Being bullish about Arctic shipping – the Northern Sea Route (NSR)

by Nat South for the Saker Blog

Part 1

The Northern Sea Route, (Северного морского пути) handled a record 9.7 Mn tons of sea cargo in 2017.

President Putin, in his speech to the Federal Assembly at the beginning of March, stated that he would like to see a tenfold increase of cargo transported along the NSR by the end of 2024.

At present, three Arctic routes are of interest as intercontinental maritime alternatives

for shipping traffic:

▪ Northern Sea Route (NSR) – used by wide range of types of commercial shipping;

▪ North-West Passage (NWP)- with occasional commercial traffic, (ore bulkers), but also the occasional cruise ship;

  • Transpolar route (TSP) – no traffic as yet apart one or two Polar expedition vessels.

On paper, the NSR looks attractive for transit shipping as it can shorten the voyage time compared to using the Suez Canal by approximately 40%. Then there is destinational traffic, along the NSR due to the various ports & towns along the coast, which is mostly tied into the transport of Siberian natural resources. A handful of shipping companies potentially view future transit through the Arctic as a means of having a competitive edge over other companies globally, but for the foreseeable future, Arctic shipping will remain a niche market, as it is just 1 percent of all global shipping, (most of that is in the Barents Sea).

With the decline in sea ice coverage in the Arctic region, it is estimated that the shipping activity in that area will increase in the coming years, but the figures vary considerably. But first, some myths need to be dispelled, the sea-ice does not melt uniformly in all locations, as the extent of sea-ice can vary from year to year. The overall continued reduction in sea-ice does not actually guarantee open ice-free routes. Paradoxically in summer 2007, while some areas in the Arctic saw a marked reduction in ice coverage, parts of the NSR were blocked to shipping due to thick ice, because there is uneven distribution of sea-ice along the coastline. Equally, the overall forecast for the decrease in sea-ice is non-linear, (NB: subject to the vagaries of mega volcanic eruptions or changes in the Atlantic conveyor as well of course says the author with a hint of sarcasm). More background information:

The topic of the NSR related to the Arctic sea ice reduction first came to prominence in the 90s. A number of climate models outline continued sea-ice melting, (already with an 65% reduction in ice thickness from 1975 to 2012), with substantially ice-free conditions between mid-21st century to the late 21st century period. Some of these climate model analyses have led to optimistic assertions being made about the potential growth of commercial shipping in the Arctic, even suggesting an estimated 15% of the global marine traffic would use the NSR by 2030. Most others suggest a rather more conservative estimate, because of the need to take into account the expensive ice-strengthening & specialist equipment needed for regular polar voyages. These ice-class ships are also more expensive to run, precisely due to specific mandatory requirements including a strengthened hull, winterisation of critical operational & safety equipment and additional engine power.

However, how the changing ice conditions will realistically correlate with expected growth in Arctic shipping is not yet well understood. Probably with this in mind, a number of research papers have been written on the economic feasibility & challenges of Arctic shipping operations, market factors in relation to the cost competitiveness and others that compare the NSR with traditional routes such as the Suez Canal. In one study, dozens of global companies expressed no interest in the Arctic because “the ratio of investments to gains are low”. Some of these studies looked at different shipping sectors, such as liner shipping, (containerised trade) and bulk trade.

The nature of suitable cargoes to go through the NSR is determined by the usual summer navigation window of around 3 to 4 months per year. So shipping involving time-sensitive cargoes & needing all year round operations are not going to use the NSR for a long time. In fact, it is probable that they will ultimately use the TSP route rather than the NSR by the end of this century. The coastal NSR will progressively lose its importance as a shipping route, as transiting ships will increasingly migrate to number of viable deeper offshore routes, north of Novaya Zemlya, as well as Severnaya Zemlya (∼82°N) and Wrangel Island. What is not reliably known is the timescale for this change, although some articles suggest that is not likely to happen for another two decades.



Winter ice coverage hinders operations for all but the strongest ice-strengthened nuclear icebreakers, even they also get stuck in ice. The NSR will be out of bounds for all year round containerised liner shipping, with their tight timetables, and just-in-time routes. Due to the sheer size of many of these container ships, they physically would not get through some of the shallower NSR straits.

Some articles also present the technical pros and cons of operating in the Arctic. From reading these, a sense of caution is apparent, with many sectors hesitant about even thinking about sailing in the Arctic, and it is not just because of a risk of an accident due to ice. Other than costs, one common factor holding back ship operators is the “persistence of risk”. Many ship operators see the NSR as being limited due to the fluctuating seasonal variations in ice coverage, the extreme weather conditions encountered, the lack of rescue & port facilities and poorly charted waters. Ship operators responses in a study perceived physical risk for Arctic shipping as being: ‘Ice’ (91%), 2. ‘Weather’ (43%), followed by ‘Remoteness’ (39%).

