Trans-Arctic Shipping routes and transport lead times

An article in BBC News (September 6, 2016) titled “Arctic Ocean Shipping routes to open for months” describes the melting arctic sea ice and new shipping routes. The article estimates if there is no dramatic reduction of Co2, these arctic routes may be open for 10 to 12 months of the year.  These arctic routes can decrease travel from East Asia to Rotterdam that takes 30 days through the Suez Canal to 20 days by 2050. However, a more aggressive low emissions scenario would keep arctic routes open for fewer months in the year and thus not impact travel time much. Most of these scenarios did not generate much benefits to shipping to the US from East Asia. How might manufacturers plan the impact of these routes on their global supply chains ? If these arctic routes open up, is it optimal to take advantage of them or refuse to use them ? How might global trade be impacted as the sea travel times decrease, thus decreasing transport costs ?

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28 Responses to Trans-Arctic Shipping routes and transport lead times

  1. Ashish Trivedi says:

    The advantage that shipping companies will receive by using this route will range from 2-6 months depending on how the countries of the world control global emissions. If we take a conservative approach by assuming that most countries in the world will unite and reduce global emissions it opens up a 2-4 month gap only.
    This period is too small for shipping companies to gain a sustained competitive advantage and thus they will not pass on the benefits of reduced transportation costs to the value chain.

  2. Mayank Agrawal says:

    Lower shipping times will lead to major savings in fuel and lower costs for goods being shipped out of East asia to european markets. This will act as a major trade boost for manufacturing hubs such as China, vietnam etc allowing them to competitively position their offering in new markets.
    On the other hand uncertainty in route availability for longer periods will increase the risk associated with this choice and render the choice as unsustainable for some.

    Opening of shorter routes will have a substantial positive impact on global trade and economy but a careful monitoring policy will be required for effective management of arctic area such that the effect of new shipping routes does not further deteriorate the environment in the region.

  3. Satyajeet Deshmukh says:

    While it is certainly optimal for shipping companies to use these Arctic shipping routes whenever there is a substantial reduction in shipping times, the fact remains that there’s still uncertainty associated with these routes, which makes it difficult to predict whether these routes will lead to a sustainable/consistent decrease in transportation costs in the long-term.

    Depending on the global emissions scenario, the duration for which these routes will be open during the year might be too less (2-4 months). Since shipping companies will still rely on traditional (longer journey time) routes for a majority of the year, it is unlikely that transportation costs will lower substantially.

    If these routes do become consistently available, higher shipping traffic through them will likely introduce additional geo-political risk. It is conceivable that Russia would want to exert control over these routes. Given that the exclusive economic zones of Norway, Sweden, and Denmark lie on these routes as well, it is possible that a territorial disputes akin to those in the South China Sea could arise in the Arctic region as well.

    • Chitrang Shah says:

      I agree with your point that, given these are hitherto unused routes with poorly demarketed lines of influence/control, there are ample possibilities of conflict. Another point to consider is that by the time these routes are fully operational, the CPEC would already be fully in use and the proposed time of transit even through the Suez canal would have come down. This might mean that the benefits to be gained from the Arctic route may not be as great as claimed. This is especially true since, as mentioned in the article, these routes would require processes in place for constant risk management vis-a-vis ice sheet thickness, climate etc.

  4. Aayush Jain says:

    With the world moving towards cleaner sources of energy, the emissions are likely to reduce over the next few decades. Therefore, the estimates provided for the low emission scenario are more likely than the high emission scenarios. The shipping times from Europe to East Asia would reduce from 30 days to 23 or 22 days by the mid/ end century according to estimates. But the gains would not be hight for North Atlantic ports, such as New York, because the route through the North West Passage is not much shorter than using the Panama Canal. Therefore, it would make sense to use trans-arctic shipping routes between Europe and East Asia and not for North America. This will result in significant drop in lead times and save transit inventory costs.

