Performance Analysis: Using the Northern Sea Route as an Alternative to Traditional Routes

Abstract

The grounding accident of M/V EVER GIVEN in the Suez Canal causes a catastrophic loss on shipping companies. Alternatively, previous studies have presented encouraging findings of the remarkable benefits of time and cost saving in the Northern sea route (NSR) due to extend the ice-free time and shorten the distance. Ships using the NSR could shorten as much as 40% of the sailing distance from China (Shanghai) to Europe (Rotterdam) compared with the traditional route via the Suez Canal. This paper investigates the economic potential of using the NSR as a cost-effective route in comparison with Suez Canal Route (SCR) between China and Europe. To achieve this target, the study evaluates the net profit for the SCR fleet and NSR fleet by involving the factors, e.g., bunker price, ice condition and ship loading rate, etc. The case-study results show that the NSR fleet is not profitable compared to the SCR, due to the limited cargo transport capability and ice restriction. Only if the loading rate for SCR fleet is lower than some threshold value or the bunker price is high enough, the NSR turns to be profitable.