The Future of Arctic Shipping


February 14, 2014 07:16 EDT

One of the most frequent shipping routes in the world runs between Rotterdam, in the Netherlands, and Yokohama, Japan. Normally, the 11,300-mile transcontinental journey would take 36 days from the North Sea to the Tokyo Bay via the Suez Canal.

However, as a result of global warming, polar ice has receded to record lows enabling trans-Arctic maritime transportation through the Northern Sea Route (NSR) along Russia’s northern coast, which is by far the shortest maritime connection between northern Europe and eastern Asia. Were a similar vessel to take the same journey from Rotterdam to Yokohama via the Arctic, 4,450 miles would be shaved from the voyage, cutting the traditional path by roughly 40%.

Such a rapid transit, roughly ten days shorter, could lead to significant savings in operating costs, fuel consumption and time. Now that Arctic navigation has finally become a commercial viability, it could dramatically shift the way Europe does trade with its East Asian partners.

But what does the future hold for the newest global super-waterway? Will it meet expectations as the next great transport system? Or is the NSR still far from wide-scale adoption like skeptics claim?

New Opportunities

The continued acceleration of climates in the Arctic bodes well for the shipping industry. The United Nations Environment Programme (UNEP) recently reported that Arctic summer ice coverage is at record lows — 50% lower than previous decades. The amount of summer ice has decreased so dramatically over the past 30 years that the Arctic Monitoring and Assessment Program predicts if such a pace were to continue, ice-free summers in the Arctic would become a reality by mid-century.

The thawing of ice in the Arctic means new shipping lanes are being opened up between Europe and the Far East, with the potential to halve the current journey in the not-too-distant future.

The first two international commercial cargo vessels to make the Arctic voyage occurred as recently as 2009. Previously, the NSR was largely impassable due to harsh conditions and was traversed predominately by Russian ships.

However, economic considerations, favorable weather conditions, and the overall increase in commercial maritime traffic between Europe and East Asia prompted intrepid seafarers to begin braving the icy High North in greater numbers. Four ships passed through what was historically known as the Northeast Passage in 2010, followed by 34 in 2011, 46 in 2012, and 71 in 2013 (41 Eastbound and 30 Westbound). According to the Northern Sea Route Information Office, 1.35 million metric tons of cargo was transported via the NSR in 2013.

The summer of 2013 saw another Arctic shipping milestone, when the Chinese Yong Sheng became the first container-transporting vessel to navigate the Arctic. Hitherto, the majority of commercial vessels that have crossed the NSR have been cargo ships laden with hydrocarbons.

The economic potential of Arctic shipping is staggering, when one considers the size of European trade with Asia. The European Union (EU) is China’s largest market as bilateral trade reached €433.6 billion in 2012, and the volume of oceanic trade is expected to rise significantly over the coming decades as developing economies in the East continue to grow.

Already, the NSR has allowed shippers to make the passage between Europe and Asia in record times. At the 2011 Arctic Forum, Russian President Vladimir Putin boldly claimed that the NSR would one day rival the Suez Canal in importance as an international transport artery. (For comparison, 740 million metric tons of cargo passed through the Suez Canal in 2012.) To Putin, and many others, the outlook for the northernmost conduit between Europe and Asia certainly seems bright.

The Arctic Advantage

One immediate advantage of Polar shipping is the time saved through bypassing traditional routes. Over a third of Europe’s trade is to the East, requiring shippers to utilize the Suez Canal or the longer journey around the Cape of Good Hope. Traveling via the NSR saves a week on average but, conditions permitting, the same distance can be covered in as few as eight days. This speed means that ships can be put back to sea at a higher rate while saving an estimated $650,000 on bunker fuel costs per journey.

The alternative shipping route would also allow companies to avoid well-documented piracy issues in the Gulf of Aden and off the coast of Somalia. This would also allow them to steer-clear of potential disruptions related to ongoing political instability in Egypt. In total, 17,225 ships passed through the Suez Canal in 2012, yet it is still home to some of the longest queues for passage in the world, while the potential risk of a total shutdown due to terrorism or government protest continues to loom.

As Arctic temperatures climb, the summer window for commercial traffic in the NSR will continue to widen permitting a longer polar shipping season, thus enabling an increase in marine transportation. New shipping lines will continue to open as polar ice diminishes, leading to rapid crossings. It is estimated that if ships could go directly over the North Pole, they would save an additional 20% in travel times. The depletion of Arctic ice will also enable a diversification in polar shipping, as larger, heavily laden cargo ships are able to safely cross the NSR.

