Monday, June 25 2018 | ASIA TODAY INTERNATIONAL - Reporting the Business that Matters in Asia
WHY SINGAPORE IS BREAKING ICE IN THE ARCTIC . . .
IF Arctic ice continues to melt, allowing global shippers to build an alternative shipping route across the top of the world, Singapore – which already faces the potential threat of a new deep-sea port in Burma – may find its historical role as a world maritime entrepot dwindling . . .
YOU might well ask why a tiny dot of a nation sitting a shade north of the Equator would want to sit on the Arctic Council?
Since 2011, Singapore has lobbied for permanent observer status on the Council, formed in 1996 to govern the desolate ice-capped North Pole.
At the eighth Ministerial meeting of the Arctic Council in Sweden last week, Singapore’s wish came true. China, India, Japan, South Korea and Italy were admitted, too.
Singapore has twin interests in the Arctic Region. First is the implication of a change in global shipping routes. As ice melts in the Arctic, an alternative shipping route opens — and that stands to eventually reduce Singapore's importance in global maritime activity.
Singapore boasts one of the world's busiest ports, and its strategic position gives it a bigger global role than that accorded to other nations of its size. Since Stamford Raffles founded Singapore back in 1819, the island State’s importance has been directly related to its strategic geographic location. Playing an entrepot role has becoming something of Singapore’s birthright.
The second equally important reason is the problem of rising sea levels. Despite its wealth and sophistication, Singapore could end up in the same boat as much less-developed island nations like the Maldives in the Indian Ocean or Tuvalu in the Pacific.
Singapore appointed Kemal Siddique to the role of special envoy for Arctic Affairs in January last year, and is said to have developed its own Arctic policy over a number of years.
The Arctic is the new crossroads between Asia and the West, Norways’s Foreign Minister, Espen Barth Eide, told the S Rajaratnam School of International Studies in Singapore in November last year. (Norway is one of the eight founding members of the Arctic Council,)
So not surprisingly, along with Singapore, Japan, China, India and South Korea were all admitted last week as permanent observers to the Council. China has campaigned for more than a decade to be an observer, and has reportedly foregone all possible claims and rights to a region that is controlled largely by its eight bordering states.
Apart from Norway, the other Council members are Iceland, the United States, Russia, Finland, Canada, Iceland and Sweden.
Eide says the Arctic Ocean is increasingly becoming a sea that ties together three of the most dynamic continents in the world.
"A lot of the interest from Asian countries has focussed on the possibility of developing new transit routes. The expected increase in shipping is mainly related to so-called destination transport within the region, and supply of services to the petroleum industry," he says.
He adds that, in a longer perspective, a marked increase in transits through the Northern Sea Route (NSR) is expected, although this will start from a very low level.
Traffic through the Arctic region has increased and the size of vessels has increased. The first super tanker transit was in 2011. Some 46 ships sailed through the Arctic last year. The number had risen from four in 2010 to 34 in 2011.
Eide says the estimate is that there will be around 480 transits in 2030, citing as an example, that Russia has announced its intention to develop the NSR into a major international transit route.
The advantage of the NSR is shorter distance. The Rotterdam-Yokohama route is 40 per cent shorter through the NSR than through the Suez Canal. Shorter journeys equate to big savings in time and fuel.
However, the traffic is still a tiny fraction of the approximately 18 000 voyages through the Suez Canal each year.
The Norwegian Minister says the NSR may become an important alternative for certain types of goods, such as LNG, and bulk transport of petroleum products and iron ore,
It is less likely to attract container transport, which requires more precision in terms of sailing times and arrival dates. Eide says climatic conditions, insurance costs, and Russia’s demand for ice-breaker assistance for parts of the journey will be obstacles to rapid development of the NSR as a major shipping route. Another reason is the limited search and rescue capacity available.
Eide, in his address, sought to allay Singapore's concerns: "For Singapore, as a littoral State of the Straits of Malacca, should not be too worried about competition from the NSR,” he said.
"In fact, it might bring other opportunities for your ship and oil rig builders, as has already been demonstrated by the deal for Keppel Offshore &Marine to build two ice breakers for Russia's Lukoil Company in 2006.
"There will also be greater demand for other ice class vessels, such as ice-class rescue vessels and ice-class floating storage and offloading units (FSOs)." Eide went on to list a string of business opportunities that Singaporean companies are well positioned to tap into.
While the prospect of NSR becoming a fully fledged international shipping route is a long way down the track — if indeed, it is possible — there is another niggling problem for Singapore.
Thailand is talking to Burma about developing a deep sea port at Dawei. If this proceeds, it creates a western gateway for Thailand and the countries in landlocked Laos.
With transportation links already in place, there could come a time where cargo can easily be moved direct from Thailand, Laos, and Cambodia to ports in Burma or Vietnam.
Then, there is no need, if you like, for ships to call at Singapore before sailing to Thailand's Laem Chabang port, on its Eastern seaboard. If these countries get their act together, they can at least partially divert the shipping traffic that currently sails through the Straits of Malacca, passing through Singapore.
* Florence Chong is Editor of ATI Magazine