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As sea ice melts in the Arctic regions, a new set of challenges and opportunities are opening up for the shipping industry. Melting ice due to climate change has critical effects for the global environment as the ice cover shrinks. However, one side effect of this is that new Arctic shipping routes are opening up.

If deemed to be viable, these routes have the potential to revolutionise the shipping industry in a much-needed boon. Access to new markets, shorter journey times and therefore more cost-effective routes are opening up in the northern regions of the world.

Minister of Transport of the Russian Federation Victor Olerskiy gave a presentation on the opening up of new possibilities at the 2015 Arctic Circle Assembly.

Decreased Voyage Time

The Arctic Route, which is actually comprised of several possible routes, has the potential to decrease voyage time on journeys between Europe and Asia by as much as 40%, according to a Copenhagen Business School study.

Searoutes.com estimate that a typical journey between South Korea and Germany would take 46 days if the ship travelled around South Africa’s Cape of Good Hope, or 34 days if it navigated via the Suez Canal. However, the same trip along what is known as the Northern Sea Route in the Arctic would take just 23 days.

The commercial opportunities opened up by this shorter, faster route are being explored by many major shipping lines. In October 2018, the Venta Maersk became the first ever container ship to traverse the NSR, a route previously only used by tankers and passenger ships. You can read more about this maiden voyage in the PDF attachment to this post.

Environmental Impact

There are many potential environmental consequences to opening up new sea routes through the melting ice in the Arctic regions. A study from the London School of Economics and Political Science has shown that there could be as many as 10,000 ships navigating the crossing each year in the Arctic once the NSR becomes completely viable. This introduces one more significant stress on an ecosystem that is already under threat.

At present, the NSR is only viable for approximately a quarter of the year. However, one study has reported that it could be viable for vessels without ice-breakers to navigate this route as soon as 2050, such are the effects of climate change.

Should the container shipping industry be looking seriously into utilising the NSR as a regular future route, there will almost certainly need to be regulations in place requiring the development of new technologies to ensure an eco-friendly approach. The effect of having more ships on the water needs to be neutralised or off-set through new technologies at sea and in port that limit the detrimental effect on the environment.

Some more information about shipping along the Northern Sea Route since 2012 can be found in the infographic attachment.

Geopolitical Consequences

Another factor the shipping industry must consider is the geopolitical consequences of opening up the NSR as a regular trade route. The whole of the NSR is situated within the Exclusive Economic Zone of Russia, with almost a third of the GDP of the country dependent on this region. Therefore, any institution or company from another country will have to negotiate with Russia.

The future of the NSR is therefore dependent on Russia’s ability to convince the wider global shipping industry to see the NSR as a safe alternative to the current traditional routes, ensuring it is free from pirates and terror.

The LSE study also discovered that disrupting the structure of European value chains would negatively impact eastern and southern EU members. The short video attachment takes a closer look at this possible outcome.