Another way to market? ‘The Ice Silk Road’

Another way to market? ‘The Ice Silk Road’

The Arctic is said to be heating up twice as fast as the rest of the world, bringing a “massive decline in sea ice and snow,” according to American scientists at the National Oceanic and Atmospheric Administration last year.

The coverage in the media this summer has looked for a silver lining to the changing weather – including an agreement between China and Russia to build an ‘Ice Silk Road’ through the Arctic into Europe.

Also known as the Northern Sea Route, the shipping lane runs between the Pacific Ocean and the Atlantic Ocean along Russia’s northern coast and its promoters say it could shorten shipping times from Shanghai to Rotterdam by at least a week compared to sailing through the Suez Canal.

The Russians have the greatest presence in Arctic shipping and most of the region’s traffic is exports of northerly deposits of oil, gas and minerals. A huge liquefied gas project on the Yamal Peninsula has been boosting cargo traffic to record levels, with nearly 300 vessels conducting more than 1,700 voyages last year. The limitations of the route as a trade lane for transit traffic are significant, however, with long periods in which the winter weather makes passage impossible. Critics say that containerised trade will be especially difficult, due to unreliable scheduling, lack of ports of call and higher insurance costs for ships that make the journey.

Transforming the route into a commercial proposition for bulk shipping is going to require a lot more climate change and huge amounts of capital. Much of the investment seems likely to come from Chinese sources: port operators like China Merchants have been looking at new projects in Norway, Lithuania and Iceland, while Beijing’s state banks have already provided billions of dollars of loans to the Yamal gas field in Siberia. Oil giant PetroChina and the Silk Road Fund – a state-backed investor with a Belt and Road focus – both hold significant stakes in the same project.

More funding will be needed for icebreakers, ice-strengthened cargo ships and a network of Arctic ports if the route is going to be opened up to transit traffic. In fact, no Chinese territory touches the Arctic directly, although officials like to talk about China as a “near-Arctic” state, and Beijing has observer status in the Arctic Council, where Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden and the United States debate development opportunities for the region.

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