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Cost-Benefit-Risk Analysis of Shipping Heavy Cargo and Project Cargos along the NSR vs the Suez Route
WP5 Industry Seminar
Oct 25, 2016 / DNV GL, Norway
SungwonHong / KitaeKim
Institute of Arctic Logistics(IAL)
YoungsanUniversity, Busan, Korea
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CONTENTS
1. 2016 Heavy Cargo Transportation on the NSR
2. Heavy Cargo Shipping by Asian Countries
3. Cost-Benefit-Risk Analysis of Shipping Heavy Cargos
5. Constraints and Challenges
6. Conclusion
4. Prospect for Heavy Cargo Transportation via NSR
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Two routes1) Suez Canal-> Barents Sea->Kara Sea
2) Bering Sea -> NSR
1. 2016 Heavy Cargo Transportation on the NSR
15 voyages
30 voyages
17 voyages 62 voyages
Heavy Cargo Transport for Yamal Project From China and Indonesia
In Summer season, NSR transportation via NSR using Bering from Asia is dominated
European Shipping Companies dominated the Heavy cargo transportation market.China, Japan and Korea’s Shipping companies also took part in transporting heavy cargo for Yamal LNG project.
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Number of Voyages to Sabetta port by route
0
5
10
15
20
25
June July Aug Sep Oct
Voyages by route
Europe via Suez viaNSR
5
17 Voyages from Europe to Sabetta port
Month of Arrival Vessel Name Total
June Happy Rover, Audax 2
July
Happy Dynamic, Happy DragonJan Van Gent, Danzigergracht
HHL Volga, BBC CarolinaFloragracht
7
AugDimantgracht, Happy Rover
Pacific Winter, Eraclea4
SepHappy Dragon, Pacific WinterMuntgracht,Happy Diamond
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Voyage from Zeebrugge, Not from Baltic and Murmansk, Arkhangelsk
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15 Voyages from Asia via Suez to Sabetta port
HAPPY DELTA : China-Suez-Sabetta-Bering-China-Bering-Sabetta
YAMATO : Indonesia-Suez-Sabetta-Bering-China-Bering-Sabetta
BBC MAPLE LOTTA : Yokohama-Suez-Sabetta
HUA YANG LONG : China Gwangzhou Salvage
XIANG HE KOU : China-Suez-Sabetta-Bering-China
PUGNAX : China-Suez-Sabetta-Zeebrugge-Sabetta-Zeebrugge
TAI AN KOU : China Cosco : China-Suez-Zeebrugge-Sabetta
Month ofArrival
Total Vessel Average days of Voyage
June 2 Happy Delta, Bigroll Barentsz 52
July 6Donaugracht, Flevogracht
Dynamogracht, Merwedegracht, Dolfijngracht, Hua Yang Long
52.7
Aug 6Happy Diamond, Yamato,
DamgrachtHHL Tokyo, Xiang He Kou, Pugnax
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Sep 1 BBC Maple Lotta 50
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30 Voyages from Asia via Bering to Sabetta port
HAPPY DOVER : Korea(Ulsan)-China-Sabetta
MIGHTY SERVANT 3 : Lwanda-Singapore-Busan-Sabetta
MIRABELLA : Mokpo, Korea-China-Sabetta
AUDAX :Zeebrugge-Sabetta-Bering-Indonesia-China-Bering-Sabetta
Arriving Month
Total VesselAverage days
of Voyage
Aug 11
Happy Dover, Mighty Servant3, Molengracht,Dijksgracht, Bigroll Bering, Xia Zhi Yuan 6,
Fagelgracht, Fortunagracht, Muntgracht, Red Zed I, Mirabella,
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Sep 14
Happy Delta, Bigroll Barentsz, Transshelf, Fjord, Fjell, Sun Shine, Dolfijngracht, Eurogracht, Florijngracht, Yamatai, BBC Nile, Red Zed II, Xiang Yun Kou, HHL
Valparaiso,
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Oct 5 Yamato, Maasgracht, Sun Rise, Audax, Deltagracht 22
