Abstract
Global warming has significantly reduced summer ice coverage in the Arctic region, providing long-awaited opportunities for the shipping industry to open new routes through a region known for its harsh navigational conditions. If a shortcut between Asia and Europe via the Northern Sea Route (NSR) is adopted, significant energy saving and pollution reduction are possible compared with conventional southern routes. However, opinions in literature differ regarding this shortcut’s economic viability. We present an analysis from the perspective of COSCO, China’s largest container sea freight operator. We perform a cost–benefit analysis under several scenarios considering the following current realities: (1) declining oil prices not seen for decades, even lower than the lowest prices assumed in previous studies; (2) declining Russian NSR tariff as an effort to attract shipping traffic; (3) possible emission control areas along a northern route may require much cleaner energy and thus impact costs not studied in previous models; and (4) the capital cost difference between a hired and a self-owned vessel. Classical case studies of shipping routes between Shanghai and Rotterdam are adopted for comparison. We explain how different factors impact the shipping costs and to what extent can the NSR be economically viable. Occasional usage of NSR (e.g., one time transit) is unlikely to be more profitable given the higher unit transportation cost, but the route could be economically competitive in terms of the total profits earned for continuous usage. A more aggressive scenario which requires ships on the NSR to switch to much cleaner fuel would erode this route’s competitiveness, but extra environmental benefits should be taken into consideration if future carbon emission trading schemes include the shipping industry.
Highlights
Exploration of marine transportation networks via the Arctic started centuries ago [1]
Reflected by real shipping traffic recorded by the automatic identification system (AIS), while the number of annual Northern Sea Route (NSR) transits is in double digits, the Northwest Passage (NWP) is at best sporadically transited by merely one or two ships [6] and seems unlikely to be “a viable shipping route for several decades to come” [7]
Fuel costs account for 3F2u%elocfotsottiasl ecxopstescutenddlyerththeedNomSRincaonmt pcoasrtedfawctoitrh(4F0ig%uruen3d)e. rFtohreaShCiRre.dCvaepsistaell,cfousetls ccoosmtseancecxotufnotr fothre32S%CRofrotouttael, cbousttsthuenydrearnthkethNirSdRfcoormthpearNedSRw(i1th8%40f%orutnhdeeNr SthRevSeCrRsu. sC1a7p%itaflocrotshtse cSoCmRe);ntehxet tfworo thotehSeCr Rsigrnouifticea, nbtuctotshtefyacrtaonrks athreirdmfaorrinteheinNsuSrRan(1ce8%anfdortrtahnesNit StaRrivffesrsaunsd1t7o%llsf.oVritahtehSeCNRS)R; t,hmeatrwinoe oitnhseurrsaingcneificcoasntst caorset efavcetnorhsiagrheemr caorminepainresdurwanitche athned NtraSnRsittratanrsiiftfsfaeen,dstuogllgse. sVtiinagthtehaNtSfRu,tumraercinoest insasuvirnagnsceccoousltds acroemeveefnrohmightehriscoimmppaorretadnwt istohutrhceeN
Summary
Exploration of marine transportation networks via the Arctic started centuries ago [1]. Commercial navigation there remains rare and economically unviable due to operational challenges in this ice-covered region. The Northern Sea Route (NSR) shortcut between Asia and Europe via the Arctic, largely attributed to global warming and the subsequent ice retreat, can have a profound impact on the world’s shipping landscape because of the potential for energy cost savings [3]. There are three shipping shortcuts through the Arctic region: NSR, Northwest Passage (NWP), and a future Transpolar Sea Route (TSR). The NSR lies within Russia’s exclusive economic zone and runs through the Bering Strait to the Kara Sea. Separately, the Northwest Passage (NWP) is a series of connecting routes from the Arctic Ocean through the Pacific Ocean to the Canadian Arctic Archipelago. Reflected by real shipping traffic recorded by the automatic identification system (AIS), while the number of annual NSR transits is in double digits, the NWP is at best sporadically transited by merely one or two ships [6] and seems unlikely to be “a viable shipping route for several decades to come” [7]
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
