Benefits and Risk of the NSR to the North Pacific

Transcription

1 The Regulation of Continental Shelf Development: Rethinking International Standards Benefits and Risk of the NSR to the North Pacific Dr. Sung-Woo Lee

2 Contents Ⅰ. Evaluating Savings in Distance & Time by Using NSR Ⅱ. Examining Possible Scenarios of Container Shipping Using NSR Ⅲ. Can NSR be Competitive by Comparison with Suez Route? Ⅳ. Can we manage the risk of NSR? Ⅴ. Concluding Remarks

3 Evaluating Savings in Distance & Time by Using NSR

4 History of Arctic Sea Ice Ⅰ. Evaluating Savings in Distance & Time by Using NSR 2010 (third lowest) 2007 (lowest) 3

5 Arctic Sea Ice Concentration Ⅰ. Evaluating Savings in Distance & Time by Using NSR September 1999 September 2004 September 2007 September

6 Citation by Expert Ⅰ. Evaluating Savings in Distance & Time by Using NSR Arctic sea ice extent is accelerated decline by climate change Intergovernmental Panel on Climate Change Deborah Zabarenko, Environment Correspondent said: "It appears we're on pace about 30 years earlier than expected to reach a state where we don't have sea ice or at least not very much in late summer in the Arctic Ocean." National Aeronautics and Space Administration NASA climate scientist Jay Zwally said: At this rate, the Arctic Ocean could be nearly ice-free at the end of summer by 2012, much faster than previous predictions. The Centre for Northern studies at Laval University Professor Peter Wadhams was quoted as saying... "The implication is that this is not a cycle, not just a fluctuation. The loss this year will precondition the ice for the same thing to happen again next year, only worse. There will be even more opening up, even more absorption and even more melting. In the end, it will just melt away quite suddenly. It might not be as early as 2013 but it will be soon, much earlier than 2040." National Snow and Ice Data Center The extent of the Arctic sea ice was at its second lowest in the satellite record, on 9 Sep NSR had a record long sailing season in 2011, spanning from 29 June to November 18 5

7 Plausible Countries to Use NSR Ⅰ. Evaluating Savings in Distance & Time by Using NSR Russia Poland Sweden Norway Denmark Finland Estonia Latvia Lithuania Iceland Germany Netherland Belgium UK Ireland France Portugal Spain Italy In Europe China Korea Japan Taiwan Hongkong Phillipines Vietnam Cambodia Thailand Indonesia Singapore InAsia 6

8 Saved Shipping Distance by NSR Ⅰ. Evaluating Savings in Distance & Time by Using NSR Unit : NM China Korea Japan Dalian Tianjin Qingdao Shanghai Ningbo Xiamen Shenzhen Guangzhou Busan Tokyo Russia St Petersburg 3,325 3,317 3,223 2,986 2,961 2,024 1,505 1,505 3,706 4,464 Poland Gdynia 3,325 3,317 3,223 2,986 2,961 2,024 1,505 1,505 3,706 4,464 Sweden Gothenburg 3,325 3,317 3,223 2,986 2,961 2,024 1,505 1,505 3,706 4,464 Norway Oslo 3,356 3,348 3,254 3,016 2,992 2,055 1,536 1,536 3,737 4,495 Denmark Aarhus 3,325 3,317 3,223 2,986 2,961 2,024 1,505 1,505 3,706 4,464 Finland Helsinki 3,325 3,317 3,223 2,986 2,961 2,024 1,505 1,505 3,706 4,464 Estonia Tallinn 3,325 3,317 3,223 2,986 2,961 2,024 1,505 1,505 3,716 4,464 Latvia Riga 3,325 3,317 3,223 2,986 2,961 2,024 1,505 1,505 3,716 4,464 Lithuania Klaipeda 3,325 3,317 3,223 2,986 2,961 2,024 1,505 1,505 3,716 4,464 Iceland Reykjavik 3,397 3,389 3,295 3,057 3,033 2,096 1,577 1,577 3,787 4,536 Germany Bremen/Bremerhaven 2,992 2,984 2,890 2,652 2,628 1,690 1,172 1,172 3,373 4,131 Netherlands Rotterdam 2,701 2,693 2,599 2,361 2,337 1, ,082 3,840 Belgium Antwerp 2,629 2,621 2,527 2,289 2,265 1, ,010 3,768 UK Felixstowe 2,621 2,614 2,519 2,282 2,257 1, ,002 3,760 Ireland Dublin 2,487 2,479 2,385 2,147 2,123 1, ,868 3,626 France Le Havre 2,343 2,336 2,241 2,004 1,980 1, ,725 3,483 Portugal Lisbon ,138-1,138 1,063 1,822 Spain Valencia ,821-2,340-2, Italy Gioia Tauro -1,864-1,871-1,966-2,203-2,227-3,165-3,683-3,683-1, Note : Shipping distance & days: referred Netpas Distance Program 7

