The climate is becoming warmer due to anthropogenic carbon emissions, and High North is warming twice as fast as lower latitudes due to positive feedbacks. The uncertainty regarding ‘if and when’ the Arctic will be ice-free can easily render any planning obsolete. Dissimilar predictions coming from different scientific weather simulation models may freeze any decision-making process in respect to the Arctic. However, increased operational risk and Arctic’s peculiarities might shape the outline of a niche maritime market; getting first and being specialized, might make a huge difference in the economic results and the market share. Uncertainty goes as far as 2030, when it is expected that Arctic will be completely summer ice-free.

On September 2012, the ice cap reached its lowest level. Multiyear ice will give place to thin first year ice. Facilities and infrastructure near coastal and river regions will be threatened, thawing of soil on the sub-Arctic region will make obsolete existing transportation roads based on permafrost. Taking into consideration the almost non-existent road and limited rail network in the Arctic and sub Arctic Circle, maritime transportation may constitute the only affordable solution to an existing transportation problem of minerals and oil between producing and consuming zones. The melting of ice will have as a direct consequence new sea-lanes to open for maritime transit through the North (Eastern) Sea Passage (NSP), North West Passage (NWP) and in a much later time through the Transpolar Route (TPR). NSP, which covers Siberia’s waterfront, is predicted to be ice-free earlier and commercial stakes will be higher than NWP and TPR. Even if there isn’t one obvious sea route, still there are two rather obvious ports that above passage is called to bridge; Murmansk on the West and Vladivostok on the East. Rason port placed in North Korea -political situation permitting-, and Greenland could become major maritime transportation hubs. Real estate will follow suit maritime exploitation.

New maritime routes may have as a result great cost savings for the maritime industry and can reduce the travel time and fuel costs by 40% along some routes. The distance between the port of Rotterdam and the port of Yokohama in Japan could be at least 4000 miles lesser through the NSP versus the Suez Canal. This in turn can lead to an increased maritime trade for bulk cargo through the Northern Routes when conditions will be appropriate. Nevertheless, a similar trend is not probable for container ships due to time restraints and much needed predictability on arrival-departure times. Northern voyages have experienced a booming period the last few years and a key advantage is that Northern Routes are away from current geopolitical hot spots such as the Persian Gulf and regions that are pirate infested such as the Horn of Africa and Malacca straits. Trade flows might gradually alter in favor of Northern Sea Routes despite initial inertia, and future technologic advancements will certainly play a role. Naval engineers provide new solutions to overcome long-existing problems; such as double acting vessels that are able to sail both in open Seas and ice infested regions. This technological step forward, is combined with directional propulsion systems such as azipods, hardened hulls and retractable rudders. An icebreaker escort will be less and less needed in the near future and these proficient vessels could even achieve reduced fuel costs. Plenty of technical problems that are met especially in icy environments still exist, such as the ice forming upon the vessel due to icy winds that can easily capsize any vessel without proper handling and on time removal of the excess ice. Special coating materials are underway to resolve such issues. The increased cost associated with these vessels during the operational life cycle –design, construction, maintenance- will determine the viability and economic feasibility of such projects. Russia is certainly eager to alter world maritime trade routes to her benefit. The huge investments that are much needed to make these routes navigable in a safe manner, will probably lead to collaboration between the arctic states and the international community.

However, exploitation of Arctic passages won’t be a straightforward process. Existing port facilities lying across NSP in particular those that were established during the Soviet era are more or less obsolete today, due to multiyear lack of maintenance after the collapse of USSR. Even the complete absence of piracy in the region nowadays, can change rapidly in the near future when the route will become more lucrative. These routes may become main avenues for immigration, smuggling, narcotics, and even terrorists’ attacks. Russia’s bureaucracy shall be a serious issue to consider prior any investment takes place. A major concern for the maritime industry is the sea-ice movements and the bathymetry of the Arctic region; much needed information in order for the Northern Corridors to become commercially viable Sea-lanes. Even the cartography and exact bathymetry of the upper North, isn’t so accurately charted, few lighthouses exist and fewer are in operation and existing systems of GPS satellites are less accurate in the High North. NSP (Russia) has shallow points, such as the Vilkitsky and Sannikov strait which almost prohibits the accommodation of large vessels such as the Panamax class or vessels above 50,000 tons deadweight. Additionally, NSP route includes strategic choke points such as Severnaya Zemlya and New Siberian Islands that could be easily blocked by adversaries in case of international turmoil. Political stability in the international arena and economic feasibility will influence above decisions. Current low oil prices are a prime example of how exogenous factors might hinder Arctic’s exploitation. The risk premiums are quite high at the moment for ships that transverse NSP. It is safe to assume that such insurance premiums will have a downward trend as more and more these routes are used and evolve into ice-free regions.

Concluding, is time ripe to invest heavily in polar ice capable vessels and polar infrastructure? This shall be examined and answered on per case basis. A professional approach will be a company specific business plan to be prepared, based on a well-defined SWOT analysis, a macroeconomic analysis, and a risk assessment of operations to be executed, prior to any investment takes place. Good news are that arctic expertise is not hard to find anymore and simulation-based decision-support (SBDS)-tools have been developed that can certainly support company’s decision process. Such tools, use vessel’s dimensions, day specific ice conditions, and calculate day specific fuel consumption and transit times. These tools in no way replace what made Greek maritime great; an inherited instinct of markets’ fluctuations combined with entrepreneurship, risk taking and hard work.

Mr Ktenas Panagiotis is an arctic and North Korea issues’ aficionado, a Member of the International Propeller Club of the US (Port of Piraeus), board member of TUFTS Greek club, and an executive board member of Institute of Global Maritime Studies (IGMS GrC). More posts can be found at Facebook @igmsgreece