News / Europe

Icebergs, Insurance Hamper Top of the World Shipping Route

The town of Ny-Aalesund in Norway's high Arctic as seen from the top of the nearby Zeppelin mountain, May 28, 2013. The town of Ny-Aalesund in Norway's high Arctic as seen from the top of the nearby Zeppelin mountain, May 28, 2013.
x
The town of Ny-Aalesund in Norway's high Arctic as seen from the top of the nearby Zeppelin mountain, May 28, 2013.
The town of Ny-Aalesund in Norway's high Arctic as seen from the top of the nearby Zeppelin mountain, May 28, 2013.
Reuters
The new shipping route opened up through the Arctic by climate change will not be crowded any time soon.

Cargoes of coal, diesel and gas have made the trip but high insurance costs, slow going and strict environmental rules mean there will not be a rush to follow them.

Looser ice means icebergs. One vessel has already been holed, and large ice breaking vessels, not always on hand, are a must.

“Significant safety and navigational concerns remain an obstacle to commercial shipping in the Northern Sea route, despite recent media reports of 'successful' transits,” said Richard Hurley, a senior analyst at shipping intelligence publisher IHS Maritime.

“AIS [ship]- tracking of vessels in the area shows all vessels are subject to deviation from direct routes as a result of ice, and many areas still cannot be navigated safely without the presence of large icebreakers able to provide assistance such as lead through to clearer waters.”

Last month, a dry bulk vessel carrying coal from Canada passed through the Northwest Passage to deliver a cargo to Finland, in a trip its operators said would save $80,000 worth of fuel and cut shipping time by a week.

The world's top oil trader Vitol brought tankers in October with Asian diesel to Europe via the Northern Sea route over Russia, potentially saving hundreds of thousands of dollars in costs.

The fast-growing liquefied natural gas market, in which Arctic players like Russia and Norway play a big role, has also seen maiden Arctic voyages.

Hurley said the passage of the Yong Sheng cargo vessel in August from China to Europe via the Northern Sea was only possible with the aid of the world's largest nuclear powered icebreaker, 50 Let Pobedy, to get it through the Lapatev Sea. Ship tracking showed only four large icebreakers were available at any one time to cover the whole Northern sea route.

Separately, a small Russian oil products tanker was holed in September in the Kara Sea, also off Russia.

“Even though damage was minimal and did not cause a pollution incident, the holing revealed fragility of emergency help,” Hurley said. “Taken together, all the inherent dangers and concerns over potential Arctic pollution count heavily against time and cost savings alone when assessing the commercial viability of the seaway.”

Insurance and containers

The market is also still nascent for insurers.

“The key obstacle here will remain the insurance, as it's still simply too risky a proposition for standard commercial insurers,” said Michael Frodl of U.S.-based consultancy C-Level Maritime Risks, who advises insurers.

“The ships aren't ready, the support facilities and port infrastructure are not yet in place, and the risks haven't been figured out enough to price insurance correctly.”

Others say the commercial potential is unlikely to be viable for container ships, which transport consumer goods, partly as trade flows develop beyond China in coming decades towards other regions including Africa and South America.

“The further away global trade moves from a totally China-centric export pattern, the more a short 'polar' route looses its appeal,” said Jan Tiedemann, shipping analyst with consultancy Alphaliner.

“The Southern route - even if longer - will always have the advantage of serving numerous markets at the same time. Think of the Middle East. Think of transshipment via the [Malacca] Straits to Australia and New Zealand. Think of transshipment in Arabia for East Africa. Think of Med and Black Sea loops.”

Until recent years harsh weather conditions, which can drop to 40 to 50 degrees centigrade below zero, had limited Arctic shipping mostly to small freighters and ice-breakers that supplied northern communities in Canada, Norway or Russia.

According to French ship classification society Bureau Veritas, there were 40 Arctic route trading voyages in 2012 for all vessel classes including oil tankers, with around one million tons of cargo moved. That compared with 700 million tons transported through the Suez canal.