Ice recession in the Far North has also prompted increased resource exploration. The NSR will allow shippers to service more and more polar commercial activities. Arctic nations that are willing to exploit their northernmost resources will have a ready transportation system in place over the coming years.

Titanic Risks?

Crossing the Arctic is not without considerable pitfalls. The most obvious initial risk is the logistical challenges posed by inclement weather and the shift of pack ice. Ships that travel by the NSR must contend with the dangers presented by drifting sea-ice and bypassing island-sized icebergs. Vessels can be seriously damaged by free-floating ice or even ensnared by their frigid surroundings.

In the colder months, this will necessitate a costly icebreaker escort, at up to $200,000 per journey, cutting into profit margins. There is also a dearth of available icebreakers able to act as Polar sentinels if required. Russia, has nine nuclear-powered icebreakers, whereas the United States Coast Guard has only two Polar-class icebreakers in its fleet.

The high risks involved in Arctic maritime shipping also lead to increased insurance costs. This is all on top of challenges posed by the lack of vital infrastructure — navigational aids, limited frequency of Arctic ports, or reliable communication systems, for instance — or the remote distances from any search-and-rescue (SAR) facilities many vessels find themselves.

Furthermore, only ships that meet certain ice class standards — those with strengthened hulls to navigate through icy conditions — are granted permits to enter the NSR by Moscow. Today, only 1% of the entire global fleet meets the necessary standards required to traverse the NSR, severely limiting the number of vessels able to undertake the journey in a season. To pilot such unpredictable waters also requires a highly seasoned crew that has undergone the appropriate training, raising another ice-block in the immediate future of Arctic shipping.

Variable ship speeds and the continual risk of delays make traversing the Arctic unreliable. In a business that relies on long-term planning, such delays diminish the NSR’s short-term attractiveness. The dangers involved in the crossing also severely limit the size of cargo that can be transported per voyage.

The volume of Polar shipping may be increasing, however, the window for transit via the NSR is still limited to a number of summer months. This window will gradually widen with continued global warming, but will nevertheless severely limit the volume of Arctic east-west traffic for the meantime.


Beyond practical business considerations, there are serious environmental concerns at stake. Shippers will argue that short journey times will reduce emissions. However, in 2013, 72% of cargo that transited the NSR were petroleum products, and Russia predicts the vast majority of tankers using the Northern Sea Route will be laden with fossil fuels. The potential for a disastrous oil spill occurring is all too real.

Recently, the Russian tanker, Nordvik, was punctured by a loose ice floe. Fortunately, none of the diesel fuel it was loaded with leaked, but the incident underscores the potential for environmental catastrophe. At the moment, there is no effective way to contend with an Arctic oil spill. The cleanup of an oil-leak would be highly expensive and hazardous due to reduced mobility and the lack of technology to contend with icy, wind-swept waters.

Finally, there is the issue of Russia. The NSR falls within Russia’s exclusive economic zone and is administered by the Russian Administration of the Northern Sea Route (NSRA). Russia recently lowered transit rates to make the NSR more attractive to shipping firms, however, that does not mean it cannot, nor will not, raise rates in the future.

The fact that the Kremlin has played petropolitics in the past raises the specter that it could act in a similarly heavy-fisted manner in regards to the Northeast Passage. Russia has used geography to its political advantage before and Moscow will not hesitate to do so again if it meets its strategic calculations.

There is still a long-way to go before the NSR can potentially compete with traditional sea-routes between Europe and Asia. The other Arctic corridor, the Northwest Passage above Canada, remains too challenging to navigate to be considered a commercial option for the foreseeable future.

However, this will not stop speculation over the role the NSR can play in the future of global nautical trade. At current rates, the increase in traffic looks to be a trickle, as a litany of obstacles impede growth of the Arctic short-cut between the Atlantic and Pacific. According to Nils Andersen, head of Maersk, the world’s largest container ship operator, Arctic shipping will not become a viable commercial option for between 15-20 years.

Of course, the seemingly endless tide of global warming will continue to warm the Polar region, leading to depleted ice levels and a continued increase in Arctic maritime traffic. But for the time being, the future of Arctic shipping looks muted.

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

Image: Copyright © Shutterstock. All Rights Reserved


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