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Arctic shipping passages have in recent years been hailed as alternative routes for moving goods around the globe quicker and cheaper.

Russia’s Northern Sea Route and Canada’s Northwest Passage are two Arctic thoroughfares that can cut shipping time for foreign vessels travelling between Asia and Europe. In the coming years, traffic in these passages is set to increase as companies look for quicker access to new markets, while looking for ways to save on fuel.

However, at a recent Arctic Summit held in London, at which GTR was present, industry stakeholders gave a more sobering and downbeat look at the realities of shipping in the Arctic. Despite all the excitement around of new arctic shipping routes, it turns out that the global shipping industry may be waiting for a long time to see an easier route through the north.

“There has been an increase in the volume of goods moved through the Artic, but I don’t predict a boom. All Arctic countries have strong ambitions, but there is a huge lack of investment,” said Christian Bonfils, CEO of Nordic Bulk Carriers, a Danish shipping company. Nordic Bulk Carriers was the first to use the Northern Sea Route to ship iron ore from Norway to China in 2010 and the first bulk carrier to use Canada’s North West Passage carrying coal from Vancouver to Finland in 2012.

The global economic downturn, coupled with recent years being a difficult time for the shipping industry in general, has left the industry eyeing the potential for the Arctic, but facing a harsh reality. Industry stakeholders agree that world trade is there, cargo volume is there, but investment and infrastructure is not. Currently, less than 1 million tonnes a year move through the Arctic, carried on less than 100 vessels.

“There needs to be investment through public-private partnerships for ports and icebreakers. The USA and Canada have icebreakers, but they are coastguards and not available for a commercial use,” said Tero Vauraste, CEO and president of Arctia Group, a Finnish shipping company.

There are currently only about 100 icebreakers in the world and that is not enough to service the demand of ships crossing the Arctic. Most icebreakers currently in use are about 30 years old and were built at a time when cargo ships were much smaller.

Icebreakers are special-purpose ships designed to navigate through ice-covered waters. The problems with icebreakers are they can take a decade to build and the cost is phenomenal. Canada estimated a cost of US$720mn dollars for a new icebreaker set to join the Canadian fleet in 2022, five years later than originally planned.

Tim Keane, senior manager, Arctic operations and projects at Fednav, a consortium of Canadian shipping companies, says the scheduling of ice breakers is problematic and that the biggest bottleneck is that there are not enough icebreakers. “We have the technology, but it is a question of commercial viability,” he said.

Canada’s Northwest Passage has only been used for 223 transits and most of those have been coastguards and research vessels, a very small amount have been commercial ships.

“In 10 to 15 years the North Sea Route or the Northwest Passage are not going to be the next Suez Canal. The potential is there, but for the time being it is very marginal,” said Bonfils.

The time of hype has passed and now is the time of realism.