Melting Arctic Alters Supply Chain Management
While most of us are eagerly anticipating the warmer weather that comes with spring and summer, one of the current topics of interest in supply chain news has to do with, of all things, ice. Whether due to natural processes or manmade escalation, another 2 million square kilometers of Arctic ice is expected to melt between now and September, potentially breaking the lowest recorded amount set in 2007. This has caught the attention of shippers in particular, who are looking to save thousands of dollars in transportation costs by making use of Soviet ice-breaking vessels and new routes to move cargo between Europe and Asia. The idea of bypassing the Suez Canal and the much longer shipping route – as well as the higher costs that come with the extended trip – has several European transportation companies devising ways to make the most of this emerging opportunity.
There’s a good deal of excitement on the shipping end of the spectrum, but the opening of the Northwest Passage is bringing with it a fairly vocal and concerned crowd. Environmentalists are all but cringing at the idea of shipping and other activities taking place in an area that is highly unregulated and full of untapped resources. It’s estimated that as much as 20% of the world’s oil reserves lie beneath the Arctic ice; should the ice continue to retreat, countries that have controlling interests in the area are likely to begin considering the idea of drilling or making use of other resources.
Despite concerns and lack of agreement about how activity in the Arctic should be regulated, companies are poised to take advantage of the new, faster routes allowed by the Northwest Passage. After the supply chain meltdowns of 2011, saving costs where possible is high on the agenda, and being able to shave off as many as 22 days from a Russia-to-China trip has transportation companies preparing to take the icy plunge into the Arctic.