Greenland shipper won’t be allowed out of Danish port contract early

By The Arctic Journal - January 31, 2017

Royal Arctic Line, a Greenlandic ocean-going shipper, will not be given permission to break its contract with the Port of Aalborg, Denmark, early, port officials reiterated last week.

“Royal Arctic Line wants to do something else. We accept that, but they are bound by an agreement with us until 2022. Right now, we are discussing what will happen after then,” Claus Holstein, the port’s managing director, told Shipping Watch, a Danish news outlet.

The announcement came a day after Royal Arctic Line announced it had finalized a deal with Guangzhou Wenchong Shipyard, a Chinese shipbuilder, to build a vessel that would be largest ship ever put into service between Greenland and Denmark.

The ship, measuring 180 meters (about 590 feet) and costing 220 million kroner ($31 million), will have three times the capacity of the two largest ships currently sailing between Greenland and Aalborg.

Once it enters into service, Royal Arctic Line’s new vessel will replace those two vessels, and, the company says, allow it to make the best use of a new port facility in Nuuk, which is expected to open this year.

The Royal Arctic Line ship will be built together with two, somewhat smaller vessels ordered by Eimskip, an Icelandic shipper that, in May, announced a capacity-sharing agreement with Royal Arctic Line.

“We assume that the co-operation will increase business activities between the Arctic nations, especially between Iceland and Greenland, where activities have been limited due to lack of frequency and direct services,” Gylfi Sigfússon, the president and CEO of Eimskip, said in a statement.

Holstein’s statement confirms the position the Port of Aalborg took in October. At that time, Thomas Kastrup Larsen, chairman of the port’s board and the city’s mayor, threatened to demand 200 million kroner in compensation from Royal Arctic Line if it sought to break its agreement with the port in 2019 as had been suggested by company officials.

Verner Hammeken, the managing director of Royal Arctic Line, later said the date had been put forward only as a suggestion during on-going discussions with the Port of Aalborg about the firm’s future there, and had not been meant as an official statement of its intentions.

However, Royal Arctic Line’s discussion of an early departure came after restructuring in 2015 did away with three Aalborg-based subsidiaries, eliminating 120 jobs in Denmark, and Mr Holstein told the media in October that the decision to make Royal Arctic Line’s considerations public was intended to quell rumours that had emerged about the port’s future.

Speaking with KNR, a Greenlandic news outlet, Mr Hammeken said that, pending the approval of competition authorities, the new vessel would sail between Nuuk, Reykjavík, Tórshavn and a Danish port.

Currently, Eimskip sails to the Port of Aarhus, and port officials have been actively lobbying Royal Arctic Line to move its Danish terminal there.

Aalborg has served as Royal Arctic Line’s home port and the main port of entry for Greenland since 1982, when the function was moved from Copenhagen.