Practicality dashes hopes that global warming will boost Arctic shipping

LITTLE is expected of Arctic shipping routes over Russia and Canada by maritime experts because of high insurance costs, slow going, the need for ice-breakers and strict environmental regulations.

Containerships will be the last to come, say experts. "The southern route will always have the advantage of serving numerous markets at the same time," said Alphaliner analysts Jan Tiedemann.

Harsh weather conditions can bring temperatures to 40 to 50 below, limiting regular Arctic shipping to small freighters and icebreakers that supply northern communities in Canada, Norway and Russia.

There were 40 Arctic trading voyages in 2012 carrying one million tonnes of cargo compared to 700 million tonnes transiting Suez, according to French classification society Bureau Veritas.

Norwegian class society Det Norske Veritas's Knut Espen Solberg said dry bulk vessels, typically coal carriers were best suited for long-haul Arctic shipping because the potential for environmental damage was less.

"Oil and container spills have a much bigger potential environmental impact than coal, so their shipping is likely to be restricted heavily," Mr Solberg said.

Despite hopes of global warming - itself frozen for 15 years - opening up the northern sea lane, Arctic routes are blighted with icebergs, holing one oil tanker so far, as well as the costly need for ice breakers and ice-strengthened ships.

"Significant safety and navigational concerns remain an obstacle to commercial shipping, despite recent media reports of 'successful' transits," said IHS Maritime shipping analyst Richard Hurley.

"Vessels are subject to deviation from direct routes as a result of ice, and many areas still cannot be navigated safely without icebreakers to provide assistance," he said.

Last month, a coal carrier traversed the Canadian Northwest Passage to deliver a cargo to Finland, in a trip its operators said would save US$80,000 in fuel and cut transit by a week, according to Reuters.

The world's top oil trader Vitol brought tankers in October with Asian diesel fuel to Europe over Russia. Liquefied natural gas carriers have also completed maiden Arctic voyages.

But Mr Hurley said such trips are only possible with the aid of icebreakers and only four large icebreakers are available at any one time to cover the whole northern sea route.

Of the tanker holing, Mr Hurley said: "Even though it did not cause pollution, it revealed the fragility of emergency help. The potential Arctic pollution counts heavily against time and cost savings."

Said C-Level Maritime Risks insurance analyst Michael Frodl: "The key obstacle here will remain insurance; it is still simply too risky a proposition for standard commercial insurers. Ships are not ready, the support facilities and port infrastructure are not yet in place, and the risks have not been figured out enough to price insurance correctly."