As the nerve centre of logistics, Nuuk Harbour is too small and can deny Greenlandic growth. According to a new socio-economic analysis from Ramboll Management Consulting, Greenland can earn an estimated 80 million Euros by expanding the harbour.
When heavy cargo and container vessels crowd to moor the biggest city in Greenland, Nuuk, it can sometimes be a claustrophobic experience. The harbour cannot accommodate all the ships because it is both too shallow and too small. There is every indication that the amount of goods will increase in the coming years, especially if foreign actors as predicted enter the field of recovering raw materials.
As a result, the Ministry of Finance & Domestic Affairs in Greenland asked Ramboll Management Consulting to analyse the socio-economic consequences of an expansion of the harbour.
- The socioeconomic analysis shows that expanding the harbour will result in significant economic gains for Greenlandic society of approximately 80 million Euros and a payback time of 10 years. The transportation time will be reduced and become less expensive for the logistic businesses that convey goods to and from Greenland and between cities. For instance, the self-government owned Royal Arctic Line can do with two vessels instead of three, and this means lower freight rates that will benefit the consumers, explains Jakob Rosenberg Nielsen.
Costs must be turned to growth
The existing capacity problems already entails that terminal logistics and storage of containers are complicated, troublesome and expensive. The users of the harbour have to lease additional repository outside the harbour, and the ineffectiveness has resulted in growing freight rates, which make commodities more expensive for consumers and places a strain on Greenland’s economy.
- The purpose of expanding the harbour is to reduce freight rates and provide infrastructure that can stimulate growth across society. Our analysis has contributed to assessing whether the expansion is a good investment or not, as well as how it will influence sustainable development in Greenland, says Senior Consultant and Project Manager Jakob Rosenberg Nielsen from Ramboll Management Consulting.
Unfilled potentials for sustainable development
By means of six different analyses, economists have examined how a potential expansion will impact the different stakeholders and society as a whole. In the analyses, six different scenarios differing on type of ownership and financing are compared to a scenario in which the size of the harbour remains the same. Areas such as infrastructure, environment and sustainable city development have been examined closely, and the conclusion suggests that Nuuk Harbour should be looking forward to a future expansion.
- The sustainable development will be strengthened because the new harbour makes it possible to use bigger and more energy efficient vessels. The increased capacity in the harbour area can be used for creating appealing city development projects, and the reduced transportation time for containers future-proofs the infrastructure and spares the environment in the long run, says Jakob Rosenberg Nielsen.
The socioeconomic consequence analysis was finished in May 2013 and it has contributed to Greenland’s decision to expand the harbour.