As such, uncertainties as to the viability of the NSR and other routes, will remain for the next decade. There are also significant cost elements to take into account when a ship uses the NSR: fuel use & prices, higher insurance costs & the NSR Transit tariff for a permit, when compared with the Suez Canal tariffs. Convoys led by icebreakers are a common operation mode in the Russian Arctic, through the NSR, which incurs icebreaker & ice pilot fees.

Some shipping companies have taken the decision to make Arctic voyages part of their core business, not only Russian ones, but Asian companies have gained a foothold in a lucrative sector. A significant proportion of this predicted increase in trade along the NSR is a growth in LNG energy delivered through the Arctic. This has been made possible by the design & construction of new ice-breaking Liquefied Natural Gas (LNG) tankers, as well as continued multidecadal reduction in sea-ice in the Arctic region.

The use and development of the NSR is underpinned by LNG out-shipments from the Yamal LNG project, (Sabetta port). The first million tons of LNG, (part of a 5.5 million tons per annum), has already been shipped so far, according to OAO Yamal LNG, which is only in its first phase, (known as a train in LNG parlance). When the whole 3 train capacity project, comes online, there will be about an annual total of 16.5 million tons of liquefied natural gas originating from the South Tambey field on the Yamal Peninsula.

Then there is another planned LNG project the Arctic LNG-2, which might come online in 2023, with a similar LNG capacity to the Yamal project. Overall, 40 million tons of LNG might be transported by 2025, when both projects fully come online.

Total estimates for NSR LNG, ore and wood shipments, (with additional information on license obligations and company future plans included). Most of the traffic is predicted to for up to 2030 are concentrated in three regions: the Gulf of Ob, Yenisei Bay & up to Pevek.

Double click on image to see it in a larger format.

A number of companies have undertaken pilot voyages to test out the effectiveness & viability of the NSR in particular (Japan, China – 2012, South Korea – 2013). Unsurprisingly, Asian companies have taken a keen interest in Russian LNG energy and as such, LNG partnerships are being put into place, connected to the Yamal LNG project. The most recent Russian Arctic partnership is with the Japanese company, MOL, who jointly with the Chinese company COSCO, ordered a specialist LNG tanker, the ‘Vladimir Rusanov’, which is due to go into service later this month.

The first of its era: ice-breaking LNG tanker: ‘Christophe de Margerie’ Double Acting Tanker, (DAT function):

Length: 299m;
Ice-strengthened to ‘Arc 7’ RMRS level;
Autonomous voyage (through ice up to 1.5 m going ahead & 2,1 metres when navigating stern-first)
Engine power of 45 MW, (3 Azipod propulsion units – 15MW each)
Cargo capacity: 172,600 cubic meters of LNG
Capable of operating down to minus 50 Celsius;
Price tag: a lot (mucho dinero)

These LNG tankers provide a shuttle service to transhipments hubs, for conventional LNG tankers to pick up and re-export to the final destination. Destinations so far from the Yamal LNG terminal include France, the Netherlands & the UK, which then were then re-exported to South Korea, UK, USA, Spain, Jordan and India. Existing hubs already used include the UK, France and Dutch LNG terminals. On the Asian side, MOL is also a stakeholder in a planned LNG transhipment hub (Reloading terminal) in Kamchatka, for the Asian LNG market. For the time being, Yamal LNG out-shipments will remain a seasonal export to the East, (from July to December) mostly due to the rigorous winter conditions.

Teekay;s first of 6 LNG tankers – ’Eduard Toll’ voyage westwards through part of the NSR

Company SCF Teekay MOL COSCO Dyngas/Sinotrans/CLNG
Number of LGN tankers 1 6 5 4


Although it was widely stated in the media that Russian lawmakers would adopt legislation giving

Russian-flagged ships the exclusive right to transport oil and gas along the NSR, this clearly has not happened, as the “Christophe de Margerie” is on the Cypriot register, although operated by SCF.

You could say that work is in progress but more could be done to take advantage of the potential that the NSR will offer in the future, not just for LNG & mineral ore shipments. It is still early days for a number of planned mineral extraction projects in Siberia, (LNG, oil, coal & mineral ores), but these shipments will be the backbone of the NSR, if the figures given by the Russian Ministry of Natural Resources are valid.

Yet, President Putin’s stated figure of 80 Mn tons of sea cargo by 2025 seems to be considerably higher than the above estimated figure of 67 Mn tons. It can be assumed that the gap could be just due to optimistic speculation, or estimates of other types of sea cargo carried by non-Russian ships.

The use of the NSR has started to be internationalised, due to the onset of a significant growth in LNG production & shipment. It is important to note that this international collaboration is mutually beneficial for Russia and foreign trade partners. Yet international maritime interest in using the NSR is still modest, but this might change over with other developments in the Russian port & transport hinterland and along the NSR. The NSR cargo traffic example outlined in this article is only one specific aspect of a multifaceted Russian policy on the Arctic.

More on this in PART 2.

Nat South is a polyglot blogger & researcher on maritime topics, amateur navigator and curious about the world around her.

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