China May Ship $700 Billion In Commercial Trade Via Arctic By 2020

The shrinking ice caps in the Arctic may have opened a new shipping route worth up to $700 billion between China, Europe and the U.S. by 2020, said a leading Chinese scientist last week, with a shipping firm expected to launch China’s first commercial arctic voyage this year – cutting travel distance by nearly half.

The shrinking ice caps in the Arctic may have opened a new shipping route worth up to $700 billion between China, Europe and the U.S. by 2020, said a leading Chinese scientist last week, with a shipping firm expected to launch China’s first commercial arctic voyage this year – cutting travel distance by nearly half.

Yang Huigen, Director General of the Polar Research Institute of China, told a conference in Oslo, as cited by Reuters, that Chinese shipping companies had been “greatly encouraged” about using the Northern Sea Route after a landmark trip by the Xuelong, or Snow Dragon, icebreaker, last year.

Yang also laid out long-term scenarios under which between five and 15 percent of China’s international trade, mostly container traffic would use the route by 2020, cutting the travel time between Shanghai and Hamburg for instance by 5,200km.

Eventually, China expects to expand the route through to the United States, saving nearly two weeks from their current journey and about $392,000 in oil and other costs, according to The Guardian.

“If the route is constructively prepared … then the demand is there, it could be a huge number,” Yang said.

[quote]”One commercial voyage by a Chinese shipping company may take place this summer,” he told Reuters, adding that “the potential value (of goods traveling the Arctic routes) is simply too large to ignore.”[/quote]

2012 saw records for navigation on the Northern Sea Route. In 2010, only four vessels were willing to sail the shortcut, though the number increased to 34 in 2011 and 45 last year. 2012 also saw a 53 percent increase in the amount of cargo transported through the Nothern Sea Route, said RT News.

The China Daily reports that the $700 billion figure arrives from projections that China’s international trade will reach $7.6 trillion in seven years. Currently, 90 percent of China’s trade is carried out by sea, with the majority of trade to the U.S. and Europe passing through the Strait of Malacca – a crowded and heavily pirated waterway that passes Singapore.

Iceland, near the northern tip of Europe, is expected to be a major beneficiary of the proposed new route.

“For us Icelanders this is very important, as Iceland is the logical endpoint of this sailing route,” said Mr. Ossur Skarphedinsson, Minister of Foreign affairs, to the News Of Iceland.

“Yang said that if 10 percent of goods exports from China to Europe went through the Arctic in 2020, that would be goods worth $700 billion. That is extremely much, and it has been mentioned before in the discussions with the Chinese that they will use large, reinforced container ships, and they would like to be able to trans-ship the goods in Iceland before they continue to Europe. This creates many opportunities for Iceland,” Skarphedinsson added.

Some analysts however have expressed caution over the route.

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“We see a potential there but it will not be the new Suez Canal,” said Christian Bonfils, managing director of Denmark-based Nordic Bulk Carriers, which sent 10 ships through the route in 2012.

“You will not see a boom in the construction of ice-class vessels – the season is too short,” a Bonfils added, noting that shipping season only lasted a few months, as ice coverage in the Arctic Ocean grows and shrinks throughout the year.