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European carriers dominate NSR heavy cargo transport markets
Company ARC7 ARC5 ARC4 ICE1 ICE2 NO TotalTotal 3 8 35 3 2 6 57
ANGLO EASTERN SHIPMANAGEMENT 1 1AUERBACH SCHIFFAHRT 1 1AUGUSTEA SHIPMANAGEMENT 1 1BALT STAR 1 1BBC Chartering 1 1BIGLIFT SHIPPING 3 3BIGROLL SHIPPING 1 1DOCKWISE SHIPPING 1 1 2FAIRSTAR HEAVY TRANSPORT 1 1FAR TRANS 1 1FR ALLIANCE MANAGEMENT 1 1HANSA HEAVY LIFT 2 2KG Schiffahrtsgesellschaft MS 1 1KONSTANTINOV 1 1MS “Senda J” Schiffahrtgesellschaft mbH & Co. 1 1MURMANSK SHIPPING 2 3 5NORFES MARINE SERVICES 1 1NORTHERN RIVER SHIPPING LINES 1 1NORTHERN SHIPPING 3 1 4OIL COMPACT 1 1RED BOX GROUP 1 1 2RESKOM 1 1RollDock Shipping 1 1SKADAR 1 1SPLIETHOFF'S BEVRACHTINGSKANTOOR 17 17STANDARD SHIPPING 1 1SVENDBORG BUGSER 1 1TK NORD PROJECT 1 1WAGENBORG SHIPPING 1 1
Ice class vessels owned by European shipping companies
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Non Ice class vessel shipping by Korea and Japan’s Carriers
ICE 1 class vessel shipping by China’s Carriers
2. Heavy Cargo Shipping by Asian Countries on NSR
Company ICE1 Non Ice class Total
COSCO FAR REACHING SHIPPING 3 3
Guangzhou Salvage 1 1
HACHIUMA STEAMSHIP 2 2
Pan Ocean 2 2
ZHEJIANG SHARE EVER BUSINESS 1 1
Total 5 4 9
Asian carrier list transported heavy cargo on NSR in 2016
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China and Japan’s heavy cargo shipping cases (2016)
Zhejiang Share Ever Business, 2016
Xia Zhi Yuan 6 :Tianjin-Bering-Sabetta
Guangzhou Salvage, 2016
Hua Yang Long : Penglai-Suez-Sabetta
COSCO, 2016
Xiang Yun Kou : Qiangdao-Bering-Sabetta-Zeegrugge
Tai An Kou : Qiangdao-Suez-Sabetta -Zeebrugge
Xiang He Kou : Qiangdao-Suez-Sabetta – Bering - Qiangdao
HACHIUMA, 2016
YAMATO : Indonesia-Suez-Sabetta-Bering-Tianjin-Bering-Sabetta
YAMATAI : Indonesia-Bering-Sabetta
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Korea’s heavy cargo transportation (2015, 2016)
CJ Korea, 2015
Korex SPB NO2
From Mussafah to Novy port
Pan Ocean, 2016
Sun Rise, Sun Shine
Yamal Plant from Indonesia, and China to Sabetta via NSR
SLK Kukbo (GE Tech), 2016
Happy Dover
Two Chemical reactors’ Intermodal Transportation from Ulsan to Pavlodar
Oil Refinery in Kazakhstan
Hyundae Heavy Industry , 2016
Happy sky owned by Big Lift
Heavy cargo for ZapSibNeftekhim Tobolsk, transshipped in Kirkenes by Tschudi
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Case 1 : CJ KOREX, Korea SPB No.2 transported Arctic loading tower for Bluewater (Assembling, Sep 21, 2015)
Novy port 9/10
UAE, 7/22
Voyage Barentz and Kara Sea from UAE to Novy port
No Ice pilot, No escort, No icebreaking tariff
Heavy Cargo Transport’s Profit : 30~40%
In case of NSR Heavy Cargo Transport’s Profit : 50%
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Arctic Gate Terminal + SCF Arctic7 Tanker (Sep, 2016)
Source : http://www.scf-group.com/en/press_office/press_releases/item76115.html?print=y
Arctic Gate Terminal transported by CJ Korex
SCF Arctic7 Tanker(Shturman Albanov) built by Samsung Heavy Industries
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Case 2 : Sun Shine (Pan Ocean) on the NSR
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Time Charter to Yamgaz
SUN RISE, SUN SHINE
Ice Pilot boarding at Busan Port
Port Charge at Russian port close to Bering Sea is high(US$20,000)
Ice pilot from Murmansk, boarding at Busan, disembarking at Sabetta
Icebreaking Tariff
Yamgaz’s Charge, about US$100,000 (Officially US$200,000)
