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No threat to S'pore yet from Arctic shipping route
Publication Date : 19-09-2013
A Chinese container ship has made the news for being the first commercial vessel to go through the Arctic sea route, reviving questions over the Suez Canal's influence, and Singapore's position as a maritime hub.
If this new route - the Northern Sea Route (NSR) - eventually becomes commercially viable, ships may bypass Singapore, which is at present a key shipping node on the route via the Suez Canal, a 193km passage between the Red Sea and the Mediterranean.
The Chinese-flagged Yong Sheng skipped the Singapore route, reaching Rotterdam from Dalian via the NSR on September 10. The trip took 34 days - 11 days shorter than the duration if the Suez Canal had been used.
The event also points to increasing interest in the NSR, as melting polar ice opens up the Arctic sea passage, enabling ships to use the route for three months during the summer.
This year, to date, more than 370 permits have been issued by the Russian authorities to ships wanting to use the NSR, a big jump from just four issued in 2010. A number of the ports along the NSR are in Russia.
But analysts do not expect the threat posed by the NSR to business via the Suez Canal and Singapore to be immediate.
Singapore, situated in a warmer climate near the equator, provides shipping facilities throughout the year.
Last year, 46 ships made the NSR route, carrying just two million tonnes of cargo, in non-commercial vessels. By contrast, the Suez Canal, a vital artery of world trade, last year handled 17,225 vessels carrying 928.5 million tonnes.
It has been plain sailing too for Singapore port operator PSA International, which last year turned in impressive results even though the global economy was weak.
Annual revenue increased 4 per cent to S$4.5 billion (US$3.6 billion) over 2011 and the five PSA terminals handled a record figure of more than 30 million containers last year.
Still, shipping giants like Maersk Line are watching developments in the NSR closely. Lars Mikael Jensen, its head of Asia-Europe trade, told The Straits Times that while the company is reviewing the option of using the NSR, it does not see the route as having a major impact on routings via the Suez Canal.
"The ability to combine loops for large markets like South China and Southeast Asia with Mediterranean cargo is not viable via the Northern Sea route," he said.
Singapore offers its shipping customers links to 600 ports in over 120 countries. Ships currently plying the NSR can only travel from one port to another, with no opportunity to transit at ports to offload cargo, reload new cargo, or refuel for a longer journey.
Many shipping companies also note that sea levels along the NSR's coast are not deep enough to accommodate larger ships carrying heavier freight. There are also no technologically advanced port facilities with bunkering and container handling facilities.
There are also concerns about a lack of emergency response facilities in case of accidents at sea.
Professor Andrew Palmer, of the National University of Singapore's Department of Civil and Environmental Engineering, who studies the Arctic, said ships using the NSR risk drifting ice blocks hitting them.
Meanwhile, to prepare for competition, not just from the NSR but the rest of the shipping world, Singapore is not standing still. It is building a new mega-port in Tuas and the first phase of development is expected to be ready in 10 years' time.
By then, this mega-port will handle an even greater volume of shipping - up to 65 million standard-sized containers a year, slightly more than double the figure reached by the existing port facilities last year.
Green technology will also be used and Tuas will be able to manage new generations of larger and more complex container ships.
Singapore's plan for this new port is a message aimed at the shipping community's future plans in Singapore. "We build now, so you can use later," is a marketing strategy that will reassure shipping firms that even if the NSR develops as a commercially viable route, Singapore can offer efficient and reliable service.
For now, the NSR is a fledgling route beset with problems.
Whether it becomes a regular shipping route depends on developments elsewhere. For example, territorial disputes in the South China Sea could affect shipping routes in the region, potentially favouring the NSR.
Any threat to the Suez Canal route is linked to political instability in Middle Eastern states such as Yemen.
The Middle East also has some of the world's biggest oil producers. If oil prices rise because of political problems there, the shorter NSR route will become attractive as less fuel will be needed.
Also, with advanced technologies in shipbuilding, the NSR could come into operation much sooner than currently envisaged.
Singapore's answer to the NSR is to provide modern maritime facilities and services that place a premium on secure and prompt delivery of goods across the oceans.
It is also keeping its ears open to developments in the Arctic by gaining permanent observer status in the Arctic Council this year.
The council - a multilateral forum for discussions on Arctic shipping, energy, environment and security - allows observer countries to contribute to discussions that can influence the decisions of its permanent members.
Singapore will use its membership status to better understand and respond to the shipping challenges from the icy Arctic.