Prospects and impacts of commercial navigation
along the Northern Sea RouteDiscussion paper for the International Transport Forum
Date: 17 / 04 / 2019

Authors
Marten van den Bossche
Karel van Hussen
Twan de Korte
Rick Janse
Onno de Jong

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Vesselfinder.com, screenshot 09-04-19 13.36 hrs

Table of content
1.

Context for NSR utilization

2.

The case for the Northern Sea Route (NSR)

3.

Relevant markets and commodities for the Northern Sea Route4.

Impacts of NSR utilisation

5.

Conclusions and discussion

4Context for NSR utilization
Arctic sea ice• Sea-ice decline has been faster during the past tenyears than in the previous 20 years
Global trade flows• In 1869 the Suez Canal opened and reduced
shipping distances by 23%.
• Travelling on the NSR reduces travel times (with40%, 14 days) compared to the Southern Sea
Route (SSR).

Trip from Hamburg to Yokohoma
RouteDistance(Nm.)

Speed(knots)

Travel time(days)

Suez Canal

11.585

1532

NSR

7.356

1418

Complex geopolitical situation
Geo-political situation• Possible disputes and overlapping
claims in the polar region• NSR falls dominantly in EEZ Russia(200 nM zone)
Polar CodeFor sea transport on the NSR Russia
has the right to adopt and enforce
non-discriminatory laws andregulations for the prevention,reduction and control of marine
pollution from vessels in ice-covered
areas within the limits of the exclusive
economic zone

The long term case for the Northern Sea Route (NSR)
Sea ice level constraint• Yearly variations of sea ice are relativelyunpredictable;• “Ice massifs” might block certain routes;• Extreme weather conditions: fog, extremely
low temperatures
Bathymetry constraints• The Vilkitsky strait (100-200m) and the long
Strait (33m) are not considered a constraint• The Dmitry Laptev has a draft of 6.7 m;• The Sannikov Straits has a draft of 13 m;
Ships carrying cargoes of > 50.000 DWT will
be limited to fewer days of operation

Ship size

Container
load

Noncontainer(tankers and Routesbulkers)load

Low cargoand size

<2.500 TEU

Sannikov<50.000 DWT and Dmitry
Laptev Strait

High cargoand size

>2.500 TEUof the>50.000 DWT Northislands

The case for the Northern Sea Route (NSR)
Factors affecting Northern Sea Route (cost)attractiveness:• Initial investment of ice-class vessels is 20-30%
higher compared to a benchmark vessel;• Higher fuel costs (net result of specialized fuels and‘slow steaming’);• Training of crew members;• Ice-breaker convoys (tariffs by Russia yet unknown);• Insurance rates and other costs (estimates 50-200%
higher than usual)• Limited length of the navigability window, uncertainty;• Extreme weather conditions (a.o. fog), ice massifs

Ice massifs along the NSR

Figure: NSR re-routing of four ship categories under RCP8.5The case for the Northern Sea
Route (NSR)• The RCP 8.5 scenario results show that thefirst route through the straights, where only
“small” ships of 50.000 DWT/2500 TEU canoperate, becomes profitable around 2035 fornon-container ships and 2051 for containerships.
• The RCP 4.5 results show that the NSR will beutilised much later in the future, never withyear-round operations and that the businesscase for rerouting will not become positivefor >2500 TEU container ships.

Figure: NSR re-routing of four ship categories under RCP4.5

Reflection on the business case for Arctic shipping• Economies of scale and/or just-in timedeliveries are vital for profitability– Costs per TEU/TON decrease significantlywith the ships capacity.

• Uncertain conditions (i.e. ice-freewindow) are difficult for container ships
carrying time sensitive cargo.
• Limited trade volume due to physicalconditions and uncertainty are thebiggest constraints for big commercial
shipping on the NSR.

Total shipping capacity (TEU) Price per TEU ($)
12,50012.43

18,00010.99

22,00010.04

24,000

9.57

Relevant markets and commodities for the Northern SeaRoute• Transit traffic counted in 2018 only for 0,5 million tons of the total 9,7 million tons
transported on the NSR.
• Main commodities transported on the NSR are:General and project cargo;– The Venta Maersk has completed a trial passage on the NSR– Heavy lift shipping on the NSR– COSCO trials
Oil products and gases;– Yamal LNG Project
Passenger transport.
– Cruises on the Northern Sea RouteImpact of NSR utilisation: impact on global trade flows
Competition between the NSR and alternativeroutes (Suez Canal and OBOR):• The NSR and OBOR experience time savingsof respectively 14 and 12 days over the SSR.
• Uncertain conditions complicate a just-in-time
delivery.
• Carriers call at multiple ports in fixed liner
schedules.
The Northern Sea Route and OBOR are second-tier alternatives. Dependent on the future fuelprice, reliability of the NSR and development of the regional market, the Arctic route could
become an alternative for certain niche markets

Impact of NSR utilisation: environmental and regional
consequences
Environmental and climatic impacts• The local arctic ecosystem can be drastically impacted due to short-lived pollutants (e.g.
black carbon and sulphate aerosols)• Positive impact IMO2020, and further steps?
Regional development consequences• The Russian Arctic harbours handled around 92,7 million tons of cargo. The majority(around 70%) is related to oil products and LNG• Murmansk (and Arkhangelsk) position themselves as a container port for transit
shipping• In addition, Scandinavian countries (i.e. Norway and Finland) are seeing business
opportunities in the Polar Silk Route.

Conclusion and discussion
The NSR remains a much studied, but much less used nautical sea route in at least thenext 4 decades to come.
• We expect an increasing number of transits and local sea trips in the NSR area, withrelatively small vessels, and aimed at niche markets (local O/D, project cargoes).
• NSR transit operations of <50.000 DWT ships start to become profitable after 2035 (underthe most extreme RCP 8.5 climate scenario)• Substantial bulk volumes will only take off around 2070 (in RCP 8.5), and may even takemore than a century (RCP 4.5).
• The 4.7% of world trade using the NSR will definitely remain hypothetical within this century,and might only be reached by 2200 under the most extreme climate scenario.