Part 1: The Future of the Northern Sea Route - A “Golden Waterway” or a Niche Trade Route

by Malte Humpert With the beginning of fall just two days away, the sun at the North Pole is about to disappear below the horizon for the next six months and the Arctic summer, which saw a new record low ice extent, is coming to a close. For the first time since the beginning of satellite measurements not only the Northern Sea Route (NSR) but also all channels along the Northwest Passage (NWP) appeared to be virtually ice free for an extended period of time.

"These waterways were of little interest to shipping companies when thick “multiyear” sea ice choked the waters along Canada and Russia’s northern coasts. But now, climate change is causing the ice to thin and recede. Since 2007, in late summer, both the Northwest Passage and Northern Sea Route have been temporarily ice-free. Within the next decade, the Arctic could experience a complete late-season melt-out – and, with that, a permanent loss of the multiyear ice."

Shipping traffic along the NSR is expected to double this year due to increases in the size and frequency of ships traveling along the route. In 2010 the Danish 40,000 ton MV Nordic Barents was the first non-Russian bulk carrier to use the NSR as a transit trade route. This year, the Japanese bulk carrier Sanko Odyssey, a ship almost twice its size, delivered iron ore from Murmansk, Russia to Xingang, China. Summer 2011 also saw the first supertanker, the 160,000 ton Suezmax-class Vladimir Tihkonov, using the shortcut from Europe to Asia. 

While sustained sailing speeds along the NSR do not yet rival those along the world's major shipping routes, they are likely to continue to increase as first year drift ice becomes less likely to present a serious obstacle during the summer months. The Vladimir Tihkonov maintained an average speed of 14 knots and sailed from Novaya Zemlya to the Bering Strait in seven and a half days surpassing the record set by the 74,000 ton Panamamax-class STI Heritage earlier this year.

Growing economic activity in the Arctic invites questions about the medium- and long-term prospects of shipping along the NSR. Do Arctic shipping routes, especially the NSR, represent a commercially viable alternative to traditional shipping routes? What are the crucial variables in predicting the future of Arctic shipping?

Shipping companies and supporters of increased traffic in the region cite significant cost savings for ships that have sailed along the NSR and predict a rapid growth of Arctic shipping. Bulk carrier tonnage may increase tenfold, from 2 million tons today to 20 million tons by 2020, and oil and gas volume is predicted to grow along similar lines to 40 million tons per year by the end of the decade.

Researchers and shipping experts, however, remain skeptical about the commercial viability of the NSR. Canadian and American maritime experts say two percent of global shipping could be diverted to the Arctic by 2030, reaching 5 percent by 2050. Experts cite a number of factors which may determine the future growth of shipping in the Arctic. This series about the Northern Sea Route will explore how global trade dynamics and world trade patterns, the severity and speed of ice decline, fuel cost savings and transit fees, Russia's Arctic natural resources development, and the emergence of China, South Korea and Japan as Arctic maritime nations, may influence the development of the NSR.

By examining the individual factors this series hopes to provide a framework for understanding whether the NSR will develop into a “Golden Waterway” or will remain a limited and seasonal trade route.

Look for Part 2: Global Trade Dynamics W
orld Trade Patterns on Monday, September 26th

[1] Michael Byers, "Asian juggernaut eyes our ‘golden’ waterways," August 29, 2011,