Conditions for and experiences with shipping

operations in the Northern Sea Route

First International Narvik Conference on Arctic Ports
25 September 2013
Mr. Sergey Balmasov
Head of NSR Information Office
Centre for High North Logistics (CHNL), Murmansk (Russia).

sergey@chnl.no www.arctic-lio.com

TABLE OF CONTENTS

1.
2.
3.

Definition and geographical limits

Natural conditions
Types of traffic
1.

Factors influencing development of the NSR:

4.1. Internal factors

a) Ice conditions & long-term ice forecast
b) Availability of needed infrastructure
c) Legislation
d) Administration
e) Tariff system
5.

Conclusions

4.2 External factors

a) Cargo base
b) Freight markets
c) Fuel prices
d) Large ice class vessels
e) Geopolitics

1. DEFINITION AND
GEOGRAPHICAL LIMITS

Official definition of the NSR: (Federal Law No132-, Article 5.1.)

1. The area of the Northern Sea Route means a water area adjoining the northern coast
of the Russian Federation, including internal sea waters, territorial sea, contiguous zone
and exclusive economic zone of the Russian Federation, and limited in the East by the
line delimitating the sea areas with the United States of America and by the parallel of
the Dezhnev Cape in the Bering Strait; in the West, by the meridian of the Cape Zhelanie
to the Novaya Zemlya archipelago, by the east coastal line of the Novaya Zemlya
archipelago and the western limits of the Matochkin Shar, Kara Gates, Yugorski Shar
Straits.

2. NATURAL CONDITIONS

Presence of ice

2. NATURAL CONDITIONS

Remoteness. Long distances and lack of infrastructure.

2. NATURAL CONDITIONS

Flat costal surface.

2. NATURAL CONDITIONS

Often fogs in summer period.

2. NATURAL CONDITIONS

Polar night in winter period

2. NATURAL CONDITIONS

low temperatures in winter period.

2. NATURAL CONDITIONS

Pushing-off and pushing-to winds

3. TYPES OF TRAFFIC

1. Transit navigation including transportation of cargo and re-positioning

2. Delivering of materials and equipment for oil and gas industry to the NSR areas
3. Export of oil products and minerals from NSR areas
4. Delivering of fuel and supplies for remote communities
5. Internal transportation between NSR ports
6. Scientific and hydrographic research vessels
7. Other traffic (tourism, navy, etc.)
Scheme dated
01.08.2013

3. TYPES OF TRAFFIC

By the end of August in the NSR

water area, on average, every day
there were about 50-60 ships.

The distribution of vessels in the

waters is constantly changing, but
in general it can be stated, that
most of the fleet - up to 40 vessels
out of 60 were located in the Kara
Sea.
These average figures confirm the
statistics of the issued permits,
most of which are given out for
work in the Kara Sea.

3. TYPES OF TRAFFIC

Sometimes NSR is suffering from mass

media misunderstanding

Ship Type: General cargo

Length x Breadth: 160 m X 23 m
Gross Tonnage: 14357, Deadweight: 19150 t

YONG
SHENG
Ice 1A
(Arc4)

Left NSR
Average
Entered NSR 03.09.13 at
Days on speed on
26.08.13 at 23:30
09:30
NSR 7,4 NSR
16 651 tons
Dezhnev cape
Cape
14,1
General cargo
Zhelaniya
COSCO
SHIPPING

4.1 INTERNAL FACTORS

INFLUENCING NSR

Internal factors influencing development of the NSR

1. Ice conditions & long-term ice forecast
2. Availability of needed Infrastructure:
Icebreaker fleet
Search and Rescue preparedness

Availability of reliable navigational data

Satellite communication
Ports
3.

Legislation

4. Tariff system
5. Administration

ICE CONDITIONS

Current ice conditions & long-term ice forecast. Two opinions:

Dominant view - global warming will continue as Unidirectional trend. Main cause of
warming is the accumulation in the atmosphere of greenhouse gases of anthropogenic
origin.

