The financial viability of a potential new Northern Sea Route port at Finnafjörður, Iceland, has been called into question by the findings of a new report from the University of Iceland’s Institute of Economic Studies.
The 1,300 ha port, which would comprise 6 km of wharf space, has already received ISK18 million (USD146,000) in funding from the Icelandic Ministry of Transport and local government. It had been assumed that once the Arctic ice has melted, leaving a route clear directly across or marginally circumnavigating the North Pole, the Finnafjörður site in northeast Iceland, at the destination of the transpolar drift stream, would be a prime location for the transhipment hub.
However, the latest report, commissioned at the request of the Ministry of Finance and Economic Affairs, has found that the Finnafjörður site rates unfavourably against potential rival facilities in Norway’s Svalbard and Kirkenes, stating that Iceland “is never the most economic option”.
Finnafjörður would operate by offloading cargo from large, ice-strengthened vessels of more than 20,000 teu, and transferring it to smaller vessels with hulls optimised for high performance in open ocean, which would then call at ports throughout Northern Europe and into the Mediterranean and North Africa.
However, at the Norwegian sites, it was found that shipping lines would have the option to continue their journey onward to ports in Northern Europe, such as Antwerp, Rotterdam, or Hamburg, without transhipping cargo at all.
The lack of landmass at the North Pole and the depth of the ocean underneath the sea ice, as well as the depth in the North Sea, would present vessels with no draught restrictions on their route between – presumably – China and Dutch or Belgian ports, enabling the journey to be undertaken in one transit on a single massive, ice-strengthened vessel. From then on, any Mediterranean-bound cargo could be transhipped at any of the North European ports already well-equipped for doing so.
In fact, the Icelandic site would remain uncompetitive in the event of any less than a total melt of Arctic sea ice; while Finnafjörður’s placement means that a route directly across the North Pole would offer considerable competitive advantage, this would take a great deal of time to materialise, and Iceland would be behind other ports in the region in terms of shaping the Northern Sea Route economy.
“If warming continues and sea ice continues to recede, that condition on the route straight across the North Pole will eventually be good; it makes sense to use that route,” said the report. “Iceland may have a competitive advantage due to the good harbour position in Finnafjörður.”