, opening new possibilities for world trade. An Arctic trade route has the potential to reduce the transit time, fuel consumption and emissions, making it an attractive alternative to the current trade routes.
Traffic through the Northern Sea Route or Northwest Passage is already possible in the late summer season, but the future trade route is expected to cross the Arctic Ocean in international waters. The ARCON project has looked into the possibilities, challenges and risks related to this new route from today and until 2050.
The Arctic potential A trans-Arctic trade route will reduce the distance between many of the current major markets: American west coast to Europe, American east coast to Asia and, the one with the greatest potential, eastern Asia to Europe. The reduced distance will in principle reduce the fuel costs per trip and allow more trips per year, both of which will be beneficial for the container business. The question is how these benefits compare with the additional costs connected to Arctic operation, today and in the future.
The map above shows the estimated transport volume from North-East Asia to Europe, together with the two alternative routes between Yokohama and Rotterdam, the trade which is used as the basis in this project. This trade is roughly 40% shorter across the North Pole than through Suez, making this the ideal route for Arctic container traffic. It??/This route?? can therefore be seen as a prerequisite for profitable trade across the Arctic Ocean. The reduction in the distance from Rotterdam compared to the Suez route is also indicated for the different regions in North East Asia. There are major uncertainties connected to what the future world trade patterns will be like, and the picture in 2050 has therefore been assumed to be the same as the present one.
How will the ice conditions develop? The future ice conditions in the Arctic until 2050 have been estimated by simulation using a recognized climate model that is also used by the Intergovernmental Panel on Climate Change (IPCC). The prediction shows a continuous decrease in the extent, concentration and average thickness of the ice, which translates into the Arctic route becoming increasingly attractive. However, there will be thick ice during the winter and spring seasons, even in 2050, and the route will not be completely ice-free in summer. The predicted maximum ice thickness along the route during the year is shown in the figure above, indicating the heaviest ice the vessel is expected to meet in an average year.
Additional seasonal or year-to-year variations are not covered by the model.
Arctic container vessels Arctic container traffic will require vessels prepared for operation in the range of the predicted ice conditions. Heavy ice strengthening and winterization are minimum requirements, and a hull shape with icebreaking capabilities is required for year-round operation. There are, however, several possible design philosophies to follow and three different approaches have been evaluated by the project:
1. A conventional container vessel with ice strengthening
2. A purpose-built container vessel with an icebreaking hull shape
3. A Double Acting container vessel
The first vessel is optimized for open-water operation and is inefficient for operation in ice. With moderate ice strengthening, the vessel can, however, operate in light ice conditions and is intended for summer/autumn operation in the Arctic. With its conventional hull shape, the vessel is well suited for operation via Suez during the rest of the year. The building costs are expected to be 20% higher than those of a regular container vessel due to ice strengthening and winterization.
The purpose-built container vessel is intended for year-round operation in the Arctic and is optimized for efficient progression through the ice. This solution favours heavy ice conditions, as the advantages in the ice must outweigh the reduced performance in the ice-free parts of the route. The building costs are assumed to be somewhat higher than those of the previous type due to heavier ice strengthening and a more complex bow structure.
With the mix between operation in ice and open water along the route, a compromise solution should also be considered. One possible solution is a Double Acting, (ref Aker Arctic design) vessel, which is built with a regular bulbous bow while the aft is designed for breaking ice stern-first. This vessel type has the highest investment cost due to a more complex hull and the requirement of pod propulsion.
The transportation costs for each design have been evaluated for an 8600 TEU container vessel and benchmarked against the corresponding cost of Suez trade with a conventional container vessel. Five cost components have been included in the analysis, which is based on typical figures from 2007: the main cost contribution is related to fuel, while cargo insurance and financial costs are also significant. Operational costs and channel fees are also included, roughly adding up to the remaining 10% of the total cost.
The transportation cost per TEU as a function of time is shown in the figure above, based on the main assumptions summarized in the table. The fuel price and trade route are the variables that have the largest impact on the results, and the investigated Yokohama – Rotterdam route is regarded as the optimal route. In short, the Arctic route will benefit from higher fuel prices and it must be significantly shorter than the Suez alternative.
Challenges and risks Environmental issues will definitely be relevant to an Arctic trade route and will be a topic for discussion. Ship designs with minimum environmental impact do, however, already exist, and the technical solutions are feasible for Arctic container vessels. The strict requirements regarding emissions and the vessel condition expected?? ????
The business side is regarded as the main challenge for Arctic container traffic. Today, the container traffic is operated according to the just-in-time principle, with very strict requirements as to regularity, a trend that is expected to continue. With the continuously changing conditions in the Arctic, the vessel’s progression cannot be guaranteed and more flexible schedules or the introduction of buffer days may be required. Continued ice melt in the Arctic will, however, be beneficial, and together with improved technology this is expected to result in better regularity in the longer run.
Recognized class rules for ice strengthening, winterization and other technical issues are already available, and the technical side is therefore not regarded as a showstopper for container traffic in Arctic waters. Further development is, however, needed in some areas – such as emergency equipment for ice-infested waters and high-power pod propulsions for the Double Acting vessel – but these are issues that are expected to be solved when the demand starts to increase.
Icing on the containers is another possible issue, and is expected to increase when the ice concentration is decreasing. The additional weight from accumulated ice may have some impact on stability and thus the cargo capacity, but the main problem may be the handling of containers in port. Winter temperatures below zero degrees Celsius must be expected along the entire route, and natural melting may not be enough to ensure ice-free containers in port. Other means of removing ice are technically possible, but may turn out to be too expensive for commercial vessels of the size in question.
Conclusion How the Arctic trade will develop is mainly a question of how world trade will develop, and it requires ship owners and operators to show an interest??. The project has concluded that there is a potential for profit from Arctic trade routes but not in the near future.
At present, the ice conditions are too heavy for the benefits to exceed the additional costs, especially during winter time, and a further reduction in ice extent and thickness is required to release the full potential.
Date: 2009-06-23