By K. Joseph Spears

The drop in oil and commodity prices are having a real impact on proposed commercial Arctic activities on a variety of fronts, including Arctic offshore oil exploration, and shipping associated with resource development. This article will attempt to summarize selected international developments which may impact Arctic shipping.

The Greenland Ice Cap

Uncertainty in the Arctic Ocean Basin is being driven by climate change and a warming Arctic where temperatures are rising significantly more rapidly than elsewhere on the planet. Recent studies have shown that the Greenland ice cap melting is accelerating, resulting in accelerated increases in sea levels caused by this melting. The environmental changes are also causing more icebergs to form, which can affect Arctic shipping.

International Arctic Shipping.

With the price of crude oil near multi-decade lows, the cost savings brought about by Arctic shipping routes seem to have less of an economic impact than had been predicted. In fact, in some cases, shipowners are transiting around Cape of Good Hope to avoid Suez Canal fees. To them, it is less expensive to sail the longer sea route, involving higher crewing and chartering costs and higher fuel burn, as weighed against the shorter route but involving Suez Canal transit fees.

It seems clear that the Arctic will continue to warm, and many non-Arctic nations are positioning themselves to benefit from potential climate changes in the Arctic Ocean Basin and their future impact on trade routes. It is important to realize that the waters around the North Pole are international waters and not subject to the jurisdiction of any Arctic coastal state. Many believe a transpolar shipping route across the centre of the Arctic Ocean crossing the North Pole will become an established shipping route in the coming years. While that remains to be seen, this winter saw record warm temperatures in the region and decreased winter sea-ice.

Arctic Council

The United States is presently chair of the Arctic Council and has been leading initiatives with respect to sustainable development and climate change which has the support of President Barack Obama who is nearing the end of his presidential term. The United States has taken a climate-based focus to the Arctic and wants to ensure that any decisions or governance of activities in the region are based upon scientific evidence. The Unites States stated position is One Arctic: Shared Opportunities, Challenges and Responsibilities.

The United States has set out a detailed policy of what it wishes to accomplish and is been working through that process under the various working groups of the Arctic Council its various government agencies.

The United States

The United States realizes that there is a capability gap especially as it relates to icebreakers and has recently put out to call for draft proposals with respect to icebreakers that are required by United States Coast Guard.


Finland will take over chairmanship of the Arctic Council in 2017, and will be looking for sustainable development and regulation of shipping and other commercial activities in the Arctic. Finland is a world leader in icebreaking technology and icebreaker construction. It is interesting to note that Canadian vessel designers and naval architects who were originally contracted to work on Canada’s planned Polar 8 icebreaker project in North Vancouver took their expertise to Finland when the Canadian project was cancelled in the 1980s. This, combined with the Finns’ long-standing expertise, resulted in development of some of the world’s leading icebreaking technology, with Finnish yards having constructed many of the world’s most technologically advanced icebreakers. For a country of little over 5 million people, it has done an amazing job developing this expertise.

Arctic Offshore Drilling

Although it is thought that up to 25 per cent of the world’s oil reserves are contained in the region, the collapse of oil prices has rendered offshore oil exploration in such hostile territory uneconomic.

Russia Northern Sea Route

Russia proposed its Northern Sea Route (NSR) as an alternative to Suez and Panama Canal traffic. However, after an encouraging start some years ago, traffic has dropped to a trickle. Cargo tonnage on international voyages was 274,000 tonnes in 2014 and 40,000 tonnes in 2015, according to the NSR Administration. The Route continues to play a key role in the movement of Russia’s Arctic hydrocarbon production.

In June 2015, the Russian Prime Minister announced availability of year-round shipping on the NSR, with Russia continuing to develop Arctic bases, adding to its fleet of icebreakers, and improving its search and rescue capability. Russia clearly considers the Route a long-term investment, and has been trying to interest China in investing in infrastructure and railways to its Northern ports.


China continues to position itself as a near-Arctic state and has an ambitious Polar research program working in both the Arctic and Antarctic. One of the stated reasons is to understand climate change processes that originate in the region. This past season its research icebreaker Xue Long circumnavigated around Antarctic. China is presently is building a second research icebreaker, and continues to engage in the Arctic Council’s work as a participant in the various working groups. It is clearly a serious Arctic player, and is in it for the long haul.

There is a great deal of concern about what China’s true intentions are in the region. Given the complex internal political processes, is difficult to determine, as its objectives have never been stated. It should not be forgotten that the Arctic Ocean Basin is a potential source of protein from the undeveloped fisheries in the region. These fisheries have the potential to be a major sustainable protein source for the world if they are properly managed. Presently there is very little data on these fish stocks. China is undoubtedly considering the use of Arctic shipping routes, given its dependence on global trade and shipping.

Looking Forward

While the Arctic is warming up, it is not heating up, geopolitically. The Arctic continues to change and the underlying work of the Arctic Council is critically important. Canada played a key role in the development of this bilateral organizations coming up on its 20th anniversary. The recently announced bilateral agreements between the United States and Canada show that there is going to be increased cooperation in the region. Commercial activities and related shipping activities will proceed as economic forces warrant. Arguably, this represents an understanding at the international level that it is time to develop the necessary scientific research underpinnings to support proper decision-making. It is on this foundation that the Arctic statutory framework continues to develop and evolve for commercial activities. It is important to underline that sustainable economic development requires input from the people that live in the region.

A good example of international cooperation is the development of the Polar Code, which, while not perfect, is a good step forward. However, coastal states are responsible for providing the necessary shipping infrastructure which includes icebreakers and appropriate search and rescue capability. Marine infrastructure is expensive and at a time of shrinking government budget it remains to be seen how these resources will be developed. Canada has a key role to play in all of this and needs to be fully engaged at the international level through the Arctic Council and bilateral negotiations. Our economic future and stability in the Arctic depends on it.

K. Joseph Spears is Ocean policy consultant is been involved in Arctic marine activities for the last 37 years and has been following these developments in involved and policy with respect to Arctic governance. Joe can be reached at kjs@oceanlawcanada.