Caution in the High North: Geopolitical and Economic Challenges of the Arctic Maritime Environment
At the 2011 Arctic Forum, then-Prime Minister Vladimir Putin expressed his maritime ambitions for the Arctic by declaring, “The shortest route between Europe’s largest markets and the Asia-Pacific region lie across the Arctic.” He went on to add, “the Northern Sea Route … will rival traditional trade lanes.”
Russia is not alone in its pursuit of maritime trade routes in the Arctic. China recently released its first Arctic Policy, highlighting the importance of developing the “Polar Silk Road.” The 2013 U.S. National Strategy for the Arctic Region noted that “the melting of Arctic ice has the potential to transform global climate and ecosystems as well as global shipping, energy markets, and other commercial interests.” Indeed, the East Asia to Northern Europe shipping route is 11,200 nautical miles through the Suez Canal, but only 6,500 nautical miles through the Arctic — a difference that can decrease transit time by 12 to 15 days on the Rotterdam to Yokohama route. The Russian icebreaking liquefied natural gas carrier Christophe de Margerie made headlines last August for a record-setting six-day transit of the Northern Sea Route. The ship made the entire journey from Hammerfest, Norway, to Boryeong, South Korea, in 19 days — nearly 30 percent faster than the traditional Suez Canal route.
The allure of shorter maritime trade routes, which are opening up as ice diminishes, and an abundance of natural resources are sparking increased interest in the Arctic. In 2017, a record 9.7 million tons of cargo shipped along the Northern Sea Route — an increase of nearly 35 percent from 2016. The Christophe de Margerie and the other ships in its new class have since begun delivery of liquefied natural gas from the Yamal Peninsula in Russia’s far north to China. Such accomplishments have fueled optimism, particularly by Russia and China, about the potential for the Arctic to become a viable alternative to normal maritime routes through the Middle East. With its geostrategic location and increasingly navigable seas, the High North holds rising importance for global trade, strategic resource extraction, and military activity. Diminishing permanent ice coverage is resulting in greater interest in regional shipping, fishing, and tourism. Yet the heightened focus on the region must also give rise to serious discussions on both viability and governance in the High North — as well as the potential for geopolitical conflict.
The Arctic is rife with barriers to maritime traffic and security including a lack of governance, inadequate crisis response, and the fragile environment. While these challenges demand thoughtful approaches, activity in the Arctic will remain constrained by the harsh conditions of the region.
Arctic sea ice extent for March 17, 2018, was 5.59 million square miles. Orange line indicates 1981-2010 average extent on March 17. Credit: National Snow and Ice Data Center.
Mariners have long recognized the difficulties of Arctic navigation. In 1820, the Arctic explorer William Scoresby wrote:
the navigation of the Polar seas… requires…an extensive knowledge of the nature, properties and usual motions of the ice, and it can only be performed to the best advantage by those who have long experience with working a ship in icy regions.
Yet climate change has had a dramatic impact on the Arctic, with the region’s average temperatures rising at almost twice the rate as the rest of the world. Sea ice, which traditionally reaches its maximum annual extent in March, continues to decline. 2018 marked the second-lowest — after 2017 — amount of sea ice coverage in the Arctic since satellite records began 39 years ago. These trends are fueling optimism regarding the future viability of the region for global trade.
Still, the Arctic remains a hostile environment. Intense cold — dropping to -40 degrees Celsius in winter — can hinder functionality of machinery and pose a danger to passengers onboard vessels. Multiyear ice, which does not melt on a seasonal basis, can be more than three meters thick, challenging even icebreaker vessels seeking passage. The increasingly open water of the High North has also amplified the unpredictability of ice floes, as the melting of one-year ice can lead large blocks of multiyear ice to flow into sea lanes. Ice floes lack predictability and conditions vary seasonally. Furthermore, weather conditions compound the challenges posed by ice, as transits are often hindered by severe storms. In the summer, heavy fog is common, obscuring visibility and requiring vessels to slow down to avoid colliding with unexpected ice or each other.
Viability of Arctic Shipping
The United Nations’ International Maritime Organization Polar Code Advisory identifies four potential Arctic shipping routes that will become increasingly viable as ice diminishes: the Northern Sea Route, Northwest Passage, Transpolar Route, and Arctic Bridge. The Northern Sea Route was first opened by the Soviets in the 1930s, but has not been a reliable transit route due to ice coverage; with ice melt, it will be increasingly open for transit. There is still significant uncertainty amongst the scientific community regarding the timeline of ice melt, but predictions indicate that the Bering Strait will open for an extended period around 2020, the Northern Sea Route around 2025, and the Transpolar Route around 2030; the Northwest Passage will open last.