Alternative scenario cyclic character of changes. In the next 5-10 years air
temperature will remain elevated, with a gradual decrease of it to 2015-2020 years.
Lowering of the air temperature will last until mid 30's and 40's, then one should expect
the transition to the next warming. Beginning now a cooling will be similar to that which
was recorded in the 40-50 years of XX century. Increased area of ice cover and,
consequently, the prevalence of heavy ice conditions, is expected in the period from 20s
to 40s years. Sea ice extent will reach its maximum between 2030 to 2035.

ICE CONDITIONS

Ice conditions & long-term ice forecast.

14-18 September 2012

Global warming?

15-17 September 2013

ICE-BREAKER FLEET
KEY INFRASTRUCTURE ELEMENT

Name

Year of built

Shaft power, kW

Builder (country)

Operator

Nuclear icebreakers
Rossiya

1984

49000

USSR

Atomflot

Sovetsky Soyuz

1989

49000

USSR

Atomflot

Yamal

1991

49000

USSR

Atomflot

50 let Pobedy

2007

49000

Russia

Atomflot

Taimyr

1989

32500

Finland, USSR

Atomflot

Vaigach

1990

32500

Finland, USSR

Atomflot

Linear diesel-electric icebreakers

Yermak

1974

26500

Finland

Rosmorport

Admiral Makarov

1975

26500

Finland

FESCO

Krasin

1976

26500

Finland

FESCO

Kapitan Sorokin

1977

16200

Finland

Rosmorport

Kapitan Nikolaev

1978

16200

Finland

Rosmorport

Kapitan Dranitsin

1980

16200

Finland

Rosmorport

Kapitan Khlebnikov

1981

16200

Finland

FESCO

Moskva

2008

16000

Russia

Rosmorport

Sankt-Peterburg

2009

16000

Russia

Rosmorport

Source: CNIIMF

SEARCH AND RESCUE

SEARCH AND RESCUE

WESTERN SECTOR

r e scu e a sse t s
a n d oil spill
r e spon se
e qu ipm e n t

Area of M aritime Rescue

Coordination Centre
(M RCC) M urmansk

Area of Marine Rescue

Coordination Center (MRCC)
Dikson

I cebr
e a k
ers

Area of M arine Rescue

Sub-Center Archangelsk

M arine operations
Headquarters.
Western sector of the Arctic

r e scu e a sse t s
a n d oil spill
r e spo n se
e qu ipm e n t

Plane AN-26
Archangelsk
airport

Marine Rescue
Coordination Center
Port Murmansk

H e licopt e r
MI -8
Naryan- Mar
a ir por t

Marine Rescue
Coordination Center
Port Dikson

SEARCH AND RESCUE

EASTERN SECTOR
Area of Marine Rescue
sub-center
r e scuTiksi
e a sse t s
Area of Marine Rescue
a n d oil spill
sub-center Pevek

r e spon
se
e qu ipm e n t
r e scu e a sseArea
ts
of Marine Rescue

Area of
MRCC
Dikson

Area of M aritime Rescue

Coordination Centre
(M RCC) M urmansk

a n d oil spill
Coordination Center
r e sponse
Dikson
e quipm e nt

(MRCC)

I ce br e a k e r s
I cebr
e a k
ers

Marine Rescue
Sub Center
Port Tiksi

r e scu e a sse t s
a n d oil spill
rArea
e spon
of se
M arine Rescue
eSub-Center
qu ipm e n tArchangelsk

M arine operations
Headquarters.
Eastern sector of the Arctic

re scue a sse t s
a n d oil spill
re spo nse
e quipm e nt

Marine Rescue
Sub Center
Port Pevek

M arine operations
Headquarters.
Western sector of the Arctic

r e scu e a sse t s

r e scu e a sse t s
a n d oil spill
r e spo n se
e qu ipm e n t

Plane AN-26
Archangelsk
airport

Marine Rescue
Coordination Center
Port Murmansk

H e licopt e r
MI -8
Naryan- Mar
a ir por t

Marine Rescue
a n d oil spill
Coordination Center
re spo nse
Port Dikson
e quipm e nt

Port
Provideniya

EMERGENCY PREPAREDNESS
VIEW FROM INDUSTRY

The best safety measure against accidents is the ice breaker escort and
regulatory requirements.
The Arctic Council agreement on developing a joint framework for SAR is
important as these countries are the ones with an interest in developing the
resources of the region while keeping potential negative effects at a
minimum ie. sustainable development.
The increased economic activity in the region will improve the general
preparedness to respond to potential accidents due to higher availability of
vessels, equipment and people provided necessary coordination is
facilitated.
WARNING the development of the shorter transportation (= reduced
emissions) via the NSR can be stopped in its infancy if too costly
regulations are imposed for example through the IMO Polar Code
requirements eg. Ban on HFO.