  5. Nishchint says:

    Looking at this development from a short term tactical viewpoint, trade between Europe and Far east including China, Japan seems to be the major beneficiary of the year-long opening up of the Northern sea route through the arctic.Reduction in transportation lead time by 33% on average throughout the year should make the supply chains more responsive and possibly make further sourcing from the far-east more competitive. However, this has deeper strategic implications from a PESTLE viewpoint.
    1. End customers are becoming increasingly conscious about how their products are sourced; whether the supply chains are green and or ethically responsible. This has made multinationals with global supply chains to become increasingly transparent. Will this alternative route possibly destroying glaciers appease these ‘conscious’ customers?
    2. The current route through the Suez Canal passes through the APAC region and north western Africa. This has ushered in prosperity in these regions. It has also helped China create a strong political influence over the regions as a result. The Chinese OBOR (One Belt, One Road) initiative plans to strengthen this route and the trans-Eurasian road and rail network connecting the economically lagging central Asian and Eastern European countries. With China poised to make investments of nearly $800bn in OBOR over the next few years, will an alternative route make sense?
    An understanding of these implications alongside other geopolitical considerations would be vital in deciding to go for the northern route through the arctic.

  6. Nishant Agarwal says:

    A lot of factors have been pointed out in other comments, which question the viability of this new trade route in the future. True that the supply chain may become more responsive as the time of transit comes down with the use of trans-arctic shipping routes, but the question arises – Does the lower transit time necessarily means lower costs? We need to look at a few things before we can figure out that whether it will be optimal to use these routes.
    Lower transit time means lower fuel costs but how about cost of insurance and safety which may go up. The unpredictability of ice sheets in the region will require a lot of investments in terms of development of new type of sea vessels and ensuring their safety. Companies may also have to take heed of the geopolitical issues which may arise and thus the escalating costs of conflicts in which they may be drawn into.
    Another issue which may concern the companies is the ethical responsibility towards the environment and marine communities that the companies may have to forego in order to ply these routes. Free access to these routes will further damage the fragile ecosystem in the Arctic and therefore, the aware consumer may turn away as he or she cares about how the product is sourced.

  7. Mansi Mishra says:

    I think it is not certain that the new route can become a regular and reliable route to the extent that it would decrease the costs of transportation significantly. Most Arctic experts think that the route can indeed turn out to be a ‘seasonal supplement’ to the Suez route. The presence of sea-ice would offset to some extent the savings in distance traveled as the ships would need to travel at lesser speeds.
    The route would add on to the uncertainties faced by supply chains. Instead of aligning with just in time strategies of the supply chain, this route would need risk mitigation measures such as a robust infrastructure of port operations, ice-breakers , logistical help & accessible ports along the route to help discharge and load the cargo.

    • Abhishek Sharma says:

      Even though shipping companies could make use of the new route, does not necessarily imply that they would. For Trans-Arctic shipping to be commercially viable, these shipping routes have to be open for long duration (10-12 months as aforementioned) . However substantial annual variability in ice-extent will cause significant challenges that would discourage shipping companies for which precise timing of shipments is crucial part of business.

      For European shippers trans-arctic routes are faster, for North American shippers however, switching transits using NSR will take longer routes than the traditional ones via Panama. Therefore efficient passage and shorter queues in the canal, North American companies would like to stick to Panama route itself.

      Using shorter routes will however, not only increase turnover and lower the costs for the shipping companies but also reduce global shipping emissions. However, companies interested in using the Trans-Arctic routes will also have to invest in Technically advanced ice-capable ships that would enable longer and more reliable shipping season.

  8. Ankur Bansal says:

    There are a number of factors that should be taken into the consideration before deciding whether to open trans-arctic shipping routes. One key motivation is that it will reduce the transportation cost, let’s try to evaluate the cost aspect first:
    1. Cost saving: If a ship will travel via trans-arctic shipping routes there will be a reduction in lead time and therefore a reduction in the cost of fuel.
    2. Incremental Cost: If a ship is traveling via trans-arctic shipping routes it might increase the insurance costs, labor costs and expose the goods to extreme weathers
    So a more balanced outlook needs to be maintained while evaluating the cost benefit for the shipping companies.
    But this issue cannot be just looked for the cost aspect, it will have a lot of environmental impacts too. On one hand reduction in fuel consumption can reduce the carbon emission, on the other hand exposing the Arctic to commercial activity can have a substantial impact on the ecosystem as a whole. There are also questions about who all parties will be benefited by these routes which will bring the geopolitical relationships into play. Also opening the Arctic area for commercial activities can open a Pandora box, because if you are allowing ships to transit via arctic how can you say no to them to drill oil in the Arctic. So all these aspects should be considered too before taking any decision for usage of these routes.

