Coal freighter traverses Northwest Passage

Friday, September 27, 2013

Today, a sea freighter capable of carrying 75,000 tons of cargo is traversing the Northwest Passage.  The Nordic Orion is carrying coal from Vancouver, British Columbia, to Finland.  Does this trip illustrate a new trend?

The traditionally ice-bound Northwest Passage across the Arctic edge of the North American continent is increasingly ice-free during summer months.  For shippers, the route offers a significant savings in distance, fuel, and cost compared to alternatives.  For example, cargo shipments between the west coast of Canada and northern Europe can cut off over 1,000 nautical miles by taking the Northwest Passage instead of the Panama Canal.  This saves time and money, and enables ships to carry more cargo (and less fuel) per trip.  It can also reduce carbon dioxide emissions associated with the shipping industry.

The Nordic Orion's cargo - coal - highlights another trend.  If the Northwest Passage becomes practical as a shipping route, Canadian west-coast ports become that much closer to markets in Europe and elsewhere along the Atlantic.  Plans to increase U.S. coal exports from Pacific ports are facing headwinds, but the economics of Canadian exports may improve if coal can be shipped east through the Northwest Passage.

At the same time, transit routes through the Northwest Passage come with risks, including icebergs, less well-mapped hazards, and local impacts to the Arctic environment.  Royal Dutch Shell PLC's aborted attempts to drill for oil in U.S. Arctic waters in 2012 illustrate some of these hazards.

Will cargo traffic through the Northwest Passage continue to increase?  How will it affect global markets?  What impacts will it have to the Arctic?

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