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The Nordic Orion made history last September when it hauled 15,000 tonnes of coal to Finland from Vancouver. It took the Danish ship four days less than it would have taken to traverse the Panama Canal. (Nordic bulk carriers)
The Nordic Orion made history last September when it hauled 15,000 tonnes of coal to Finland from Vancouver. It took the Danish ship four days less than it would have taken to traverse the Panama Canal. (Nordic bulk carriers)

Global trade

A reality check on the Northwest Passage 'boom' Add to ...

This is part of a series looking at infrastructure projects designed to create economic opportunities in the North.

When the Nordic Orion loaded up with coal in Vancouver in September and sailed through the Northwest Passage to Finland, the voyage was hailed as a breakthrough in Arctic shipping and a sign of things to come as global warming opens up the Far North. But many experts have become less convinced about the potential of the Arctic as a major shipping route or a source of vast mineral wealth.

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There is no doubt warming temperatures have created opportunities for shipping in the Arctic Ocean. The extent of summer ice has dropped by about 40 per cent since 1979 and some experts say that by the summer of 2050 ships with no ice strengthening at all will be able to go through the Northwest Passage.

All of which has increased long-held interest in using northern routes as a faster way of sending cargo shipments from Europe and the eastern seaboard of North America to Asia. Since Roald Amundsen successfully navigated the Northwest Passage in 1906, explorers and merchants have dreamed of using the passage to save time and money. The Canadian government has also been hoping for years that increased traffic along the route will bolster Canada’s claim to sovereignty over the passage, which the Americans and Europeans say is international water.

On paper it’s an intriguing notion. Sending cargo through the Northwest Passage would shave about 4,000 kilometres on a trip from Europe to Asia compared with the Panama Canal, which also can only accommodate ships of a certain size. The Nordic Orion saved about $200,000 and about four days using the passage.

But many experts say there are too many drawbacks to the Northwest Passage that mean it will never amount to more than a niche transit route. It’s too shallow, they note, and the network of islands and inlets make navigation tricky. Much of the area also lacks proper charts and there is little infrastructure, such as ports or search and rescue facilities. The geography and wind currents also mean the passage remains ice covered far longer than other parts of the Arctic.

The federal government has also done little to assert Canada’s claim to the area, says Bernard Funston, a consultant and former chairman of the Canadian Polar Commission. “We’ve got to start putting our money where our mouth is. We’ve done a lot of paper work around this stuff but we haven’t done much on the ground.”

There are other challenges as well. The Panama Canal is being widened, meaning larger ships will be able to pass through. And Russia has been far more assertive in staking its claims in the Arctic and developing its own passageway, the Northern Sea Route, which stretches from the Barents Sea to the Bering Strait. The Russians have five Arctic icebreakers with plans to build three nuclear-powered ones. They are also building 10 navigational and rescue centres and already have a network of ports along the route.

Transit traffic along the Northern Sea Route has increased from 34 ships in 2011 to about 50 this year. China has demonstrated an interest in the Northern Sea Route and another shorter option – sending ships across the top of the world along the Transpolar Route which skirts the North Pole.

By contrast Canada is building one icebreaker and a fleet of eight patrol boats. Much of the increased shipping activity in the Canadian Arctic has been from cruise ships, government vessels and barges used to resupply remote communities. The Coast Guard is also developing Northern Marine Transportation Corridors, a network of waterways through the Arctic that are most commonly used which would then be provided with marine services.

But none of these Arctic routes will ever be more than of limited use, says Malte Humpert, executive director of the Washington-based Arctic Institute. Arctic shipping can’t compete with the Panama Canal, Suez Canal or Strait of Malacca near Singapore, which sees up to 60,000 ships annually. Container ships in particular won’t travel through the Far North because these ships typically make several stops during a transit.

“As a transit route I really don’t see the Arctic happening where someone says, ‘Oh we have Japanese computer screens or cars going to Europe.’ That will never happen,” Mr. Humpert said. “It’s too unreliable, the season is just two or three months at the moment. Even if the ice melts dramatically it will never be a year-round season because the ice will always be there during winter.”

However, Arctic shipping has been getting more attention internationally. Much of a recent conference on the Arctic in Brussels was taken up with discussions about transit, trade and environmental issues in the North. During the conference, Kathrin Keil, a scientist at Germany’s Institute for Advanced Sustainability Studies, said shipping through the Arctic will remain a niche “for certain ships, for certain commodities, for a certain time of the year. But it’s not an all-year-round global maritime trade route. That’s not what it is and probably won’t be.”

What could increase is so-called destinational traffic, which involves ships servicing mining or oil and gas operations in the Arctic. For example, Baffinland Iron Ore Mines Corp. expects to send regular shipments of ore to Europe once its giant Mary River mine in Nunavut opens in 2015.

But some say the Arctic may not yield the mineral wealth expected. Despite predictions that the Arctic contains up to 30 per cent of the world’s untapped reserves of oil and gas as well as vast troves of minerals, the economics of extracting those resources remains high and vulnerable to commodity prices. The shale gas revolution has made drilling for natural gas in the Arctic less enticing and Greenland, once considered the new frontier for mineral exploration, has yet to see the boom many forecasted.

Mr. Humpert added that global trade is shifting toward the Southern Hemisphere, meaning the Arctic will become even less important as a shipping route. “More and more trade is from south to south,” he said. “Rather going from Japan to Europe or from Europe to North America, a lot more trade is going from China to Brazil and Africa to the Middle East or Africa to India.”

Some say the Northwest Passage is already seeing more shipping which will only continue. Traffic along the passage has climbed from nine ships in 2007 to 30 in 2012 and could more than triple by 2040, according to figures compiled by Lee Carson, president of Ottawa-based Norstrat Consulting. “I think there will be a lot more increase in that traffic than the sort of generally accepted forecasts,” he said.

Mr. Funston is less convinced about the prospects of a major increase in shipping in the Far North. “The Arctic is still cold and it will be cold and dark for half the year forever.”

Shaving kilometres off sea routes

Sea distances for Shanghai to Rotterdam:

Panama Canal: 25,588 kilometres

Suez Canal: 19,550 km

Northern Sea Route: 15,793 km

Northwest Passage: 16,100 km

Transpolar Route: 13,630 km

Source: Laurence C. Smith, UCLA professor of geography

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