NAVIGATIONAL CHARTS
COVERAGE AREAS

All together 730 navigational charts,

including 233 in English
1240 costal visual signs
300 floating marks
Ongoing hydrographic surveying

Source: Hydrographic Enterprise, St. Petersburg.

NAVIGATIONAL CHARTS

Approximate list of navigational charts for NSR transit:

NAVIGATIONAL
PUBLICATION

AVAILABLE AT WWW.ARCTIC-LIO.COM

RADIO NAVIGATIONAL WARNINGS

RADIO NAVIGATIONAL WARNINGS

RADIO NAVIGATIONAL WARNINGS

Navigational and meteorological

information, gale warnings transmitted in
English from St. Petersburg through
Inmarsat-C SafetyNET

Date:
Sep 24
METAREA XX
SECURITY
WEATHER BULLETIN FOR METAREA XX
ISSUED BY THE ARCTIC AND ANTARCTIC RESEARCH INSTITUTE ST PETERSBURG
ON THE 24 SEPTEMBER 2013 AT 0600UTC
PART 1
AT 240600UTC
GALE WARNING
01130, 01140, 01150
FROM 240600UTC TO 250600UTC WINDS N/E GUSTS 18 TO 23 MS
01240, 01250
FROM 240600UTC TO 250600UTC WINDS N/E 18 TO 23 MS
17021, 17022, 17023, 17024
FROM 240600UTC TO 250600UTC WINDS N/E GUSTS 17 TO 20 MS
PART 2
SYNOPSIS AT 240600UTC
HIGH 1035 HPA 78N 015E STATIONARY INCREASE
HIGH 1036 HPA 78N 027E STATIONARY INCREASE
LOW 982 HPA 55N 037E STATIONARY DEEPENING
LOW 1005 HPA 63N 095E MOVING S 10 KMH DEEPENING
ICE AT 231200UTC
NANSEN BASIN-LITKE TROUGH-NANSEN BASIN-17290-17230 ICE N TO 8033N 12500E, 8033N 11632E, 8041N
11015E, 8052N

SATELLITE COMMUNICATION

The breach of INMARSAT satellites coverage areas

Source: Hydrographic Enterprise, St. Petersburg.

SATELLITE COMMUNICATION

Shore based correction stations

Source: Hydrographic Enterprise, St. Petersburg.

PORTS ALONG NSR

Port infrastructure needs to be developed

TARIFFS

Rates for services of the icebreaker fleet on the NSR

Season 2013, the same principles as in 2012

Tariffs for icebreakers' services on the

NSR established by Order No. 122-t/1
as of 07 June, 2011, are Maximum
Icebreaker fleet operator has the right
to apply tariffs at the level of or lower
than the Maximum tariff
The tariffs can be a subject to
negotiations with FSUE Atomflot

3. INTERNATIONAL AND
NATIONAL LEGISLATION

Current legislation structure

IMO Polar Code
United Nations Convention on the Law of the Sea 1982
Article 234, Ice-covered areas

Russian Regulations for

Navigation on the Seaways of the
NSR,1990

Rates for services of the

icebreaker fleet on the NSR, 2011

Federal Law No132- "On Amendments to

Certain Legislative Acts of the Russian
Federation regarding state regulation of
merchant shipping in the waters of the Northern
Sea Route entered into force 28.02.2013

to be prepared in 2014?
to be approved in 2015?

New Rules of navigation on the

water area of the NSR
Registered April 12, 2013

New tariff system for icebreaker

services should be established
soon (capacity, ice class, distance,
period)

Guidelines
for Radio communication in Arctic,
2013-2014

3. INTERNATIONAL AND
NATIONAL LEGISLATION

Marine transportation on the NSR is regulated by the Russian

legislation based on the principles of the UN Convention on the
Law of the Sea, 1982, in particular article 234 Ice-covered
Areas.