  9. Surbhi Sachdeva says:

    I believe that opening of the arctic routes for a longer duration will certainly help shipping companies save a lot of time and hence fuel costs. This will help the supply chain to become more efficient and responsive. But as rightly pointed in the article as well, the shipping companies will have to invest in advanced and technologically improved ice sheet thickness monitoring system. So the companies really have to perform a cost benefit analysis in that case. Hence, the question here is the fuel cost saved worth the time and money invested in the advanced systems and monitoring?
    Also there is a question of ethics, that i feel should be addressed. As rightly asked in the post that whether these companies should use the route or refuse to use it? i think that the first instinct should be not hope for the routes to remain open for a longer time and to work towards a low emission scenario. And even if that doesn’t happen, I personally feel that the companies should refrain from using these routes in order to preserve the biological systems (food chains and ecosystems) of the area. But then that is the utilitarian in me talking!!

  10. Bhawarth Sangwan says:

    Trans-Arctic Shipping route has potential to promote trade not only between East Asia and Europe but also between East Asia and North Africa. Opening up of this route can lead to more manufacturing plant setting up in North Africa and consumer market in China, Korea, Japan etc. Africa has abundance of natural resources and new quicker and cheaper trade routes will promote economic development in the region. From Geo-political perspective, it will reduce dependence on China’s OBOR, Suez Canal and Malacca Strait. However, trans-arctic route will not be free from conflicts because of the unclear demarcation of Arctic Zone between countries, power-tussle to control the sea lanes in Arctic Zone etc. If these routes open up with significant benefit forecast, it is prudent to take advantage of these lanes to reduce dependence on ever crowded Suez Canal. Also, it will translate in lower lead times and lower transportation costs (both in terms of toll paid to use Suez Canal and general mileage cost). In fact, the toll to use Suez Canal could be as high as $400,000…!!
    https://www.cnbc.com/2016/02/26/cargo-ships-could-save-thousands-by-skipping-the-suez-canal.html
    However, using the Arctic route doesn’t mean that we should promote global warming to take advantage of the situation. However, building resilience in the global supply chain (in terms of considering Trans-Arctic route) might prepare us for the worst. There lies the threat of destroying the environment in and around Arctic by ship ballast and pollution. Hence, proper regulation will be needed to ensure controlled movement of the ships through this lane.

  11. Siddhant Khattri says:

    Positive facet of a major global concern – Global Warming! International supply-chain and logistics are definitely going to be affected. At the same time, we need to think about the perception of United Nations. In any case, melting of ice is considered to be an issue that needs repair! Even if businesses are going to save time, new regulations on usage of the route will define the profitability in the game. Definitely, reduction in lead time will lead to betterment, but Global organizations are going to look it in a different way. Increased usage for logistics of the route might lead to increased melting, disturbance of eco-system as well. Hence, the issue at hand remains ambiguous as various stakeholders are involved with conflicting interests.

  12. Abhijit Saurav says:

    The opening of the Arctic Ocean route has potential to reduce the lead time of the shipping but there exists a major issue that can majorly impact the utilization of these routes even if the CO2 content is maintained at the current level and the Arctic ocean routes are open for more number of months in a year. That major risk is associated with the political issues that can pop up related to countries who could claim ownership of these sea and ocean waters once they turn out to be more economical than existing routes. The current battle of ownership of the South China Sea between Japan and China is a corollary of the issues that can manifest in future. One of the major powerhouse of the world, Russia, can potentially demand rights of control over the Arctic Sea routes which would eventually lead to more barriers for some companies which would like to use these routes. Thus the risk associated with political intervention in these routes can potentially lead to more harm than gain in using these routes in future.

