Climate change may open Arctic sea routes

Robert Karniol, Defence Writer Straits Times 14 Dec 09;

THE climate talks being held in Copenhagen have highlighted the fierce debate over global warming - its causes, environmental consequences and severity, and how the international community should respond. That much of Asia looks set to benefit amid the overall gloom is often overlooked.

'Major reductions in transport cost have twice remade the world. First, with the invention of the steamship and then with the introduction of containerisation,' said Mr Stephen Carmel, senior vice-president of maritime services at the world's largest container shipping company, Maersk Line. 'In my view, were the Arctic to open up and become really

viable for shipping, we would see the same. It'll change the world as much as the container did.'

There are three frigid routes with the potential to speed up maritime traffic: the Northwest Passage over North America, the Northern Sea Route over Russia, and the more tentative Polar Route running astride the North Pole.

According to one study, the Arctic ice covering each route has receded by about 20 per cent over the period from 1979 to 2006. This trend is expected to continue, with the Northern Sea Route likely becoming the first to emerge as regularly navigable. Just when this might occur is open to speculation, but Mr Carmel suggests a timeframe of around 2040 to 2050.

The savings in distance can be significant. The route between Yokohama and Rotterdam, for instance, is 20,100km via the Panama Canal or 17,800km via the Suez Canal. The Northern Sea Route would cut this to 11,400km, a reduction of at least 35 per cent. And Yokohama to New York is 15,800km using the Panama Canal but just 12,200km using the Northwest Passage, a reduction by nearly 25 per cent.

China should emerge as the big winner, centred on Shanghai, but not all routes stand to benefit. Maritime travel between Singapore and New York, or between Los Angeles and Rotterdam, are among those that will remain unaffected.

Mr Carmel emphasises that time saved is nevertheless more significant than distance, given daily ship charter rates and ancillary costs. Using that measure and an average speed of 22 knots, the journey from Yokohama to Rotterdam would be cut by about a third to 12 days, and Yokohama to New York by a quarter to 12 days.

However, the cost comparison is considerably more complex. Shipping companies could expect savings in fuel and canal toll charges, the latter worth US$250,000 (S$348,000) to US$300,000 each way for an average-sized container vessel using either the Suez or Panama. However, any threat of ice will require an icebreaker escort, by some estimates costing US$100,000 in each direction, and inclement weather common in the Arctic may cut speed, with a resulting loss in time.

Furthermore, vessels using northern routes may be required to utilise a higher grade of fuel for environmental reasons, and this will add to the cost. Hardened hulls may also need to be factored into shipbuilding costs.

Calculation complexities aside, shipping companies are convinced that substantial savings in the cost of transport can be realised on selected routes between Asia and Europe, and between Asia and the east coast of North America. This will reinforce the globalisation of trade that containerisation so significantly primed, but it will also have a wider impact on trade patterns.

The opening of Arctic sea routes could slash usage of the Suez and Panama canals, with dire consequences on local economies. Egypt earned toll receipts of US$5.38 billion last year, accounting for 1.2 per cent of its gross domestic product.

Italy's largest seaport, Gioia Tauro, is among those in similar danger. It now mainly serves the trans-shipment of containers travelling between Asia or the United States and Central Europe, and much of this traffic could be lost.

With so much at stake, some assume the threat of conflict over issues relating to the control of northern waters. Indeed, Canada has long claimed the Northwest Passage as an internal waterway subject to its sovereignty, though this has yet to gain international recognition.

Countries abutting the Arctic Ocean - Canada, Denmark, Norway, Russia and the US - have in recent years intensified their territorial claims to better ensure exclusive access to a suspected wealth of natural resources. Others from further afield - including China, France, Japan and South Korea - have begun eyeing the area's bountiful fisheries.

Speaking at a security conference earlier this month, Canada's chief of defence provided a military perspective on this heightened activity.

'There is no conventional military threat to the Arctic,' General Walter Natyncyk firmly stated. 'If someone were to invade the Canadian Arctic, my first task would be to rescue them. The Arctic is a very harsh environment. It is actually more difficult for me to support operations in the (Canadian) Arctic than it is to support operations in Afghanistan.'

All this suggests that the public debate over global warming has so far largely neglected a critical issue: the potentially dramatic reduction in transportation cost, and what this means for trade.