GIRDWOOD -- Arctic shipping is an ice dream unlikely to come true any time soon, the head of one of the world's top shipping companies told The Arctic Imperative Summit here Tuesday.
It was not exactly what some in the audience wanted to hear.
A shrinking polar ice cap and a slow but steady increase in ships trafficking the Arctic Ocean along Russia's Northern Route has fueled a belief that direct shipping from Europe to the Far East could be on the horizon. The U.S. Coast Guard has begun referring to the narrow stretch of the Bering Sea between Wales and Naukan, Russia, as "Alaska's Strait of Gibralatar."
That notion was pooh-poohed by Capt. Stephen Carmel, senior vice president for Maersk Line, Limited, the globe's leading mover of containerized freight.
Polar ice: Unpredictable and pesky for ships
The unpredictability of polar ice today makes the Arctic too big a gamble for large shippers, he said, and that doesn't look likely to change. The Maersk Line is a subsidiary of the Danish conglomerate A.P. Moller-Maersk Group, one of the world's 150 largest companies. Carmel himself is based in Norfolk, Va., but his view is global.
What stands in the way of Arctic shipping today, he said in an interview with Alaska Dispatch, is the structure of the "global supply chain." Manufacturers and businesses of all sorts have streamlined to hold down costs by reducing inventories. As a result, on-time shipping has become a paramount concern.
"Time always matters," Carmel said, "but predictability these days is more important."
Shippers can't afford to be knocked off schedule by shifting ice or fog in the Arctic, he said, and both are potential problems. Shipping lanes in the region are opening, but there is still a lot of ice even in the summer. "When we say 'ice free,' we mean no ice," Carmel said.
The "ice-free Arctic" of today, unfortunately, still has ice. It's broken ice much of the time. It moves around in chunks, at the whim of Nature's winds and tides. But it's ice. Sometimes regular ships can manuever through it. Sometimes they needed icebreakers. Sometimes the ice becomes problematic for all shipping, especially north of Canada.
Carmel said Maersk doesn't envision a time when the fabled Northwest Passage
around the top of North America will be reliably open to shipping. Too much ice, he said, bunches up in a key strait on the Atlantic Ocean side.
"It's not going to happen," Carmel said.
Prospects are better for the Northeast Passage, or what the Russians officially call the "Northern Sea Route." It is already being used for some shipping, and projections are that the route from Murmansk along Siberia to the Bering Strait will become passable for longer and longer periods each year as global warming heats up in the years ahead and the polar ice cap continues to shrink.
The Russians have been pitching the Northern Sea Route as a shorter way to ship between Europe and Asia.
"Shorter is not necessarily faster," Carmel responded, and faster is not always better. "If I say I'm going to deliver something on Thursday, showing up on Wednesday doesn't help. The container industry itself has actually slowed down."
Timing is of the essence in shipping ballet
Ships that once steamed at 20 to 24 knots have throttled back to 15
knots to save fuel. They have been able to do this because speed in the global stream of commerce isn't as important as timing. There is an integrated, global system of ships, ports and railroads that moves almost like ballet. The dancers don't need to be especially swift, but they do need to hit their marks perfectly on cue.
That's hard to do when dancing in a jumble of ice.
Carmel did, however, leave at least a glimmer of hope for those who dream of an ice-free Arctic "progressing Alaska," as former Gov. Sarah Palin used to say. "Clearly there is going to be a lot of destination shipping up there," he said of the Far North's industrial needs. Less ice will encourage shipping by water instead of road to resupply Alaska's Arctic oil fields, and oil fields, some hope, will develop in the Chuckchi and Barents seas. The same for possible mining developments in both Russia and Alaska.
Russia, too, might be able to shift the paradigm for global shipping given its fleet of nuclear-powered ice breakers.
"There are state players that don't respond to market conditions," Carmel noted.
For the Russians, or maybe for the Chinese, making money in the shipping business might not be as important as pioneering new opportunities in the shipping business. The Russians have already begun experimental shipments of gas condensates to Korea. Condensates are to be sent to China this year along with oil and iron ore.
Commodity shipments are a whole different game from containerized freight, which dominates international shipping. Commodities can generally be moved with less concern for shipping time and arrival dates.
"I don't want to make it sound there's never going to be a lot of shipping up there," Carmel said, adding, "the economics drive things."
If new oil fields or mines open in the Arctic, as some expect, Carmel said there is little doubt shipping will accelerate. "Destination shipping is driven by commodities," he said.
Show me the commodities
Alaska is already in the commodities business north of Kotzebue. Red Dog Mine is the largest zinc mine in the world. It ships concentrates to Asia and Europe. The company might be able to take advantage of Russia's Northern Route to reach markets in the latter area.
Kotzebue Mayor Eugene Smith told the summit the community is now trying to build a deep-water port to encourage new mining in the Ambler area in the western Brooks Range mountains, north of the Arctic Circle and not far from Red Dog. Nome, a historic mining community south of Kotzebue on the Bering Sea coast, is also trying to build a deep-water port.
"Ports are not about ships," Carmel said. "Ports are about freight."
Nome and Kotzebue, at this point in time, want ports to lower the costs of imported goods as much as anything. But deep-water ports, estimated to cost $50 million and up, are also key to exporting Alaska resource wealth. If those ports can ship direct to Europe across a relatively ice-free Arctic, their marketing options expand greatly.
And some of the cross-Arctic shipping lanes are increasingly passable, Carmel agrees.
As for the idea that the Bering Strait will begin to look like the Panama Canal in the years ahead? No way, Carmel said. Global warming, which scientists warn will one day destroy the polar ice cap, just isn't that far along.
"I don't think at the end of the day anything changes," Carmel said. "The fundamentals are the same. I'd question how you could take variability out of the equation."
Contact Craig Medred at craig(at)alaskadispatch.com