  13. Pulkit Gupta says:

    Even thought the trans arctic route may present opportunity for a shorter route of travel. I personally don’t believe it would right to opt for such route, given the fact that it doesn’t provide as much value as thought so. 1) Economically, although the routes would be shorter but increase in uncertainty of availability of routes might cause delays or increased costs of planning. Alternatively, due to the presence of thin ice, the speed of travel might not be as much as in free water, which could add days to travel and hence higher cost. This might also increase the risk associated with the transportation and hence higher opportunity cost. 2) Cost of negative externality – Although the cost of transport reduce with this but the cost that the society will have to incur might go up significantly. This could hamper various industries and habitats which would ultimately cause an negative impact in overall scenario. This could lead to bigger ecological and environmental issues which could impact the survival of human beings and other species on earth.

  14. Debojyoti Ray says:

    Some of the primary costs which I can think of, against the Trans-Arctic shipping routes would be –
    1. Cost of designing and building ice strengthened ships
    2. Cost of monitoring the level of ice on the basis of different emission scenarios
    3. Cost of certain customers boycotting the companies, exploiting the spoils of global warming
    4. Cost of insurance and maintenance, which would be higher for ships traversing trans-arctic
    5. Cost of territorial disputes, with some countries proclaiming the rights of the new routes
    6. Cost of harming the fragile arctic environment
    In addition to the above costs, there is also added uncertainty in terms of the number of the days of the route being open, as that is directly correlated with the effort different countries make in reducing greenhouse gas emissions, which would vary from one year to the next.
    If the above mentioned costs manage to exceed the benefits of reduced transportation costs, primarily fuel and time, I am afraid, global warming cannot help much in terms of reducing the cost of the products being shipped.

  15. Rohit Mohan says:

    The potential for trans-arctic shipping will lead to lower shipping times and potentially lower shipping costs as a result of fuel savings and navigation fees. The extent of savings will depend on how emission scenario pans out, however there are several risks associated with utilizing such a shipping route –
    1. navigation risks due to uncertainty in weather (aka Titanic)
    2. reputation risk – is it right to benefit while the globe heats up??. Will Customers associate with such companies/brands??
    3. Geo-Political risk – Which countries will start using this route? How will that affect relations between nations?
    Impact on Global Trade could be three-fold
    1. Potentially Lower Costs leading to Lower Prices for players in the value chain
    2. Faster Shipping leading to greater responsiveness of the supply chain
    3. Access to New Markets for some goods

  16. Simrat Bir says:

    While the benefits in terms of reduced transportation times seem to be very attractive, predictions by scientists and several independent researchers show that it could potentially be years before the Arctic routes are actually commercially viable enough for shipping.
    For a high emissions scenario, trans-Arctic shipping could be potentially commonplace by late century, with navigable routes available even to open water vessels for perhaps 4-8 months a year. For a low emissions scenario, where global temperatures are stabilized at less than 2 degrees above pre-industrial levels, the frequency with which open-water vessels can make the transits is much wider than today at 2-4 months.
    However, a paper by the Copenhagen Business School in a new paper says, low bunker fuel prices, a short sailing season and continuing treacherous ice conditions in the Arctic even in summer months means it could be 2040 at the earliest before it is commercially viable for ordinary merchant ships to pass through what is known as the northern sea route. Although shipping will increase over the next decade, especially as Russia develops oil and gas fields in Siberia, total Arctic cargo tonnage is expected to remain only a small fraction of the amount carried along southern routes through the Suez and Panama canals.
    The Copenhagen Business School report, which compares the costs of building ice-reinforced ships suitable for the northern sea route, to existing costs of using the Suez Canal, includes fuel prices, wait times, lengths of journey, canal fees and different sea conditions. It concludes that trade is unlikely to open up the northern route for decades.