Non-discrimination basis for all states

Preventing environment pollution
Ensuring safe navigation

Article 234
Coastal States have the right to adopt and enforce nondiscriminatory laws and regulations for the prevention, reduction and
control of marine pollution from vessels in ice-covered areas within
the limits of the exclusive economic zone, where particularly severe
climatic conditions and the presence of ice covering such areas for
most of the year create obstructions or exceptional hazards to
navigation, and pollution of the marine environment could cause
major harm to or irreversible disturbance of the ecological balance.
Such laws and regulations shall have due regard to navigation and
the protection and preservation of the marine environment based on
the best available scientific evidence.

3. LEGISLATION

Main changes in new NSR Navigation Rules

NSR Regulations 1990

NSR Regulations 2013

Every vessel intending to navigate

through the NSR shall obtain a Permit
from NSR Administration

Every vessel intending to navigate

through the NSR shall obtain a Permit
from NSR Administration

Master or person replacing him shall

be experienced in operating vessel
in ice

Master or person replacing him shall

be experienced in operating vessel
in ice

Obligatory requirements to have Civil

Liability Certificate for bunker oil
pollution

Obligatory requirements to have Civil

Liability Certificate for bunker oil
pollution

3. LEGISLATION

Main changes in new NSR Navigation Rules

NSR Regulations 1990

NSR Regulations 2013

Vessel must have at least Arc4 or

1-A ice class.

Flexible system. Admittance criteria

depend on season, ice class, NSR area
and actual ice conditions

Mandatory ships inspection

Inspection not needed, only

documents. E-mail communication.

Mandatory icebreaker assistance

Information on the need of icebreaker

assistance indicated in the Permission

IN independent navigation;
IS with icebreaker support;
S severe ice conditions
M moderate ice conditions
L easy ice conditions
The Kara Sea
Ships Ice
reinforcement
class

No2
Ice1 (1D)
Ice2 (1C)
Ice3 (1B)
Arc4 (1A)
Arc5 (1A Super)

Arc6
Arc7
Arc8

Ice
navigation
mode

South-West
part
L

+
+
+
+
+
+
+

North-East
part
S

+
+
+
+
+
+
+

Western
part
S

+
+
+
+
+
+
+

Eastern
part
S

+
+
+
+
+
+
+

The East Siberian Sea

South-West
part
S

+
+
+
+
+
+
+

North-East
part
S

+
+
+
+
+
+
+

The
Chukchi
Sea

IS
IN
IS
IN
IS
IN
IS

IN

+ +

+ +

+ +

IS
IN

+ + +
+ + +

+ + +
+ + +

+ +
+ +

+ +
+ +

+ +
+ +

+ +
+ +

+ +
+ +

IS

+ + +

+ + +

+ + +

+ + +

+ + +

+ + +

+ + +

IN

+ + +

+ + +

+ + +

+ + +

+ + +

+ + +

+ + +

IS

+ + +

+ + +

+ + +

+ + +

+ + +

+ + +

+ + +

IN

+ + +

+ + +

+ + +

+ + +

+ + +

+ + +

+ + +

IS

+ + +

+ + +

+ + +

+ + +

+ + +

+ + +

+ + +

IN

+ + +

+ + +

+ + +

+ + +

+ + +

+ + +

+ + +

IS

+ + +

+ + +

+ + +

+ + +

+ + +

+ + +

+ + +

IN3

The Laptev Sea

+
+
+
+
+
+
+

Admittance criteria to NSR

NSR MANAGEMENT
ICE CONDITIONS:

Official long-term forecast of expected types of ice conditions

September-October 2013

Source: NSR Administration

NSR MANAGEMENT
ICE CONDITIONS:

Three-days updates of the forecast of types of ice conditions

(forecast of 20/09/2013)

Laptev Sea

East-Siberian Sea

Kara Sea

The official long-term ice forecast and subsequent updates are an essential aspect for the
organization of navigation on the NSR. Permission to sail through various sub-areas of the
NSR and the need for icebreaker support is determined on the basis of the ice conditions.

