National audit: Arctic route less viable than Suez Canal

Oceans minister says economic case will be made by 2040

Empty containers outnumbered export cargo 2.6 to 1

Calls for Busan to publicly verify costs, results and insurance

Minister of Oceans and Fisheries Hwang Jong-woo answers lawmakers' questions at the National Assembly's national audit of the Ministry of Oceans and Fisheries, held Monday at the ministry's annex in Dong-gu, Busan. [Yonhap]
Minister of Oceans and Fisheries Hwang Jong-woo answers lawmakers' questions at the National Assembly's national audit of the Ministry of Oceans and Fisheries, held Monday at the ministry's annex in Dong-gu, Busan. [Yonhap]

The Panstar Acro completed a 50-day Arctic route trial and returned to Busan port Sunday morning. A homecoming ceremony is scheduled for Tuesday afternoon at Jaseongdae Pier in the North Port. The Ministry of Oceans and Fisheries said it plans to continue the trial runs next year. Questions raised in the National Assembly over economic viability and sanctions risks have cast a shadow over the voyage, while Panstar said it would assess the results jointly with the ministry rather than comment independently.

The Panstar Acro's round trip marked the first Arctic route voyage by a Korean container ship. The one-way leg took 22 days and the full round trip 50, cutting roughly 10 days off the 30-to-34-day one-way journey between Busan and Rotterdam via the Suez Canal.

Minister of Oceans and Fisheries Hwang Jong-woo, speaking Monday at a National Assembly Agriculture, Food, Rural Affairs, Oceans and Fisheries Committee national audit in Busan, said the ministry would "carefully analyze the trial results and prepare a more substantive plan for next year's trial run." The government aims to open a regular route by 2030 after a comprehensive analysis of distance, route, time, cost and fuel consumption. It also plans to build a support framework covering timely port infrastructure development, training of polar specialists and development of core icebreaker technologies.

The central question is economic viability — specifically cargo procurement and shipping profit and loss. At the audit, People Power Party lawmaker Kim Yong-tae of Pocheon and Gapyeong-gun, Gyeonggi Province, said that "even under the most favorable assumptions, a ministry-commissioned report shows the Arctic route will be less economically viable than the Suez Canal through the 2040s." He noted that next year's Arctic route budget stands at 622.8 billion won ($466 million), that a single round trip to Europe costs 7.63 billion won, and that icebreaking service fees alone account for 1.36 billion won of that total. Democratic Party lawmaker Kim Seong-beom of Seogwipo, Jeju — a former vice minister of oceans and fisheries — said the ministry needed to examine "how costs and revenues vary depending on cargo procurement and sailing schedules." Minister Hwang said he believed "economic viability can be secured around 2040."

Lawmakers also raised concerns that the Panstar Acro carried far more empty containers than actual export cargo. According to ministry data released by People Power Party lawmaker Kang Seung-gyu of Hongseong and Yesan-gun, South Chungcheong Province, the vessel transported a total of 1,945 TEUs of empty containers — 202 TEUs on the outbound leg and 1,743 TEUs on the return — against just 737 TEUs of actual export cargo, a ratio of 2.6 to 1. The ship returned with no import cargo at all, carrying only empty containers belonging to six South Korean companies. That fell short of Panstar's pre-departure plan to load 1,300 TEUs of empty containers alongside import cargo. Kang criticized the voyage as "all show and no substance," saying a project that President Lee Jae Myung had called "Busan's flag for the future" had amounted to little.

Lawmakers also identified US sanctions against Russia as a key reason shippers are reluctant to use the Arctic route. If a vessel becomes trapped in ice or sustains hull damage requiring icebreaker rescue or refuge at a Russian port, general average costs would arise — and any money flowing to Russia in that process could constitute a sanctions violation, they argued.

The trial was structured so that the Korea Shipowners' Association fund — financed by member contributions — would provide up to 4 billion won in trial operation subsidies and cargo-attraction incentives. Panstar's actual profit and loss for the voyage has not been disclosed, but industry opinion leans toward a loss. Shipping industry estimates suggest the company likely lost around 4 billion won even after receiving subsidies, and as much as 7 billion won before subsidies. The additional incentive of up to 1 billion won for exceeding 2,000 TEUs round-trip now appears out of reach, and a dispute has emerged over whether empty containers should count toward cargo performance. Some observers caution, however, that it is difficult to draw broad conclusions about profitability from a single voyage.

A Panstar official, responding to questions about the trial's results and the failure to secure import cargo, said the company faced "limitations in releasing data independently" given that the voyage was part of a ministry-run competitive program, and that it would "compile and assess the results jointly with the ministry." When the ship departed in August, Panstar had described the voyage as a "first run" and said it planned to reapply for next year's program, with three sailings between July and October under consideration if selected.

In Busan's political circles, calls have emerged for the city to hold a public review session — together with relevant agencies and experts — to openly verify the voyage's operating costs, cargo performance and insurance arrangements. The ministry's analysis, expected in about a month, is set to serve as the definitive scorecard for the Panstar Acro's trial run.


kaf2002@heraldcorp.com