  17. Ankur Jain says:

    Given the opportunity at hand, it does sound to be a good proposition for the shipping companies. But from the perspective of Trans Arctic cargo movement which connects far west to far east, the duration of 2-6 months does not seem economic enough to establish a complete route, influences and maritime jurisdictions. It would take a lot of effort and money in this task for a non-scalable opportunity. The only countries majorly interested would be west European countries who take Suez route to enter Indian ocean. American shipping companies still will continue to use Pacific ocean. Given the opportunity of newer ports coming at Gwadar and Chabahar, the companies can look to utilise them and make entry into China and India. Japanese and Korean regions will continue to be served in the existing ways.

  18. Amit George Mathews says:

    If the artic route does open up and irrespective of the duration it stays open if it creates a shorter sea travel time manufacturers and other companies should use them for shorter travel time not only reduces fuel costs it also reduces the black carbon emission by these huge ships which accelerates melting of ice caps. I do realize that it does not sound ideal when u consider that the route may have become viable due to global warming and then to go on and make the argument that using this route would prevent escalation of global warming. However, that is the current situation and we might as well use the opportunity to decrease potential emissions and fossil fuel usage.
    Global trade will be impacted by 2 things due to the shorter travel time
    1. Possibility of increased frequency of travel of ships during the period that the route remains open.
    2. A new shorter route will lead to better responsive supply chain and hence may be leveraged to demand higher prices by the supplier
    Another potential improvement this new route could provide is the avoidance of the route in which there has been a high risk of piracy especially across the coast of Somalia through which ships have to traverse before they cross the Suez canal. Maybe this route could thus decrease the insurance costs and hence reduce overall costs of goods.

  19. I believe that if their is a possibility that this trade route is better in terms of costs than it should be utilized. However it is estimated that it will be fully functional by year 2040. Manufacturers can take advantage of the fact that this route adds one more route to material flow. However there are larger risks in this route-
    1) Weather unpredictability
    2) Requirement of ice reinforced ships
    3) Environmental damages
    4) Potential conflicts in Russia, US,china and Europe.
    I would specially emphasize here that no matter what happens to global warming, ice will become sufficiently thin to cross by mid of this century hence this route will open new possibility in a global supply chain. Just like their is passage of ships from Suez canal this route must be developed for future use.

  20. Srishti Singhal says:

    If the arctic routes do open up in due course of time, I see no reason for the shipping companies to not use them. It would lead to lower shipping time between Asia and Europe, and the benefits can be passed on to consumers. Hence I do not agree with Ashish’s point of view that just 2-6 months of benefit do not make much of a difference. Any money that is saved that can be passed on to the entire supply chain.
    However at the same time, we need to be cognizant of two facts –
    1. It would only provide benefit to certain routes and not all routes, which may provide disproportionate share of benefits to certain shipping companies and certain manufacturers. This may even lead manufacturers to re-align their global supply chain.
    2. The timelines – as others have pointed out, the world is moving towards cleaner sources of energy and it might take a significant amount of time before these routes open up.
    To conclude, our focus should definitely be to control the CO2 emissions as much as possible and delay the melting of arctic ice, but if the sea level does rise, then shipping companies should go ahead utilizing more efficient trade routes.

  21. Chaitanya Vallabhaneni says:

    The arctic routes are no where close to being commercially viable in the near future and with almost all the countries realizing the social and economic gains of being in the Paris climate agreement the probability that the temperatures will rise and the ice caps will melt is quite low. At present not all ships can utilize these routes and the number or ice strengthened ships plying in the sea is very low. The savings in fuel costs should warrant the investment in ice strengthened ships upfront. That being said the availability of accurate data regarding the thickness of ice diminishing in the arctic gives an opportunity to closely monitor the scenario and take action only when the probability of routes opening up is higher the investment for now would be to put in place monitoring mechanisms to observe the data on ice thickness and when the thickness is approaching desirable levels for open sea ships to pass investments in that regard can be made. Also the potential tensions with Russia and the treacherous weather conditions which can delay the transport for winter months anyway should be considered.

