Cargoes of dry-bulk commodities hauled through Arctic waters are set to rise to a record this year as shipping companies use the route to almost halve journey times compared with Suez Canal shipments.
Nordic Bulk Carriers A/S plans to transport about six to eight 70,000 metric-ton shipments of iron ore to China from the Russian port of Murmansk starting in July, according to director Christian Bonfils. Using the so-called Northern Sea Route for the journey instead of the canal saves 1,000 tons of fuel, or $650,000, he said today by phone.
“We plan to use the Northern Sea Route if it makes sense and we can rely on it,” Bonfils said. Nordic Bulk Carriers, based in Hellerup, Denmark, has four ships with the world’s heaviest hull reinforcing for plying icy waters and will become the biggest user of the route in terms of volumes transported by year-end, he said.
Russia is promoting the Arctic voyage as a lane to ship oil, natural gas and minerals to the Pacific Ocean from the northern Atlantic as ice melts and scientific knowledge of marine transportation in the region advances. Any dry-bulk cargoes to be sent to Asia from ports north of Rotterdam may be able to use the route when it’s open, Bonfils said.
The route follows the Russian coast from the island archipelago of Novaya Zemlya in the west to the Bering Strait in the east, according to the website of the United Nations Environment Programme’s GRID-Arendal affiliate. A voyage through Arctic waters is as much as 40 percent shorter than a journey via the Panama or Suez canals, the site showed.
Nordic Bulk Carriers made the first Arctic voyage with a commercial mineral cargo in 2010 and another last year, according to its website. The Murmansk-to-China journey takes 23 days using the northern route, compared with 43 for the Suez Canal, according to Bonfils. The planned ore cargoes represent an all-time high for shipments via the passage, he said.
Arctic navigation may be limited to as little as four summer months a year, George Economou, president of DryShips Inc., said in a May 30 interview. Limits on voyages also stem from a shortage of specialized ships, uncertain hire costs for government-owned icebreaker escorts for the seven-day passage and evolving rules as the trade develops, Bonfils said.
Ship owners can charge a daily hire rate for an Arctic voyage that’s up to four times higher than the Suez route, yet the dollar-per-ton cost of moving cargoes remains the same because of the savings in time and fuel, Economou said. DryShips in December ordered four Panamax vessels with strengthened hulls at a cost of $34 million each and aims to start employing them on the Arctic voyage in 2014.
“We know there is demand there, as long as we can provide the ships,” Economou said. His company is based in Athens and has a fleet of 58 dry-bulk carriers and tankers, according to first-quarter results released May 29.
While icebreaking fees exceed Suez Canal tolls, shippers using the northern route avoid elevated insurance costs associated with passing through areas of higher risk for piracy, according to Bonfils.
Fifty-five Panamaxes out of the global fleet of 2,005 have reinforced hulls, Nick Brown, a spokesman for Lloyd’s Register, said by e-mail yesterday. Only three have the top classification of 1A Finnish Swedish class, he said. Nordic Bulk Carriers owns two of those ships, its website shows.
1A-class vessels are the only ones permitted by Russia’s government to use the Arctic route, Bonfils said. Including orders at yards, six of the ships will be available for service in the next three years, he said.
Commercial passage through the Arctic has become easier since 2007 as ice retreats in the region’s northeast, partly because of climate change, Rudiger Gerdes, a professor at the Alfred Wegener Institute for polar and marine research in Bremerhaven, Germany, said by phone yesterday.
Panamaxes are the largest ships that can navigate the Panama Canal. Lloyd’s Register ranks second globally among so-called classification societies that monitor compliance with structural rules for building and maintaining ships.