The Arctic Maritime Routes: Future Trade Opportunities for Canada?

The six-day blockage of the Suez Canal has highlighted the vulnerability of trade routes. Some critical geographic points like the canals are strategic and can threaten the world maritime trade […]
Published on May 30, 2021

The six-day blockage of the Suez Canal has highlighted the vulnerability of trade routes. Some critical geographic points like the canals are strategic and can threaten the world maritime trade if blocked. Around 80 per cent of the volume of international trade in goods is carried by sea, and the percentage is even higher for most developing countries. The Suez canal represents 12 per cent of global trade, and around one million barrels of oil and roughly eight per cent of liquefied natural gas pass each day. It is estimated that the blockage costs $9.6 billion of goods a day. This event must incite us to search for some alternatives to avoid trade dependence on some passages that can be blocked accidentally or even voluntarily. Climate change and melting ice is creating a new road for the future. Indeed, the Arctic Circle is becoming more and more navigable—an opportunity for polar countries like Canada.

The Arctic Route: A New International Issue

A navigable trade road in the Arctic will be a real asset and even a game changer for international trade. With East Asia and China’s economic and political rising, most container ports are now in the Pacific Ocean. Indeed, in 2018, eight of the ten biggest ports in the world were Chinese. Of the 20 main ports, only four were not located in the Pacific Ocean. These are mainly the European ones: Rotterdam in the Netherlands, Antwerp in Belgium and Hamburg in Germany and are located in the northern part of Europe. Trade between the Atlantic ports and the Mediterranean seaports is declining.

Reinforcing trade connections between Europe and Asia is now the main issue for the two regions. As reported by the Arctic Institute: “Over the past decade, Asia has overtaken North America as the largest market for European exports, and the doubling of world trade by 2020 will further increase the importance of shipping lanes”. Moreover, a shorter connection between Europe and Asia would be an asset as container ship operators adopt “super-slow steaming” to reduce fuel consumption.

Russia and the United States are already looking closely at the Arctic region due to this growing strategic role. Even the UK, which has no territory in the Arctic, becomes more and more engaged in this area to protect its interests. The UK has a significant role in Arctic science and the world’s leading maritime services industries. Considering the relations between the UK and Canada, this potential Britannic activism could be an opportunity.

Canada Can Have a Geopolitical Role

Canada has a geographical position that strongly favours it in the development of Arctic routes. If the ones on the north of Russia seem to be currently the most attractive, the North-American routes (Northwest Passage) have a lot of potential.

Indeed, in 2014 the Nunavik became the first cargo ship to traverse the passage unescorted when it delivered nickel from the province of  Quebec to China. The journey from the Northwest Passage lasts 26 days, so two weeks less than the 41-day return via the Panama Canal. Due to the climatic condition and the frozen ocean, the ships need to be ice-breakers. In 2018, Russia had the largest fleet, but Canada was second. On the other hand, an attractive Northwest Passage would be problematic for Canada’s sovereignty in this territory. As highlighted by Col. Pierre Leblanc (ret’d), there is a risk that this would be considered an international strait between two oceans which gives them the right of transit. This right would also apply to submerged submarines and aircraft over the strait, a situation that would create a security risk with a loss of jurisdiction.

It also must be noticed that the Northwest Passage could not be the only route in the North of Canada. If climate change accelerates, a Transpolar Passage could open across the Arctic Ocean via the North Pole by mid-century. This possibility has already attracted the attention of China. Canada will have to be ready to manage this potential route.

Finally, the Arctic Maritime route would present economic advantages, but we must consider the security issue. The polar circle will likely become a new area of cooperation and competition. Ottawa and the provinces bordering the Arctic will have to be active to ensure a peaceful trade.

 

 

Alexandre Massaux is a research associate with the Frontier Centre for Public Policy.

Photo by Samrendra Singh on Unsplash.

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