Knut Espen Solberg of Norwegian shipping and offshore classification group Det Norske Veritas, said dry bulk vessels carrying coal were best suited for Arctic shipping as the potential for environmental potential was less.

“Oil and container spills have a much bigger potential environmental impact than coal, so their shipping is likely to be restricted heavily,” said Solberg, a former Arctic mariner.

You May Like

Israelis Quietly Expand Enclave in Palestinian District of Jerusalem

Estimated 500 settlers, armed or protected by paramilitary police, live in Silwan among 50,000 Palestinians More

Video US, Iran Face Similar Challenges in Syrian Fight Against IS

Both Washington, Tehran back fighters battling Islamic State militants in Iraq -- but in Syria they support opposing sides in country’s civil war More

China Boosts Efforts to Help Afghan, Regional Stability

Observers say China’s increased regional involvement are due to concerns that Afghan instability and the presence of anti-China militants in Pakistani border areas could fuel Xinjiang troubles More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
After Decades of Pressure, Luxembourg Drops Bank Secrecy Rulesi
X
October 21, 2014 12:20 AM
European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.
Video

Video Young Nairobi Tech Innovator on 'Track' in Security Business

A 24-year-old technology innovator in Nairobi has invented a tracking device that monitors and secures cars. He has also come up with what he claims is the most robust audio-visual surveillance system yet. As Lenny Ruvaga reports from the Kenyan capital, his innovations are offering alternative security solutions.
Video

Video Latinas Converting to Islam for Identity, Structure

Latinos are one of the fastest growing groups in the Muslim religion. According to the Pew Research Center, about 6 percent of American Muslims are Latino. And a little more than half of new converts are female. VOA’s Carolyn Presutti travelled to Miami, Florida -- where two out of every three residents is Hispanic -- to learn more.
Video

Video Exclusive: American Joins Kurds' Anti-IS Fight

The United States and other Western nations have expressed alarm about their citizens joining Islamic State forces in Syria and Iraq. In a rare counterpoint to the phenomenon, an American has taken up arms with the militants' Syrian Kurdish opponents. Elizabeth Arrott has more in this exclusive profile by VOA Kurdish reporter Zana Omer in Ras al Ayn, Syria.
Video

Video South Korea Confronts Violence Within Military Ranks

Every able-bodied South Korean male between 18 and 35 must serve for 21 to 36 months in the country’s armed forces, depending upon the specific branch. For many, service is a rite of passage to manhood. But there are growing concerns that bullying and violence come along with the tradition. Reporter Jason Strother has more from Seoul.
Video

Video North Carolina Emerges as Key Election Battleground

U.S. congressional midterm elections will be held on November 4th and most political analysts give Republicans an excellent chance to win a majority in the U.S. Senate, which Democrats now control. So what are the issues driving voters in this congressional election year? VOA National Correspondent Jim Malone traveled to North Carolina, one of the most politically competitive states in the country, to find out.
Video

Video Comanche People Maintain Pride in Their Heritage

The Comanche (Indian nation) once were called the “Lords of the Plains,” with an empire that included half the land area of current day Texas, large parts of Oklahoma, New Mexico, Kansas and Colorado.The fierceness and battle prowess of these warriors on horseback delayed the settlement of most of West Texas for four decades. VOA’s Greg Flakus reports from Lawton, Oklahoma, that while their warrior days are over, the 15,000 members of the Comanche Nation remain a proud people.
Video

Video Turkey Campus Attacks Raise Islamic Radicalization Fears

Concerns are growing in Turkey of Islamic radicalization at some universities, after clashes between supporters of the jihadist group Islamic State (IS) or ISIS, and those opposed to the extremists. Pro-jihadist literature is on sale openly on the streets of Istanbul. Critics accuse the government of turning a blind eye to radicalism at home, while Kurds accuse the president of supporting IS - a charge strongly denied. Henry Ridgwell reports from London.

All About America

AppleAndroid