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Proposing a common platform of shipping cost analysis of the Northern Sea Route and the Suez Canal Route

Author

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  • Masahiko Furuichi

    (Graduate School of Management, Kyoto University, Department of Architecture Building, Room 205, Yoshida-Honmachi, Sakyo-ku, Kyoto 606-8501, Japan)

  • Natsuhiko Otsuka

    (North Japan Port Consultants, Ltd. (NJPC), South-2, East-2, 8-1, Chuo-ku, Sapporo 060-0052, Japan)

Abstract

Maritime trade between East Asia and Northwest Europe using the Northern Sea Route (NSR) has been recently increasing, because ship operators may take advantage of the shorter sailing distance of NSR whose navigable season has become longer because of retreating Arctic sea ice. As Arctic sea ice continues to retreat because of global warming, the NSR is now approximately 40 per cent shorter than the Suez Canal Route (SCR) for such trade. In 2013, shipping on the NSR marked a record 10 year-high volume of 1.36 million tons with 71 voyages. Accordingly, comparative analyses of estimated shipping cost via the NSR and the alternative conventional routes, especially the SCR, have been carried out. Furthermore, NSR/SCR-combined shipping, that is, when a vessel transits the NSR during the warmer months and the SCR in the colder months, has already been proposed as a realistic scenario for Arctic shipping in the previous studies. Since assumptions used in the cost estimations vary among the studies, as discussed by Lasserre, there remain some difficulties when comparing estimated shipping costs. This study aims at establishing a common platform of a wide range of cost estimation assumptions, through clarifying and analysing the cost components contained in the current literature. In addition, interviews with NSR shipping professionals were conducted concerning the NSR fee on an unofficial basis, since typically such fees are determined based on negotiations between ice breaker escort service provider and shipping company. An empirical analysis revealed that NSR/SCR-combined shipping of container cargo between East Asia and Northwest Europe can be commercially feasible.

Suggested Citation

  • Masahiko Furuichi & Natsuhiko Otsuka, 2015. "Proposing a common platform of shipping cost analysis of the Northern Sea Route and the Suez Canal Route," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 17(1), pages 9-31, March.
  • Handle: RePEc:pal:marecl:v:17:y:2015:i:1:p:9-31
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    Citations

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    Cited by:

    1. Lin, Dung-Ying & Chang, Yu-Ting, 2018. "Ship routing and freight assignment problem for liner shipping: Application to the Northern Sea Route planning problem," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 110(C), pages 47-70.
    2. Joseph, Lambert & Giles, Thomas & Nishatabbas, Rehmatulla & Tristan, Smith, 2021. "A techno-economic environmental cost model for Arctic shipping," Transportation Research Part A: Policy and Practice, Elsevier, vol. 151(C), pages 28-51.
    3. Zhao, Hui & Hu, Hao & Lin, Yisong, 2016. "Study on China-EU container shipping network in the context of Northern Sea Route," Journal of Transport Geography, Elsevier, vol. 53(C), pages 50-60.
    4. Theocharis, Dimitrios & Rodrigues, Vasco Sanchez & Pettit, Stephen & Haider, Jane, 2019. "Feasibility of the Northern Sea Route: The role of distance, fuel prices, ice breaking fees and ship size for the product tanker market," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 129(C), pages 111-135.
    5. Theocharis, Dimitrios & Rodrigues, Vasco Sanchez & Pettit, Stephen & Haider, Jane, 2021. "Feasibility of the Northern Sea Route for seasonal transit navigation: The role of ship speed on ice and alternative fuel types for the oil product tanker market," Transportation Research Part A: Policy and Practice, Elsevier, vol. 151(C), pages 259-283.
    6. Dai, Lei & Jing, Danyue & Hu, Hao & Wang, Zhaojing, 2021. "An environmental and techno-economic analysis of transporting LNG via Arctic route," Transportation Research Part A: Policy and Practice, Elsevier, vol. 146(C), pages 56-71.
    7. Alexandros M. Goulielmos, 2018. "“After End-2008 Structural Changes in Containership Market” and Their Impact on Industry’s Policy," IJFS, MDPI, vol. 6(4), pages 1-21, November.
    8. Theocharis, Dimitrios & Pettit, Stephen & Rodrigues, Vasco Sanchez & Haider, Jane, 2018. "Arctic shipping: A systematic literature review of comparative studies," Journal of Transport Geography, Elsevier, vol. 69(C), pages 112-128.
    9. Lasserre, Frédéric & Beveridge, Leah & Fournier, Mélanie & Têtu, Pierre-Louis & Huang, Linyan, 2016. "Polar seaways? Maritime transport in the Arctic: An analysis of shipowners' intentions II," Journal of Transport Geography, Elsevier, vol. 57(C), pages 105-114.
    10. Sibul, Gleb & Jin, Jian Gang, 2021. "Evaluating the feasibility of combined use of the Northern Sea Route and the Suez Canal Route considering ice parameters," Transportation Research Part A: Policy and Practice, Elsevier, vol. 147(C), pages 350-369.

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