  22. Devika R Krishnan says:

    Although this might be an opportunity for the manufacturers to reduce the in-transit time for their raw materials or finished goods, the issue has to be looked at from a strategic point of view. A firm has two options to choose: (I) operate in the new route and thus be responsive in its product delivery to the customer at lower cost (II) not operate in the new route and thus be socially responsible. Over and above the choice or the tradeoff a firm makes, the firm also has to be aware of the fact that today’s customers are very much educated about the choices they make while buying a product. They’re environmentally more conscious compared to their fellows in the previous decades and have access to many forums which bring to their attention the practices followed by the manufacturer of the product. Hence the risk associated with the supply chain that is not socially responsible is huge especially in terms of brand perception and equity. In my opinion, thus a firm should not be operating in this route and thus be ethical in the whole process of value creation to its customer.
    Having made the choice of not operating in this route, thus the firm should focus on how opening up this route can pose risks to its current supply chain. For e.g. the competitor might be using this route and thus improve its responsiveness at lower costs which can directly impact the firm’s topline. These risks can be mitigated by optimizing the current shipping routes in terms of carrier utilization , making the whole customer experience more value adding over and above the responsiveness etc.

  23. Prasant Goel says:

    Arctic shipping has long been pursued by many large countries like Russia, China, US apart from Scandinavian Countries. One of the Danish bulk carriers saved $200,000 and four days transit time by shipping coal from Vancouver to Finland through Northwest Passage ( one of the 4 Arctic shipping routes ) in 2013. Also as highlighted It is close to 10 days shorter from Asia to Europe through the Arctic than through the Panama Canal. Countries like China have published handbook recently(April 2017) titled “ Guidance on Arctic Navigation on the Northwest Route” for Chinese shipping companies that could soon be using the Northwest Arctic route to Europe and Eastern US much more frequently for commerce purpose. China apart from Russia and Canada is establishing the norms including Shipping fee design for crossing the Arctic routes as well the cost of the service including icebreaking ships. And the commerce doesn’t end here, the cruise ships have planned expeditions to satiate the unending fascination of the people for the Arctic life, Polar Bears, Seabirds and Ice Bergs.Crystal Serenity cruise ship was one among the 40 ships that ferried 3600 people in 2015-16 across the Arctic. At the recent Arctic circle conference, China quoted that 5 ships of COSCO ( Chinese Ocean Shipping Company ) traveled across arctic through the Northern Sea Route. Moreover, Russia has established 11 Arctic ports of varying sizes including a Liquid Natural Gas Port at Sabetta on The Yamal Peninsula. With significant advances across the Arctic shipping routes, the need of the hour is to get the governance in place that could reduce the damage to the marine life apart from getting the economic benefits. One such effort towards the creation of digitized maps to identify sensitive marine environments being marked as no-go or slow –go during different seasons would help a great deal and has been taken up by researchers in Canada. To sum up, Arctic shipping has a long way to go but a bigger challenge towards getting the economic benefits of Arctic shipping is to gain these benefits in a sustainable manner.

