Northern know-how brings a competitive edge
ESL Shipping has the world's most modern fleet for the arctic region and decades of experience in challenging winter conditions. This provides the company with a one-of-a-kind competitive edge for growth in the Arctic market.
The northern dimension is playing an emphasized role in ESL Shipping's strategy. Advantages brought about by the geographic position can be seen as know-how in eastern markets and expertise in the products and services required in the region. One of the most interesting areas for growth is shipping in the northern region, where ESL Shipping is one of the world's most significant operators.
Climate change is opening up northern sea areas for commercial shipping.
“Our special expertise in arctic shipping gives us a competitive edge. Our shipping company has the world's most modern dry cargo fleet designed for the arctic region. We have already been operating in truly challenging winter conditions for decades. Such know-how takes time to generate, and it cannot be easily copied by our competitors", says Aki Ojanen, Chairman of ESL Shipping.
Feeling at home in the Northern Sea Route
For two years, ESL Shipping has operated in the Northern Sea Route, where its large Supramax vessels have carried the raw materials required for the construction of a new LNG port from Kirkenes in Norway to the Yamal Peninsula in Russia. Operations have been profitable from the start and have provided loads of useful experience.
“We know how to operate in the Russian arctic. We are familiar with the special characteristics of practical matters, such as navigation, radio communication and maintenance, and we have learned to work with the local authorities and icebreakers. We are already one of the most experienced shipping companies operating in the arctic region in Russia,” Ojanen says.
The Northern Sea Route is stabilizing into a passage which is open for five to six months every year. Currently, some 20–25 million tonnes of goods are transported through it annually. Ojanen believes that, as the cargo level stabilizes, there will be a significant increase in transportation volumes in the Northern Sea Route, and ESL Shipping will take its share.
Now that cargo prices are at a record low, it is more profitable to carry goods between Europe and Asia through the longer southern routes. ESL Shipping benefits from this situation as well through the offshore loading and unloading services it offers to large ocean liners. This, together with transportation agreements for Supramax vessels in the Northern Sea Route, was reflected in the good results of ESL Shipping during the third quarter.
Transportation in arctic regions requires a modern and sufficiently large fleet designed specifically for demanding ice conditions, combined with a crew with thorough expertise in winter conditions. Such competence takes time to develop and, furthermore, this extremely demanding niche market is not at the top of the list for the world's largest shipping companies looking for areas to expand their operations.
Operating in the arctic region is a long-term activity. What is needed, in addition to a superior fleet and know-how, is a pioneering spirit, the courage of explorers. It is also necessary to have the courage to maintain the shipping company's long-term competitiveness through required investments.
“We are in a good position. After all, we made a bold decision in 2010 to invest in ice-reinforced Supramax vessels. If it was not for them, we would not be operating in the Northern Sea Route or the Canadian ice region. When considering investments of such magnitude, we need to analyze global changes and the strategic long-term potential they present.”
“Whenever we have acquired new ships, they have represented the highest level of innovation, being unique in the whole world. We promise similar decisions in the future,” Ojanen says.
ESL Shipping's vessels are full of Finnish research expertise, design and technology. Top expertise in ice navigation can also be found on ESL Shipping's Board of Directors.
“We are surrounded by a world-class cluster of arctic know-how. It helps us to develop ever safer, more functional and more economical ships. We are in an excellent position to take advantage of the growing potential of sea transportation.”