Interest rising in Arctic route, pioneer says

PUBLISHED : Monday, 16 May, 2011, 12:00am
UPDATED : Monday, 16 May, 2011, 12:00am


Shipping companies and charterers are showing growing interest in using the northern sea route through Arctic waters between Europe and Asia, says the head of the shipping firm that helped pioneer the trade lane.

But Felix Tschudi, chairman of Norwegian company Tschudi Shipping, said that with charter rates for dry cargo ships currently at very low levels, there was little financial incentive for companies to shift from established routes.

Tschudi Shipping used a Hong Kong registered dry bulk carrier, the Nordic Barents, to transport 40,140 tonnes of iron ore concentrate from a Norwegian iron ore mine at Kirkenes to Qingdao last September. The ship was the first foreign-registered vessel to sail non-stop through the Arctic wastes to Asia.

Tschudi, who was in Hong Kong late last week on the final leg of a mainland visit to Beijing, Shanghai and Guangzhou, said the voyage took 21 days compared with 40 days via the Suez Canal. When charter rates for a similar-sized vessel were around US$30,000 day last year there were higher potential savings than the current rate of about US$17,000 a day.

'It's all about the economics. There is definitely a market on exports to China, but it has to be competitive and there has to be an economic advantage,' Tschudi said.

He thought metal and raw materials traders, particularly on the mainland, would be enthusiastic exponents of the northern sea route. He said the shorter voyage time meant they were less exposed to fluctuations in commodities prices and the length of time their capital was tied up in a cargo would be reduced.

Tschudi Shipping and associate company Tschudi Arctic Transit, are working on plans for several voyages this year. Sovcomflot will use a tanker to transport 150,000 tonnes of gas condensate to China later this year in one of a number of voyages the listed Russian shipping firm is planning.

'We are trying to open people's eyes to the possibility. It will definitely develop over time and I've been planting the seed in China,' Tschudi said, adding there was interest by companies in all the cities he visited.

Tschudi thought the exploitation and development of mineral, oil and gas resources, including liquefied natural gas, in the high north Arctic region could spur greater use of the northern sea route. An additional benefit was that the transit through Arctic waters avoided the pirate-infested waters of the Gulf of Aden and the Indian Ocean.

But with the route only open between July and November, Tschudi said this short window precluded the route's development as a major container shipping lane between China and Europe.

'The problem with container lines is that they operate regularly. But the conditions [on the northern route] are not the same all the time. I don't think it is very suitable for liner operators' like Orient Overseas Container Line, he said.

Even so, the Russian authorities were 'very focused' in creating the right operating conditions for the northern sea route to evolve as an alternative to conventional routes.

Time saver

New York-Hong Kong

Northern Sea Route - 20,982km

Suez and Malacca - 21,570km


Northern Sea Route - 15,793km

Suez and Malacca - 19,550km

New York-Shanghai

Northern Sea Route - 19,893km

Suez and Malacca - 22,930km


Northern Sea Route - 19,718km

Suez and Malacca - 16,460km

Source: Danish Institute for International Studies