  24. Nachiketa Mohanty says:

    History tells us that whenever an advantage has been harnessed from a situation that’s potentially detrimental to the long-term sustainability of life on the planet, the situation has worsened more often than not. Hence, we need to analyze this situation thoroughly before making any decision. The comments above have been insightful on different dimensions. I would, therefore, focus on some issues which have not been explored.
    The first and foremost question to ask is who is going to be the beneficiary of the opening of shipping routes through the arctic. Undoubtedly, its going to be the resources and drilling industries. This begs the question of whether we want such industries to increase commercial activity through one of the most sensitive environmental regions on the planet. Even if a “Polar Code of Conduct” is instituted (https://www.theneweconomy.com/business/global-warming-opens-arctic-to-polar-trade-routes-and-tourism), there’s no guarantee that it will be upheld 100% of the times. Even chance accidents (e.g. oil spills) would have the potential to harm the polar ecosystem beyond repair. Do we want to risk our existence further only for the sake of saving some dollars on transportation?
    This brings me to the second question. How much will we actually save through these routes? Its important to remember at this juncture that ice-melting is a non-consistent process. Hence, there would be uncertainty in the viability of routes in each season. On top of that, we are looking at only approximately 125 days of viable travel through the arctic in a year. Route planning through the Arctic for an uncertain 125 days and then planning through the existing Northern Route for the rest of the days is going to increase complexity and thereby uncertainty. Increasing uncertainty brings in more risks and consequently greater costs. The only cost savings we are looking for are transportation costs. Even those cost savings are mitigated because ships would have to travel at a much lower speed through the Arctic owing to uncertainty in presence of ice sheets. Thus, a proper study needs to be undertaken to ascertain the actual cost savings, if any, before getting our hopes high.
    However, this situation might provide some advantage to us without posing a direct threat on the Arctic ecosystem. Presently, ice-strengthened ships navigate through the Northern Seas Route along the Russian Coast. With melting ice at the pole, this route will become viable for even non-ice-hardened vessels. This can result in cost savings through greater commercial activity using normal ships on these routes without having to endanger the polar region directly.
    I found that these articles together give a comprehensive view of what we are looking at in this situation.
    https://www.theneweconomy.com/business/global-warming-opens-arctic-to-polar-trade-routes-and-tourism
    https://www.huffingtonpost.com/2013/03/04/trans-arctic-shipping_n_2807689.html
    https://climatenewsnetwork.net/arctics-melting-ice-shrinks-shipping-routes/

  25. Gaurav Suri says:

    Global Warming is one of the biggest challenges facing mankind and melting Arctic sea ice is a prime example of the consequences of global warming. Governments across the world are making efforts to reduce global warming and cut down the carbon emission. Assuming that the governments are able to do so it would be really difficult to repair the damage already done and it can be said that the Arctic routes would be open for approximately 3 months annually. Since these routes would decrease the transit time for shipping companies I think more and more shipping companies would use the routes and the cost benefits achieved can be transferred across the supply chain. However, in order to take these cost benefits, the firms would have to make an initial investment and it is best to do a cost-benefit analysis of the investment and the potential gains. Some of the aspects to be looked at here is the cost of making the existing fleet strengthened for ice, utilization of these ships, weather predictability in this route and potential border disputes. The most important concern, however, is the impact to the Arctic region due to increase in shipping frequency. The shipping plan should be created such that the region isn’t impacted. The governments should promote the use of the new routes while ensuring that all the steps are taken that the region is not impacted further.

  26. Nishant Dhiman says:

    It is always prudent to analyse any situation with respect to the short term as well as term impact along with the sustainability of the benefits, if any.
    The world has faced similar situations multiple times in the past. There are two particular scenarios which I would like to share before opening up on the specific issue of trans-arctic shipping routes.
    First, the scientists of the world felt very hopeful when the ethanol based fuel was developed from the corn crops and it was declared a green fuel as it was not derived from the fossil fuels. Later on, many research firms came up with the idea of quantifying the benefits of using ethanol and they administered a research in this regard. The results were surprisingly completely opposite of the expectations and it was found out that the process of generating a litre of ethanol causes much more emission of green house gases than the conventional fuels. It is like generating one unit of electricity by consuming 1.5 units.
    The second example is that of the Solar Energy which is being promoted on a large scale as a solution for all our power needs, which surely is, if we ignore what we’ll do with the Solar panels at the end of its life cycles.
    Shipping through Arctic is also of the similar nature which will provide us the benefits in the terms of savings in transportation cost but will lead greater damages to the planet in the long run, which may not be actually that long. Reduction in the transportation time will surely make supply chains more responsive and agile for the firms. The decision about setting up the manufacturing facilities itself may be altered to a great extent due to this. The companies would be able to gain a lot due to this new route but it’ll also increase the competition and ultimately reduce the margins or the gains achieved may be negated.
    Instead of relying on trans_arctic routes, the firms should make their existing supply chains and manufacturing more effective. Growth in the shipping requirements will also enable advancements and new technologies in the shipping industry such as ships of higher capacities or faster ships. Extracting the profits by damaging the environment will not be sustainable and ultimately affect the overall trade. This, in my opinion, we should not focus on the trans-arctic routes and infact the nations should come forward to prevent this overall damage.

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