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(Yonhap Feature) As Arctic ice melts, shipping companies test new transportation route

All Headlines 09:00 September 26, 2012

By Malte E. Kollenberg
Contributing writer

Seoul, Sept. 26 (Yonhap) -- Kim Moon-ju, the assistant manager at Hyundai Heavy Industries (HHI), points to a grey-beige storage building. "Over there, that's where we do research and development," he said from the HHI head office in the southern port city of Ulsan, 414 kilometers south of Seoul. "Five hundred researchers work there." But he refrains from saying much more because what exactly those researchers are working on is top secret, other than that it has to do with the future of shipping.

A first glimpse of how this future might look was shown in August 2011 when the world's largest shipbuilder allowed outsiders to get a peek of an icebreaking iron ore carrier model. If and when the ship is built, it will be the largest icebreaking transport ship available in commercial shipping.

The northern sea line above the Russian coast has become ship-navigable since 2005 as the weather warmed up, apparently from climate change, creating a new shipping route from East Asia to Europe and North America. The best season is between May and October, with the ice usually measuring the thinnest in September.

Global institutes such as the American National Snow and Ice Data Center and the Norwegian Polar Institute had predicted record-breaking thinning ice this year. In June, the ice thickness had been less than the record year of 2007. According to the Colorado-based National Snow and Ice Data Center, the new record low in Arctic ice set on Aug. 26 was broken again on Sept. 4.

"Compared to September conditions in the 1980s and 1990s," the center said on its Web site, "this represents a 45 percent reduction in the area of the Arctic covered by sea ice."

The changing conditions have attracted shipping companies who have been sending tankers, container ships and other carriers into and through what used to be eternal ice. The lion's share of ships operating in the Arctic still goes to and from Arctic harbors, but the new route is getting increasingly interesting for transit transports.

In 2009 German shipping company Beluga was the first to send two of its ships from Ulsan to Rotterdam in the Netherlands. Two years later, the number of ships taking the route had already increased to 34, and experts say the number will only rise further.

South Korean President Lee Myung-bak's recent trip to Norway and Greenland is seen as largely influenced by Korea's ambitions to become a major player in the Arctic: The country is eyeing the large oil and gas reserves in the region as well as the shortened shipping route to Europe and North America.

Theoretically, the northern seaway offers enormous reduction in cost and shipping time in the long run. It usually takes about two weeks to travel 6,500 sea miles between Korea and Western Europe. Shipping through the Suez Canal and the Mediterranean, on the other hand, takes twice as much time as the route is twice as long.

Yet, there are too many problems to resolve before the region's commercial shipping can truly pick up, not the least of which is the cost. Security and environmental concerns, lack of infrastructure and appropriate ships, legal regulations and permission procedures all contribute to driving up the insurance cost.

"I think one can say the shipping and logistics industry is closely watching what is going on in the Arctic," Jan-Gunnar Winther of the Norwegian Polar Institute said.

At Hyundai, workers did more than just watch. Determined that the new transporter is a step in the right direction, company insiders hint that the research and development work has virtually been completed. The route through the Arctic will only become cost efficient if the icebreaking ships are comparable with ordinary transporters plying the Suez Canal. Therefore, the new type of ship has to have a few advantages, research officials say.

The new icebreaker transporter will be able to carry up to 190,000 tons, around double of what commercial counterparts can carry. It will be possible to navigate through ice up to 1.7 meters thick at a speed of up to six knots. Hyundai says doing so will reduce fuel consumption by 5 percent compared to other transporters in the same league. The specifications, Hyundai officials boast, are all in accordance with the company slogan to build the biggest, safest and greenest ships.

Industry officials take pride in the fact that shipping, which had its share in fueling climate change, can now take part in helping it slow down by taking the more fuel-efficient route. But Prof. Kim Gil-su of maritime transportation science at Korea Maritime University says it's way too premature to make such a claim because Arctic shipping is years from commercialization.

"The icebreaking-equipped ships are expensive," he says. They can only be used in the icy waters in the summer months, and it does not make much economic sense to use them for the southern route the other half of the year.

Also, using the northern sea route for containers or regular cargo shipments are not really feasible as they usually need to stop at multiple ports on the way to Europe to load and unload. "There are a lot of temperature-sensitive goods loaded on container ships. That makes it difficult to go through the Arctic passage. Keeping the temperature consistent would increase the cost more," says Prof. Kim.

The new route mostly works as an alternative for companies trying to ship as fast as possible to Europe. But even that has to be done with caution. The route goes through Russian territorial waters, and permission is granted on a very restricted basis. "Russia is trying to strengthen its maritime territorial sovereignty in the Arctic Ocean," Prof. Kim believes.

But restrictions are required, experts say. There is not much knowledge about the kind of environmental threats and hazards the ships pose as they cross through the Arctic waters. An oil spill in the Arctic would have unimaginable consequences for the ecosystem. Equipment that clean up after a spill by sucking oil drifting on sea surfaces do not work in icy conditions. Means of rescue in the Arctic are also very limited.

The London-based insurance company Lloyd's stated in its "Risk report Arctic" published in April 2012 that for the Arctic shipping to develop into an economically viable business, the infrastructure has to expand. Production of the Arctic's raw materials could most probably become the driving force for such development, and infrastructure built to excavate the raw materials could bring the side benefit of developing the ship transport industry.

For HHI, it does not matter how it develops as long as it does. One client in Canada has already expressed interest in the ship, says Kim Moon-ju, the PR assistant at the shipyard. "It takes around eight months to complete a ship. Adding the ice-breaking capabilities takes a little longer.

Asked for the final price of the ship, Kim grinned and replied it will depend on the negotiation skills of the ordering customer. For a similar model without ice-breaking capabilities, the price is about US$46 million, Kim says, but even that, he adds, is subject to change with market conditions.


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