Source: Government Accountability Office
Parts of the Northern Sea Route and Northwest Passage are becoming more viable for limited maritime traffic during the warmer months, a trend that will almost certainly continue. Yet increased traffic brings another concern for Arctic nations — knowing which vessels are transiting off their coasts and for what purpose. As the water routes become increasingly passable, there is likely to be a corresponding rise in fishing activity (legal and illegal), recreational traffic, research vessels, and perhaps even illicit trafficking. Maritime domain awareness is increasingly important to ensure maritime security in the Arctic, yet this is hindered by the lack of resources dedicated to the region. Challenges with communications and even satellite limitations further hamper efforts to establish regional awareness.
These difficulties, along with the region’s unpredictable weather and ice conditions, combine with the demands of the global shipping market to raise serious concerns about long-term viability of transit shipping in the Arctic.
The maritime industry breaks shipping into two categories. Transit shipping routes connect the trading hubs of the world, whereas destination shipping is the movement of bulk resources (such as oil, gas, liquefied natural gas, or minerals) from the point of extraction to markets outside of the Arctic region.
Destination shipping is increasingly viable as regional resources are explored and extracted (particularly from the Yamal peninsula), then moved from the point of extraction to market rather than along the entire Northern Sea Route. The success of the purpose-built Christophe de Margerie class of ice-breaking liquefied natural gas carriers highlights the potential of destination shipping.
However, transit shipping is far more problematic. The commercial sector has demonstrated lukewarm interest in the possibility of transit shipping despite the significantly shorter route. For container shipping of goods (as opposed to bulk shipping of raw commodities), shipping companies rely on economies of scale and on-time delivery within a tight schedule; the ever-increasing capacities of ships help to lower costs. Employing this “just in time” model — an inventory strategy that relies on precise shipping schedules to improve demand and decrease inventory costs — is virtually impossible given the operating challenges of the Arctic.
Variation in the depth of the Arctic Ocean will impact viability of shipping routes. Credit: 90-North.
The water depths in many parts of the Arctic pose another limiting factor to commercial shipping, as the largest and most economical vessels simply cannot transit the region regardless of time or weather factors. While the (as yet inaccessible) Transpolar Route permits an unlimited draft, the depths vary tremendously along both the Northern Sea Route and the Northwest Passage (indeed, of the seven routes of the Northwest Passage, three are considered generally unsuitable for navigation while the remainder are considered difficult to navigate due to the pattern of ice drift).
Ships transiting the Arctic must also travel with icebreaker vessels, whose slow icebreaking speeds and size limitations put a further constraint on trade. This becomes problematic as shipping companies have sought to increase cargo ship size in an effort to improve efficiencies and lower costs. Not all icebreakers can accommodate the width of the modern cargo ships, which form the backbone of global trade.
Icebreaker escorts, provided along the Northern Sea Route by Russia’s Rosatomflot fleet of icebreakers, are also costly. An escort for a typical cargo ship (120,000 ton Arc4 rated vessel) through the route would cost around half a million dollars in the summer-autumn period and $1.4 million during the winter-spring; the 18 percent Russian value-added-tax may also be added. Compare this with the average Suez Canal costs of $465,000 per passage. Moreover, ship owners must pay increased insurance costs for northern transits due to the higher risks — and reduced emergency response capabilities — associated with transiting the region. In general, operating in the Arctic can be vastly more expensive due to higher insurance, decreased transit speeds, and the potential for significant weather delays.
The lack of infrastructure in the region further compounds these limitations. While Russia has invested heavily in improving its Arctic infrastructure to facilitate the extraction and movement of resources to markets, the region remains underdeveloped. Hydrographic surveys, channel markers, deepwater ports, and emergency response units are generally lacking in the region and pose serious challenges to operations. The region has poor communications and satellite coverage due to atmospheric phenomena, latitude challenges, and ionospheric effects. Arctic states are addressing these challenges and there are plans for infrastructure improvements, but the hostile environment makes such updates arduous and expensive.
Number of active ships along the Northern Sea Route in 2017. Source: NSR Administration daily logs
Given the challenging conditions and costs, it’s not surprising that the Northern Sea Route experiences limited vessel traffic. For example, as of Sept. 15, 2017, 106 vessels were operating in the region. These vessels were primarily traveling between ports along the Northern Sea Route, particularly around the development of LNG projects in Russia. By Nov. 1, that number had dropped to 25 vessels; by Dec. 1, there were just 16 vessels. During the same period, vessels transiting the Suez Canal rose slightly from 6,340 in September to 7,842 in December.
The Northern Sea Route transit numbers stand in stark contrast to global shipping numbers. In 2017, the Centre for High North Logistics reported just 24 vessels and 194,364 tons of cargo transited through the Northern Sea Route, as compared with 17,600 vessels and 1.04 billion tons of cargo that transited the Suez Canal that year. Indeed, traffic diminished along the Northern Sea Route since the peak in 2013 with 71 vessels and 1.36 million tons of cargo (as compared to 16,600 vessels and 915 million tons of cargo through the Suez Canal in 2013) due to more challenging ice conditions.