Bunkering
Arctic Fuel(Low frozen temperature) can be bunkered at Busan and Tianjin
Busan provides low price arctic fuel than Tianjin
Pan Ocean’s Heavy cargo transportation via NSR
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The 1st Multimodal transportation of Korean company
Most difficult compared to other heavy cargo transport
Case 3 : SLK Kukbo, Multimodal Transportation from Ulsan to Pavlodar
Source: http://thebarentsobserver.com/en/industry/2016/07/arctic-shipping-operation-makes-it-history-books
“Happy Dover” loading chemical reactors for Kazakhstan
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Summary of Multimodal Transportation by SLK Kukbo
Source: SLK Kukbo, Sep 2016
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Inland Waterway Transport Section to Pavlodar
Source: SLK Kukbo, Sep 2016
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Case 4 : Hyundae Heavy Industries, Loading Heavy Cargo at Ulsan, Transshiped at Kirkenes by Tschudi Shipping Co.
Transshiped by TschudiTransported to Tobolsk, Russia(Early Jul, 2016, Kirkenes, Norway)
Loading Heavy cargo, Happy Sky (May 21, 2016, Ulsan Korea)
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Korea’s Activities regarding NSR Heavy Cargo Transportation 2016
Bunkering( 10 )Transshelf, Yamato, Sun Shine, Bigroll Bering, Xia Zhi Yuan6, Sun Rise, Red Zed I, Red Zed II, BBC Lima, Audax, Crew Change( 1 )Dijksgracht, Ship Supply(3)Molengracht, Eurogracht, Fortunagracht,
Loading ( 3 )
Happy Sky, Happy Dover, HHL Tokyo
Loading( 1 )Mirabella
Loading(2)HHL ValparaisoHHL Tokyo
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Case : Pan Ocean
Yamal LNG Plant Modules Transportation
Sun Shine, Sun Rise owned by Pan Ocean Chartered by YAMGAZ
Batam / Tianjin(LDG) → Bering Sea → E. Boundary of NSR
→ Sabetta(DISCH) → W. boundary of NSR
Sun Shine(Aug 18~Sep 04), Sun Rise(Sep 19~Oct 04)
3. Cost-Benefit-Risk Analysis of Shipping Heavy Cargos
(Source: Pan Ocean)
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Pan Ocean’s Two Vessels
Sun Shine Sun Rise
Registered/Built Panama / 2008.12.30 Marshall / 2012.10.31
Classification KR & ABS KR
Ship TypeCargo Ship
(Semi-Submersible Heavy Lift Carrier)Cargo Ship
(Semi-Submersible Heavy Lift Carrier)
LOA/Breadth/Depth 174.2 / 40.0 / 8.5 m 168.5 / 40.0 / 10.3 m
GT/DWT 17,824 / 14,715 tons 22,499 / 24,052 tons
Main EngineTwo(2) sets of Direct drive Diesel, 3,600KW,
STX - MAN B & W 8L32/40 Three(3) sets of ELECTRIC PROPULSION
8L32/40, 4000KW, STX - MAN B & W
Photo
(Source: Pan Ocean)
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Case 1: Comparison of SCR & NSR Shipping - Pan Ocean’s Sun Rise and Bigroll Barentz -
Bigroll Barents via Suez Sun Rise via NSR
SpecificationGT LOA Depth Breadth GT LOA Depth Breadth
22,500 173 12 42 22,499 168 10.3 44
25, April
14, June
4, Aug
1, Sep
28 days50 days
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Economic Analysis of Heavy Cargo Transportation - Cases of Sun Rise and Bigroll Barentz
NSR(Sun Rise, No Ice class)
Suez(Bigroll Barents, Arc4 )
Remark
Voyage Distance(nm) 6,118 13,253
Voyage Days 28 50
Bunker Cost ($) 294,000 525,00035ton/day$300/ton
Ice Breaking fee 200,000 official
Ice Pilot 17,000
Iridium 5,000
Suez Canal fee 59,784 Sun Rise case
Insurance 40,000 18,000
Total(US$) 556,000 602,784 46,784
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Conditions 1 day delay at Port Said for Bunkering
