IHS Maritime: Arctic ShippingGary Li, Senior Analyst, IHS MaritimeRichard Hurley, Senior Analyst, IHS Maritime

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Arctic Routes

• How safe is it?• What advantages will it

bring?• What sectors are set to

benefit from it?• How soon can I use it?• Can it be an alternative

to Suez?

Trade Factor

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Asian Exports

Asian Imports

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Asian Seaborne Trade Forecast

© 2013 IHS Source: IHS World Trade Service

• Asian import/export• Forecasted steady growth

• Container shipping to Europe• Third largest in terms of regional

trade

• COSCO ‘Yong Sheng’ – 2013• Dalian – Rotterdam via NSR• Nine days faster than Suez

Ice Capable Container Ships• Relatively few in number• Maersk currently in the ‘lead’• Total TEU numbers quite low

• Currently only 15% of container fleet are ice capable

• Only 1% of new orders are for ice capable ships

LNG Demand• LNG demand

forecasted to grow strongly

• Asia stands to be largest importing region

• Top five Asian economics have huge appetite for LNG

• China and Japan fuelling imports

Ice Capable LNG Tankers• Relatively small percentage

of current fleet- 29 out of 375• Also small percentage of

orderbook- 10 out of 88• Japan and Norway has

largest % of tankers

• Russia leading the way with new orders

• Delivery of Veliky Novogorod in Jan 2014

• Aim to dominate Arctic LNG transport

Icebreakers• Critical for navigating NSR,

even during summer months

• Russia holds near monopoly• US and Canada lagging in

icebreaker capabilities

• Atomflot- six icebreakers available for escort duties

• Others mainly used in Arctic ports

• New icebreaker LK60 class in build- in service by 2017

Alternative to Suez?• Total Suez transits in 2013

were not impacted • More than 16,000 ships

transited the canal in 2013

• Vital to Egyptian economy• Military will not allow it to be

threatened• Current volumes in NSR

nowhere near Suez• Will remain vital for

international shipping for the indefinite future

2nd Army• 2nd Mechanized Division• 16th Mechanized Division• 18th Mechanized Division• 2 x Divisions in reserve

3rd Army• 7th Mechanized Division• 19th Mechanized Division• 2 x Divisions in Reserve

Regulatory Bottlenecks

• Varying classifications for ice capable ships

• NSR uses Russian class• Non-standardisation • Polar Code- 2015

• International Maritime Organisation

Safety Concerns• Few assets, overstretched if traffic increases• Icebreakers have to maintain escort as well as SAR duties• Few aircraft assets in region• 10 new SAR centres due to open in 2015

Arctic Shipping Routes

• With shrinking ice coverage in Arctic, the seaways is opening up

• The “Northern Sea Route” (NSR) and “Northwest Passage” (NWP) are navigable during the summer months

• A further “Central” corridor is envisioned to have opened up by 2040

2013 Ice Coverage• Ice coverage in the Artic is annually at

its greatest extent in February and least in September

• Navigation season for the NSR is late June to September

• In recent years Artic Warming has made most difference to extent of ice in summer

• In 2012 the NSR was considered ice free from August 2012

• In 2013 the summer minima was 29% higher than predicted

• Ice breakers were still required for vessels passing North of the East Siberian island throughout the season

Ice Extent in February 2013

Ice Extent in September 2013

Images courtesy of the National Snow and Ice Data Center, University of Colorado, Boulder.

NSR Transits

The number of ships transiting the NSR increased in 2013 by 54%

• 267: Total traffic in the area June to October • 25: Non-Russian vessels from 11 Flags• 10: Vessels made the through passage• 9: Vessels carried export cargoes

from Russian ports• 6: Total number of icebreakers

employed?

Year No. of Transits

2011 41

2012 46

2013 71Source: NSR Administration/AISLive

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2013 SAR Incidents

• The holing of the tanker Russian Flag Tanker Nordvik in the Matisen Strait on September 4.

• The loss of the helicopter from the CCGS Amundsen on 9th September

Date: 4 September

Ice Class: Ice Class I

Cargo: 4,944 tons diesel

Damage: 1m hole in ballast tank

Date: 9 September

Ship: Icebreaker Taimyr

Date: 11 September

Ship: Tanker Boris Vilkitsky

Date: 14 September

Ship: Icebreaker Vaigach

Nordvik Incident- September 2013

CCGS Amundsen Incident• 9 September: helicopter of CCGS

Amundsen collide with ice and crashes

• Injured crew perish despite being in survival suits

• Amundsen was ordered to return

• Helicopter eventually recovered• Helicopter was only effective

asset for this section of NW passage

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Nordic Orion: NSR & NWP voyages

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•During the summer months of 2013, Nordic Orion transited both Northern Sea Route and North West Passage

•NWP route shaved over 1,000 miles off the Panama Canal Route

•..and was able to carry 25% more cargo

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Icebreakers

•Russia has the largest fleet of ‘escort’ icebreakers•Most icebreakers used for port clearance duties

Sea-going Icebreaker Fleet by Nationality

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osa

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Thank You!

Questions?