9 Saved Shipping Distance by NSR Ⅰ. Evaluating Savings in Distance & Time by Using NSR Unit : NM Taiwan Kaohsiung Hong Kong Philippines Vietnam Cambodia Thailand Manila Ho Chi Minh Sihanoukville Laem Chabang Singapore Indonesia Tanjung Priok Russia St Petersburg 1,959 1,535 1, , Poland Gdynia 1,959 1,535 1, , Sweden Gothenburg 1,959 1,535 1, , Norway Oslo 1,990 1,566 1, , Denmark Aarhus 1,959 1,535 1, , Finland Helsinki 1,959 1,535 1, , Estonia Tallinn 1,959 1,535 1, , Latvia Riga 1,959 1,535 1, , Lithuania Klaipeda 1,959 1,535 1, , Iceland Reykjavik 2,031 1,607 1, , Germany Bremen/Bremerhaven 1,625 1, , Netherlands Rotterdam 1, ,027-1,070-1, Belgium Antwerp 1, ,058-1,099-1,142-1, UK Felixstowe 1, ,066-1,107-1,150-1, Ireland Dublin 1, ,200-1,241-1,284-2,046-1,056 France Le Havre ,344-1,385-1,427-2,190-1,200 Portugal Lisbon ,107-1,444-3,005-3,046-3,088-3,851-3,400 Spain Valencia -1,886-2,309-2,646-4,207-4,248-4,291-5,053-3,524 Italy Gioia Tauro -3,230-3,653-3,990-5,551-5,592-5,634-6,396-5,407 Note : Shipping distance & days: referred Netpas Distance Program 8

10 Saved Shipping Time by NSR Ⅰ. Evaluating Savings in Distance & Time by Using NSR Unit : day China Korea Japan Dalian Tianjin Qingdao Shanghai Ningbo Xiamen Shenzhen Guangzhou Busan Tokyo Russia St Petersburg Poland Gdynia Sweden Gothenburg Norway Oslo Denmark Aarhus Finland Helsinki Estonia Tallinn Latvia Riga Lithuania Klaipeda Iceland Reykjavik Germany Bremen/Bremerhaven Netherlands Rotterdam Belgium Antwerp UK Felixstowe Ireland Dublin France Le Havre Portugal Lisbon Spain Valencia NSR Non-ice water speed : 18NM/H months Ice water speed : 3NM/H -6.7 Italy Gioia Tauro open Sea Ice length : 700NM Note : Shipping distance & days: referred Netpas Distance Program 9

11 Saved Shipping Time by NSR Ⅰ. Evaluating Savings in Distance & Time by Using NSR Unit : day Taiwan Kaohsiung Hong Kong Philippines Vietnam Cambodia Thailand Manila Ho Chi Minh Sihanoukville Laem Chabang Singapore Indonesia Tanjung Priok Russia St Petersburg Poland Gdynia Sweden Gothenburg Norway Oslo Denmark Aarhus Finland Helsinki Estonia Tallinn Latvia Riga Lithuania Klaipeda Iceland Reykjavik Germany Bremen/Bremerhaven Netherlands Rotterdam Belgium Antwerp UK Felixstowe Ireland Dublin France Le Havre Portugal Lisbon NSR Non-ice water speed : 18NM/H Spain Valencia months Ice water speed : 3NM/H open Sea Ice length : 700NM Italy Gioia Tauro Note : Shipping distance & days: referred Netpas Distance Program 10

12 Saved Shipping Time by NSR Ⅰ. Evaluating Savings in Distance & Time by Using NSR Unit : day China Korea Japan Dalian Tianjin Qingdao Shanghai Ningbo Xiamen Shenzhen Guangzhou Busan Tokyo Russia St Petersburg Poland Gdynia Sweden Gothenburg Norway Oslo Denmark Aarhus Finland Helsinki Estonia Tallinn Latvia Riga Lithuania Klaipeda Iceland Reykjavik Germany Bremen/Bremerhaven Netherlands Rotterdam Belgium Antwerp UK Felixstowe Ireland Dublin France Le Havre Portugal Lisbon Spain Valencia NSR Italy Gioia Tauro Non-ice -7.3 water -8.5 speed : 18NM/H 12months Sea ice length : 0NM open Note : Shipping distance & days: referred Netpas Distance Program 11