Average speed: 11knot
Economic Analysis of Heavy Cargo Transportation - Case of Sun Rise, What if
NSR Suez(11knot) Remark
Voyage Distance 6,118 13,576
Voyage Days 28 51.4
Bunker Cost 294,000 539,70035ton/day$300/ton
Ice Breaking 200,000
Ice Pilot 17,000
Iridium 5,000
Suez Canal fee 59,784
Insurance 40,000 18,000
Total 556,000 617,484 61,484
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1. Current NSR Heavy cargo transport conditions
Current heavy cargo transportation via NSR is mainly for natural
resource development or plant construction near the Arctic.
Yamal LNG Project is the only on-going project in the Russian Arctic area.
Continuous heavy cargo transportation is expected for completion of Yamal LNG Plant at the end of 2017.
100 transportation for Yamal LNG plant is expected for 2017.
Heavy cargo traffic is expected to decrease due to lack of scheduled
projects for construction.
2. Arctic LNG-2 Project
New Arctic LNG Plant in Gydan Peninsula, commissioned in 2025
4. Prospect for Heavy Cargo Transportation via NSR
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3. Multimodal Transportation via NSR
Korea’s Samsung C&T and Samsung Engineering have finally given up on the Balkhash project($2.5 billion) in Kazakhstan on Sep 1, 2016.
Competition between NSR and TSR
China’s “One Road One Belt” made new roadway connecting Russia-
China via Mongolia Trucking highway
4. Prospect for Heavy Cargo Transportation via NSR
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1. Project cargo transportation
Difficulty to secure steady heavy cargos in the Arctic region
Need to get business information at the early stage of project
designed by EPC
Necessity to accumulate heavy cargo transportation experience
2. Heavy cargo transport pattern
Made in Asia, equipped in Northern Europe or Arctic Area
Transportation via NSR has economic feasibility
Asia heavy cargo manufacturer’s over capacity
China and Indonesia make general technology products and Korea
makes high value products
5. Constraints and Challenges
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3. Fierce competition
Dominant position of EPC
EPC makes offers to various logistics companies and selects the most
profitable, which makes competition inevitable.
Asian shippers are expected to bid for the low price to accumulate experience where the ice class vessels set high charter fee.
4. Possibility of securing long term heavy cargos
Almost impossible to build new ice class vessel without securing stable heavy cargo volumes
5. Constraints and Challenges
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Feasibility of heavy cargo transport in the Arctic area via NSR is high
No steady heavy cargo traffic with long-term contract
In case of project cargo, if participating in EPC’s early project
New ice class vessel building is possible
Securing steady long-term heavy cargo is the focal point
Heavy traffic of low-rate ice class vessels during summer is expected
China
Order of 3 ice class heavy cargo carrier has been changed to general cargo carrier
Decrease in demand for ice class heavy cargo carrier
Korea
Project cargos that need high technology are produced in Ulsan, Changwon and Mokpo, which leads to high possibility of participation in the heavy cargo transport market in Arctic region
- With accumulated experience in NSR navigation, participation in the heavy cargo transport via NSR is expected.
6. Conclusion
