An alternative look at melting Arctic Ice

The Earth’s climate has fluctuated throughout its history, long before mankind entered the picture. Certainly, however, the rise in overall global temperature in the twenty first century is nothing to trivialize. Adverse effects such as droughts and rising sea levels have created ecological concerns, from lower yielding agricultural production, to regions of the world being potentially submerged in the future.

While worrying, what if, theoretically, we took a “glass half-full” perspective towards some of the effects of climate change, such as melting ice in the Arctic. Could any positives emerge?

Two routes could become viable time and fuel saving alternatives for maritime trade

Traversing through Arctic waters has long been a lucrative prospect, but has only become feasible with the accelerated rate of melting Arctic sea ice. Until 2009, shipping along the Northwest Passage, which runs alongside the northern coast of North America and connects the Pacific and Atlantic Oceans, was largely restricted. Due to, however, the declining size of the polar ice caps, previously inaccessible waterways can now be potentially navigated. Current estimates project the Northwest Passage to be “a frigid slush of fresh and saltwater” in three to five years during the Arctic summer. In 2013, the Danish-operated Nordic Orion was the first big freighter to make the journey, travelling from Vancouver, Canada to Pori, Finland. Compared with using the Panama Canal, the current method of bridging the Pacific and Atlantic Oceans, using the Northwest Passage was approximately $80,000 cheaper and one week faster. Should more follow in its footsteps, the route could prove to be a speedier passageway between northeastern Asia, the U.S. East Coast and Europe.

The Northern Sea route, also known as the Northeast Passage, holds perhaps even greater potential. As ice continues to thaw, presenting more favorable sailing conditions, a shipping lane along the Siberian coast connecting the Atlantic to the Pacific could open up. The Northern Sea route holds the potential to cut journey times between Western Europe and Asia by thirty per cent. First used in 2007, traffic along the route has steadily increased over the years, with a modest four ships sailing in 2010, to seventy one in 2013. Using this route also has the added advantage of avoiding the Suez Canal and its piracy prone waters.

Frozen treasure

The U.S. Geological Survey estimates that around one third of the Earth’s undiscovered natural gas as well as over thirteen percent of its undiscovered oil could be under the Arctic Ocean floor. Exploration licenses are already being handed out by Arctic countries to begin preliminary drilling. Russia would seem to benefit the most from this, as forty three of the sixty large oil and natural gas fields are located in its territory. Current projections estimate production could begin in ten to fifteen years. Lastly, huge reserves of a range of minerals including copper and gold could become accessible and mined with diminishing ice-sheets.

Hurdles that must be overcome

While these are all interesting developments, they are not without obstacles. Firstly, although shipping along both the Northeast Passages seems very promising, an uptake in traffic seems unlikely for the time being. Although ice has receded to the point where navigating water ways is possible, it is by no means easy. In all likelihood, it needs an approximate twenty to thirty years of climate change before it is a fully recognized alternative. Arctic weather is still as unpredictable and treacherous as ever, even during the summer months. Besides making navigation difficult, the added risk hikes up insurance premiums. Adding to the costs, ships traversing the Northern Sea Route will need an icebreaker escort, which costs around $400,000.

There is also the ever pressing issue of Arctic territorial ownership. The Arctic is governed under domestic laws, but under certain circumstances, international agreements. The current regulations according to the 1982 UN Convention on the Law of the Sea, for example stipulate both freedom of navigation rights, but also for a coastal country to set territorial sea boundaries up to twelve miles offshore, as well as claim “exclusive economic rights to natural resources on or beneath seafloor” up to 200 miles offshore. Disagreement arises, when for example, Canada claims the Northwest Passage as its own, and as being subject to its laws. Other nations such as the US, however, strongly disagree and claim it is a free international passage. Another point of contention between the two nations is that their boundaries for establishing exclusive economic zones overlap in some instances, such as in the ongoing debate of the current ownership of the Beaufort Sea.

Conclusion

Undoubtedly not without controversy, it would seem there are some benefits that could be gained from the melting Arctic ice. What role the shipping lanes in the Northeast and Northwest Passages will play in the supply chain is yet to be seen, as is whether the appropriate infrastructure can be established to acquire lucrative Arctic resources.

What positives do you see for supply chain and logistics processes as a result of the melting ice?