Silver Lining of Global Warming? To the Routes in North!

shengda2
Shengda Zhu
Research Associate
Institute of Transport and Logistics Studies
The University of Sydney, Australia

Global warming and sea-level rise are, for sure, a worry. Many major ports are on the front line in fighting with these dramatic effects. Solace for the maritime industry is the emergence of a potential new shipping route from the melting glaciers in the Arctic sea, as shortcuts to connect the world’s major markets. The most compelling advantage of Arctic shipping is its distance. the world’s busiest route between East Asia and Europe, traversing in the Arctic can decrease to 40% of the total distance. Natural resources, such as hydrocarbons and rare minerals, are another incentive for Arctic shipping growth.

On the other side, the major concerns of shipping in the Arctic are the uncertainty and technical requirements posed on both ships and facilities because of the extreme environment and constantly changing ice conditions. Even with icebreaker escort, additional construction cost is needed to reinforce vessels to navigate in ice-covered areas. Substantial investment is expected in ports and facilities alongside Canadian and Russian coastal areas to put Arctic routes into use and provide basic cargo handling, navigation, and rescue services.

f1

Arctic shipping routes, Source: The Arctic Institute

Container shipping companies do not agree on adopting Arctic shipping and the shortened distance of Arctic routes does not lead to the enthusiasm in these new routes. While some liners rejected Arctic shipping routes because of environmental concerns, many trial voyages have been conducted by pioneering companies since 2013.

Academia mainly focused on the economic and navigational viability of Arctic shipping, and there are very few studies on its socio-economic impacts, considering the vulnerability in the Arctic area. The externalities of freight transportation in the North, which include the impacts of air pollution on local people, implications for global warming, and risks of an oil spill, should be further investigated.

The transport volume in arctic shipping routes is preliminarily estimated with a series of very generous assumptions on voyage conditions to identify any external costs. Based on a logit model incorporating different transport options, Arctic shipping route can take up to 13% market share of the container transport volume. As a comparison, the traditional shipping routes via the Suez Canal or Panama Canal would take almost all the left market share, whereas the rail and air transport options are negligible.

It is found that environmental costs by using Arctic routes tend to be higher than conventional options due to their smaller ship size and lower load factor. The successful development of Arctic shipping routes would lead to worse environment outcomes per unit. Because the Arctic area is more vulnerable and important to the entire global warming problem, imposing emission charges or higher canal fees on Suez Canal and Panama Canal would push traffic volumes to the North, which is undesirable from the perspective of global environmental effects.

Future studies should endeavor to investigate other externalities of Arctic shipping. More specifically, the first venue is how the local ecosystem would be affected by shipping noise, oil spill, and other disturbance. The second aspect is how the commercialization of Arctic routes would impact on its landside communities. The routine shipping in these sea areas would significantly change local people’s hunting and fishing behavior and threaten their food supply security. However, this does not imply they are entirely opposed to the open of Arctic routes. Local communities want their voices heard, be involved in setting regulations, and an improvement to their quality of life through more job opportunities and resources. Therefore, together with quantifying the costs to local communities, research should also be focused on how to benefit both local people and shippers to achieve a win-win situation.

f2

 Container ship in the Arctic, Source: Arctic Council

 

References:
Lasserre, F., & Pelletier, S. (2011). Polar super seaways? Maritime transport in the Arctic: an analysis of shipowners’ intentions. Journal of Transport Geography, 19(6), 1465-1473.