Concerns for the International Community
Although maritime traffic in the region is a fraction of overall global traffic, it accounts for a significant number of vessel incidents (such as groundings, mechanical failure, ice damage, fires). In 2016, there were 55 reported shipping incidents north of the Arctic Circle, with the majority stemming from machinery damage or failure, followed by vessels that were wrecked or stranded. The rising number of vessels in the region — to include an increase in tourism and recreational traffic — is worrisome due to the increased potential for incidents, the lack of robust response capabilities, and the limitations of operating in the harsh environment of the Arctic.
To address the growing concerns about the safety of ships and lack of defined maritime standards in the Arctic, the United Nations’ International Maritime Organization drafted the Polar Code, which took effect on Jan. 1, 2017 for ships operating in polar waters. This code establishes mandatory regulations and standards for vessels operating in ice-covered waters. The Polar Code will require regular updates to keep pace with changes in ice conditions and risk. Further, the International Maritime Organization lacks its own enforcement mechanism and instead relies on classification societies, the entities that certify ships for operation, to ensure compliance prior to issuing a Polar Code certification. Safety of maritime traffic in the region demands improved governance, response capabilities, and maritime domain awareness. In addition to updating the Polar Code to reflect the evolving Arctic maritime environment, the international community must pay more attention to ensure strict protocols and response capabilities.
Given how severe the consequences of a potential regional disaster would be, and the current paucity of response capabilities, the Arctic is a region particularly well suited to cooperation. Some international organizations are already cooperating to address regional challenges. The Arctic Council has proven to be an effective coordinating mechanism for the region. Established by the Ottawa Declaration in 1996, the council’s members include the eight Arctic nations as well as six international organizations representing indigenous peoples. Thirteen non-Arctic states have been approved as observers, including China, South Korea, Singapore, Japan, France, Germany, and the United Kingdom. The Chair of the Arctic Council rotates every two years and the current chair, Finland, has established a priority of increasing cooperation and improving connectivity in the Arctic.
Yet despite the noteworthy progress of the International Maritime Organization and the Arctic Council, the international community faces a number of limitations. The Arctic Council’s mandate specifically excludes military security. The annual Arctic Security Forces Roundtable offers a suitable venue for such discussions, but Russia was excluded from this year’s conference due to ongoing tensions stemming from the Crimea annexation. Moreover, the international community is not prepared to respond to a near-term Arctic emergency. The absence of well-developed protocols, significant infrastructure, hydrographic surveys, communications capabilities, emergency response assets, and operational proficiency all pose challenges to a coordinated emergency response.
Implications for International Security
Despite these challenges, the Arctic is not doomed to falling into the trap of the security dilemma. The Arctic Council has been a useful forum for cooperation on critical issues like the protection of indigenous peoples, environmental concerns, and search and rescue. Thus far, the council has proven to be an effective coordinating mechanism for nations to address non-security challenges and opportunities. The difficult conditions of the region — and the need for extensive international cooperation to protect the unique environment — make it ideally suited for working cooperatively.
Significant progress has been made on Arctic governance, but there is still much to be done. Overall Arctic activity is experiencing an upward trend — this will almost certainly continue as natural resources become increasingly accessible. The region’s bathymetric and climatological dangers, high costs, and uncertain governance preclude it from becoming a major maritime trade route in the near future and will require a more measured approach. Maritime activity is likely to remain limited predominantly to destination shipping, fishing, and tourism rather than becoming a viable alternative to the Suez Canal.
Despite this limited scope of future activity, failure of the Arctic stakeholders to cooperate now could be catastrophic in a crisis. An Arctic emergency on the scale of Costa Concordia or Deepwater Horizon would almost certainly result in high environmental and human costs given the lack of search and rescue capabilities, poor communications, and subpar regional infrastructure currently in place.
These issues affect all Arctic nations, as well as the organizations and non-Arctic nations with economic and environmental interests in the region. Indeed, the Arctic presents a unique geopolitical challenge, combining the traditional strategic interests of the Arctic nations — and those, such as China, with stated regional economic interests — with a distinct demand for international cooperation to protect its fragile environment and indigenous communities. Thus far, stakeholders have cooperated to resolve the most pressing issues by implementing protocols for shipping and signing agreements on search and rescue, prevention of oil pollution, and regulation of fishing. This cooperation offers cause for optimism that the Arctic could remain insulated from geopolitical tension in more developed parts of the globe. Yet as the region warms, tensions may rise due to economic competition or spillover from other global disputes. It is critical to strengthen the mechanisms and support of the Arctic Council and to continue to work cooperatively to ensure the safety and security of the Arctic. The region is well-positioned to be peacefully developed, but the geostrategic conditions are in place for a potential conflict if the international community fails to act.
Rachael Gosnell is a naval officer and Senior Instructor in the Political Science Department at the U.S. Naval Academy. She is a graduate of the Georgetown International Security Studies program and is pursuing a doctorate in International Security and Economic Policy at the University of Maryland, with a focus on maritime security in the Arctic. All views expressed are her own and do not reflect those of the U.S. Department of Defense or the U.S. Naval Academy. This piece was adapted from the author’s “The Complexities of Arctic Maritime Traffic” published by the Arctic Institute