13 Saved Shipping Time by NSR Ⅰ. Evaluating Savings in Distance & Time by Using NSR Unit : day Taiwan Kaohsiung Hong Kong Philippines Vietnam Cambodia Thailand Manila Ho Chi Minh Sihanoukville Laem Chabang Singapore Indonesia Tanjung Priok Russia St Petersburg Poland Gdynia Sweden Gothenburg Norway Oslo Denmark Aarhus Finland Helsinki Estonia Tallinn Latvia Riga Lithuania Klaipeda Iceland Reykjavik Germany Bremen/Bremerhaven Netherlands Rotterdam Belgium Antwerp UK Felixstowe Ireland Dublin France Le Havre Portugal Lisbon NSR Non-ice water speed : 18NM/H Spain Valencia months Sea ice length -9.9 : 0NM open Italy Gioia Tauro

14 Examining Possible Scenarios of Container Shipping Using NSR

15 Traffic Forecast by targeted countries Ⅱ. Examining Possible Scenarios of Container Shipping Using NSR Forecast of con traffic between 6 Asian and targeted European countries would be around 46 M TEU in 2030 Unit: 000 TEU China Korea Japan Taiwan HongKong Philippines Sum ,043 1, , ,171 1, , ,882 2, , , ,980 2, , , ,555 2, , , ~ % 3.8% 1.8% 4.1% 4.4% 4.9% 6.5% Note : applying traffic O/D after forecast national traffic using real GDP growth Source : traffic CI online, GDP growth : Global Insight 14

16 SP Survey Ⅱ. Examining Possible Scenarios of Container Shipping Using NSR SP VS. RP Stated Preference Selection or rank of scenario Possible to apply to demand of new transportation Revealed Preference Using records or real data Impossible to apply to demand of new transportation Target : Forwarder (excluding shipping companies) Selection between Suez Canal Route and NSR Variables : Time, Cost - Cost : 120%, 110%, 100%, 80%, 70% - Time : 30 days, 25 days, 20 days Response : 43 persons in 30 companies Analytical tool : Limdep 15

17 NSR Shares by Scenario Ⅱ. Examining Possible Scenarios of Container Shipping Using NSR Suez canal conditions - cost : 100% (1,000~1,500$/TEU in presence) - time : 30days No NSR Cost NSR Time NSR Shares 1 120% 30days 1% 2 110% 30days 5% 3 100% 30days 20% 4 80% 30days 86% 5 70% 30days 97% 6 120% 25days 10% 7 110% 25days 34% 8 100% 25days 72% 9 80% 25days 98% 10 70% 25days 100% % 20days 52% % 20days 84% % 20days 96% 14 80% 20days 100% 15 70% 20days 100% 16

18 Traffic Forecast via NSR Ⅱ. Examining Possible Scenarios of Container Shipping Using NSR Cost - Scenario Analysis Time - using data by previous method Navigatle period on NSR : 3 months : 6 months : 9 months : 12 months (common use) If NSR Cost 110%, - 14M TEU in 2030 year, 31.6% share If NSR Cost 100%, - 29M TEU in 2030 year, 64.1% share AMSA(2009) : 90~100 days by 2080 Ragner(2008) : up to 170 days in 100 years NSIDC(2007) : ice-free arctic by 2030 <Traffic Forecast via NSR> Unit : 000 TEU <Share of NSR> NSR Cost % % , % ,417 2,920 80% 249 1,145 2,457 4,304 70% 376 1,252 2,542 4, % 1.2% 4.6% 9.7% 0.3% 5.0% 16.9% 31.6% 1.6% 16.0% 40.2% 64.1% 13.3% 43.3% 69.7% 94.5% 20.2% 47.3% 72.1% 96.4% 17

19 Can NSR be Competitive by Comparison with Suez Route?

20 Applied Sailing Cost Ⅲ. Can NSR be Competitive by Comparison with Suez Route? 1 Charter Ship size : 8,000TEU Charter - Ship for Suez Canal Route : 45,000$/day - Ship for NSR : 54,000$/day (20% up) 2 3 Fuel Ship operation Distance : between Tokyo and Rotterdam Speed - non-ice water : 18NM/h - ice water : 3NM/h (considering ice breaking) Ice water length - 3 months sailing : 700NM - 6 months sailing : 300NM - 9 months sailing : 100NM - 12 months sailing : 0NM Fuel consumption : 0.3 ton/nm Fuel Cost : 445$/ton, 720$/ton, 995$/ton Ship for Suez Canal Route : 23,000$/day Ship for NSR : 27,600$/day (20% up) Suez Canal Toll thouand dollar (including incedental expense) NSR Ice Breaking Service Fee million dollar Toll/ Ice Breaking Service Fee Ice breaking service fee 1) Rates for services on the escorting of ships on the Northern Sea Route to ensure the transportation of cargo. - Rates for container : 1,048 Rouble/ton ($34.4/ton) - 24 ton per TEU (Miaojia Liu et al, 2010) - $4 million for 8,000TEU ship, 60% in load 2) Rates for services on the escorting of ships along the Northern Sea Route collected from transport ships sailing in ballast, towing, technical, auxiliary (including research) and other floating - Transit along the waterways of the Northern Sea Route : 1,000 Rouble/ton ($32.8/ton) - $3.6 million for DWT 110, 000 3) excluded port services 4 19

