MSC says no to Arctic shipping route

MSC says no to Arctic shipping route

The northern lights as seen from Venta Maersk, an ice class vessel that in August 2018 sailed on a trial run from Asia to the Baltic via the Arctic sea route. Photo credit: Maersk.

Mediterranean Shipping Co. has joined a growing list of major carriers and logistics providers turning their backs on the northern sea route over fears the commercialization of the Arctic passage will lead to environmental damage.

In declaring the northern sea route out of bounds, MSC follows CMA CGM and Hapag-Lloyd that have similarly eschewed the commercial benefits of an Asia-North Europe option that is 30 percent shorter than the southern route via the Suez Canal.

In its rejection of the Arctic option, MSC said in a statement it was convinced the 21 million containers it transports annually could be transported around the world without passing through the northern corridor.

“As a responsible company with a longstanding nautical heritage and passion for the sea, MSC finds the disappearance of Arctic ice to be profoundly disturbing,” said Diego Aponte, president and CEO of the MSC Group.

Aponte called on the container shipping industry to focus its efforts on limiting environmental emissions and protecting the marine environment across existing trade routes.

Maersk Line has not yet ruled out the Arctic option, but a spokesperson reiterated a position the carrier took after conducting a one-off trial passage last year, telling JOC.com, “We do not currently see the northern sea route as a viable commercial alternative to existing east-west routes.”

Cuts transit by 11 days

Climate change is reducing the sea ice in the Arctic and opening up previously inaccessible shipping lanes for longer periods, with the ice-free window currently about three months over the summer. Russia is intent on opening its Arctic waters to commercial shipping — a controversial position, but one that has attractive commercial benefits to carriers as it shortens the Asia-North Europe transit by at least 11 days.

Rodolphe Saadé, CEO of CMA CGM, announced in August that none of his carrier’s 500 vessels would use the Arctic passage, turning his back on the route despite knowing it would represent a “major competitive advantage for shipping companies.”

But Hapag-Lloyd expressed skepticism that the route would ever be commercially viable considering the narrow ice-free window and the ice-class vessels required for the transit.

Not only carriers are rejecting the route. Otto Schacht, executive vice president of sea logistics for Kuehne + Nagel, said on his LinkedIn page in July the company would not support the Arctic passage.

“No one should support shipping goods from Asia to Europe via the Arctic. Whoever considers it, supports global warming,” was Schacht’s blunt message.

Those concerns are not holding back China’s Cosco Shipping, which continues to send cargo vessels through the Russian Arctic waters both eastbound and westbound. Cosco has made 22 shipments since its first transit in 2013, although most are to the Russian port of Sabetta to supply the Yamal LNG plant.

Of the European carriers, Maersk conducted its one-off trial run in August 2018, sending a container ship with fish and electronics from Vladivostok in the Russian Far East to St. Petersburg in the Baltic. While the carrier acknowledged after the trip that the Arctic did not appear viable, it was reported by Reuters in June that Maersk was in talks with a Russian state-owned icebreaker to explore the viability of shipping goods from Asia to West Russia via the Arctic route.

According to the Centre for High North Logistics — a Norwegian foundation investigating the development of logistics in the Arctic — of the 27 voyages along the Arctic passage, the Maersk transit was the only container vessel. 

Contact Greg Knowler at greg.knowler@ihsmarkit.com and follow him on Twitter: @greg_knowler.

Comments

The sentiment is amazing, and I applaud their plans, but saving even a week of transit, is likely to be to great a cost savings to ignore. When more more ships are powered by LNG, scrubbing technology advances, in 15 years, I see this opinion changing.