Source: NSR Administration

NSR MANAGEMENT
ICE CONDITIONS:

Actual data on ice conditions

Laptev Sea
Kara Sea

East-Siberian Sea

Source: NSR Administration

4.1 EXTERNAL FACTORS

INFLUENCING NSR

External factors influencing development of the NSR

External factors
a)

Main driver - freight market level for different shipping segments

b) Cargo base price differences in Asian and Western markets

c)

Availability of large ice class vessels in different segments

d) Fuel prices and other costs elements

e)

Piracy threat cost of insurance & protection, risk of non-delivery of cargo.

f)

Environmental restrictions (IMO Polar Code Requirements in the future?)

g)

Geopolitics

CARGO BASE

TRADING PATTERNS ARE

EQUALLY IMPORTANT
AS DIFFERENCE (SAVINGS) IN
DISTANCE
THE MAJOR TRADING ROUTES
IN THE WORLD ARE LOCATED
TOO FAR SOUTH FOR THE NSR
TO BECOME A RELEVANT
ALTERNATIVE FOR SUEZ,
PANAMA OR CAPE OF GOOD
HOPE
GIBRALTAR AND SINGAPORE
ARE THE GEOGRAPHICAL
BREAK-EVEN POINTS;
ANYTHING SOUTH OF THESE
POINTS IS OF NO RELEVANCE

LAST YEAR: SUEZ ABOUT 19 000 TRANSITS;

PANAMA ABOUT 15 000 TRANSITS;

NSR 46 TRANSITS

Re-positioning.
POLARCUS SEISMIC VESSEL

COMMERCIAL ASPECTS
OF SHIPPING: NSR VOYAGE
CALCULATION

HAMMERFEST NEW ZEALAND

TC-Rate USD 150 000 p/d

(13 kts)

Routing
Distance

Canal cost

Bunker

TOTAL

Via Suez

45,1 days

usd 100 000

usd 1 622 000

usd 8 487 000*

Via Panama

39,4 days

usd 50 000

usd 1 417 000

usd 7 377 000

Via NSR

31,5 days

usd 370 000

usd 1 133 885

usd 6 228 000**

SAVING VERSUS PANAMA IS usd 1 030 000

(* 70 000 ** 120 000 extra insurance)

COMMERCIAL ASPECTS
OF SHIPPING: NSR VOYAGE
CALCULATION

Bulk cargo Kirkenes Shanghai (18 days shorter)

SUEZ
Bunkers

44*700*33

TC - Cost

48 * 15 000

NSR
1 016 000 26*700*33

DIFFERENCE
601 000

415 000

720 000 30 * 15 000

450 000

270 000

Canal

250 000

375 000

-125 000

Ports

250 000

250 000

Total

2 372 000

1 795 000

560 000

Port charges and Commission remain the same, NSR transit fee will be higher than Suez cost
Main cost elements are:
-

timecharter cost (for LNG and Seismic)

bunker costs for Tankers and Bulkers)

CONCLUSION

SEASONAL NAVIGATION PUTS SOME LIMITATIONS ON THE FURTHER GROWTH OF

TRANSIT TRAFFIC

THE CURRENT FAVORABLE CONDITIONS FOR 4-5 MONTHS OF THE YEAR ARE NOT YET
SUFFICIENT FOR THE FORMATION OF NEW PERMANENT TRANSIT TRAFFIC FLOWS.

NO CONTAINER LINES WILL MAKE SHEDULES FOR 5 MONTHS OF THE YEAR AS THEY
WILL LOSE THE BIG PORTS LIKE SINGAPORE, INDIA, MIDDLE EAST AND
MEDITERRANEAN ON THEIR WAY TO EUROPE.

NSR WILL REMAIN A NICHE (ARCTIC) IN A SEGMENT (ICE) OF THE MARKET BUT AS
CALCULATIONS HAVE SHOWN IT CAN BE A VERY INTERESTING NICHE.

THE OBJECTIVE IS THAT THE NSR WILL BE CONSIDERED A SAFE AND PREDICTABLE
COMMERCIAL ALTERNATIVE TO TRADITIONAL ROUTES DURING THE ICE FREE SEASON.

FOR MORE INFORMATION VISIT WWW.ARCTIC-LIO.COM

Thank you