21 Sailing Cost per TEU between Tokyo & Rotterdam Cost per TEU excluding ice breaking service fee Fuel Cost 445$/ton 720$/ton 995$/ton Cost/ Rates Suez Canal Route (including Toll) Ⅲ. Can NSR be Competitive by Comparison with Suez Route? NSR 3 months 6 months 9 months 12 months Cost Rate 12.5% 16.1% 21.1% 25.6% Cost ,049.1 Rate 11.6% 16.4% 22.1% 27.2% Cost 1, , ,243.1 Rate 11.1% 16.5% 22.7% 28.2% Unit : $ Cost per TEU including ice breaking service fee Fuel Coast 445$/ton 720$/ton 995$/ton Cost/ Rates Suez Canal Route (including Toll) NSR 3 months 6 months 9 months 12 months Cost 1, , , , Rate -40.4% -84.6% % % Cost 1, , , , ,049.1 Rate -31.5% -65.8% -96.8% % Cost 1, , , , ,243.1 Rate -25.3% -52.8% -77.6% -98.6% Unit : $ 20

22 Can we manage the risk of NSR?

23 Challenges in Arctic Ⅳ. Can we manage the risk of NSR? Temperatures Darkness Polar storms Huge distances Extreme loads and response Human aspects Variety in ice conditions Supply system Political issues etc Contingency plan Improved infrastructure Increased contingency capacity Special monitoring system Specialized vessels Ice navigation and tracking system Comprehensive international governance etc 22

24 Risk Level in the Arctic Ⅳ. Can we manage the risk of NSR? Risk = Probability Consequence Severity of consequences and probability drive risks Risk General Risk Visible Risk in Arctic Invisible Risk in Arctic Acceptable risk level Rescue Material failure Oil spill Risk mitigated through technology and regulatory measures 23

25 Risk Management Tools Ⅳ. Can we manage the risk of NSR? Oil Spill Detection Vessel Detection Ice Navigation Iceberg Tracking 24

26 Concluding Remarks

27 Ⅴ. Concluding Remarks In conclusion, The NSR has the economical effect in terms of distance. However the expensive NSR toll fee imposed by Russia is a key issue whether NSR can become a popular shipping route or not, The forecasted cargo traffic between Asia and Europe will be around 46 million TEU., Providing us the grounds enough to promote the use of NSR According to the survey, about 20% of Korea Shippers and forwarding companies said that they are going to use the NSR, 72% and 96% of them will use NSR, if they can saved 5 and 10 days, respectively According to the survey, the expected traffic volume per scenario are as below 6,000TEU in 2015 and 1.4 million TEU in 2030 if the cost of NSR is 10% higher than the SCR 29,000TEU in 2015 and 2.9 million TEU in 2030 if the costs of NSR and the SCR is same 249,000 TEU in 2015 and 4.3 million TEU in 2030 if the cost of NSR is 20% lower than the SCR 26

28 Ⅴ. Concluding Remarks When applied to 720 USD, 27.2% will be saved per unit TEU If incresed to 995 USD, 28.2% is able to be saved Shipping cost of NSR including ice breaker fees Assuming $995 of fuel cost, the shipping cost via the NSR will increase by 34.9% for 3 months non-ice water period Assuming $995 of fuel cost, the shipping cost will increase by 14.1% for 12 month s non-ice water period As such, the commercialization of NSR is mainly depended on ice breaker fee Simultaneously, we should consider how to manage and reduce invisible risks in NSR. It is also related to cost of journey of NSR like insurance. That is why we need to approach, gradually. First, Destination-Arctic shipping, Second, intra-arctic shipping, Third, Transit-Arctic shipping. 27

29 Ⅴ. Concluding Remarks Implication 1. Need to discuss more on how to keel appropriate toll level in terms of commercial use of NSR 2. Establishing related laws and amendment system for the NSR 3. Developing appropriate vessels for the NSR at the earliest possible 4. Establishing a global cooperation system in order to promote the NSR 5. Reinforcing risk management system for the NSR 6. Developing ports along the coastal area in the Arctic 7. Establishing gradual approaching way to commercialize the NSR 28

30 Sung-Woo Lee, Ph.D. Director, International Logistics Research Department