EMEA News
Declining Interest Reported in Use of Arctic's NSR from International Shippers
Interest from ship operators in utilising the Arctic's Northern Sea Route (NSR), which runs along the Russian coast connecting Europe and Asia, has waned in recent years, according to a report by Platts.
It has been previously speculated that increased use of the Arctic could have a potentially significant impact on bunkering, as tonnage that transitions to such routes would no longer pass by a number of currently key bunkering ports.
However, international shipping traffic on the NSR route is said to have begun to decline in 2014, slipping to 274,103 metric tonnes (mt), a three-quarter year on year fall, while in 2015 transited cargoes declined by another 86 percent to 39,586 mt, reported to mark a six-year low.
Currently, Russia is said to be developing the passage with the intention of ramping up crude and liquefied natural gas (LNG) deliveries from the Russian Arctic area to international markets, as well as transforming the NSR into a major route for international trade.
The route has the potential of offering several advantages over the traditional trade route to the Asia-Pacific region from northern Europe through the Suez Canal and the Strait of Malacca, a plan that is said to have had initial support from international companies, when transit cargoes hit a record high in 2012 of 1.262 million mt in the NSR region - representing 30 percent of total cargo shipments from 2011 to 2013.
However, since that time, transit cargoes are reported to have declined, having represented 7 percent of total shipments in 2014, and less than 1 percent in 2015
Further, it is noted that, during the past two years, no hydrocarbons cargoes have transited the route at all.
The region's harsh, unpredictable climate, as well as potentially high ecological risks, were cited as some of the reasons behind the decline.
A spokesperson from Statoil ASA (Statoil), which has sent a number of tankers with naptha and LNG cargoes to Japan via the route in the past, says that the company has lost interest in the passage.
"Statoil has not used the Northern route since 2013 and we currently have no plans to use it," said the spokesperson.
"Firstly, the waters need to be safe both as far as the vessel, the cargo and the environment are concerned. Secondly, any route we use needs to be commercially attractive and competitive against the alternatives," she explained , but did not provide further detail, but did mention that the company's choice of route is influenced by direct costs, amongst other things.
One of the key benefits of the route, from a cost perspective, is a reduced sailing time meaning a potentially significant saving in bunker costs.
However within the last two years bunker prices have fallen substantially, from over $600 per metric tonne to well under $200 pmt, meaning those potential savings would be similarly reduced.
In February, Ship & Bunker reported that a group of 15 environment groups this week delivered a letter to the Arctic Council, an organisation ruling on governance issues in the north, renewing a call on the involved nations to ban the use of heavy fuel oil in the Arctic.
