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 ?

About aviyer2010

Professor
This entry was posted in Capacity, logistics, manufacturer, ship, Supply Chain Issues, Uncategorized and tagged , , , , . Bookmark the permalink.

102 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.

  27. Harihara Subramanian says:

    I feel companies must necessarily take advantage of the new route. This will indeed give them substantial cost reduction in their supply chain. The lower travel times in fact can promote NEW products that could not be shipped in these routes owing to longer travel times. A whole new stream of businesses is bound to open with this. However, the companies might not immediately pass on the cost reduction benefits to the end customer owing to the ambiguity in the sustenance of these routes. Until a clear picture is obtained regarding the number of months the routes would be open and whether this would be possible year after year, companies would be cautious. Passing on the benefits to customers would signal to the market continuation of the practise and set new expectations. In case of non-sustenance of the routes, calling back prices would become difficult. Hence, though the new routes are a boon for the shipping industry, the benefit for customers in the extended supply chain is a matter of question that can be only answered with time.

  28. Ayush Bajaj says:

    Opening up of the Arctic Ocean sea routes to trade would definitely have several benefits which include:
    1) Substantial cost savings due to reduction in shipping distance
    2) Faster lead time which would make the entire supply chain very responsive
    These factors would create new trade zones resulting in the reimagining of the supply chain by setting up of new factories/warehouses to tap this opportunity. This would, however, come at a cost:
    1) Adverse effect on the flora & Fauna of the Arctic Region.
    2) Difficulty in scheduling the shipping due to the uncertainty in weather conditions
    3) Bad effect on the products due to the extreme climatic condition
    4) Start of new trade war, wherein the countries would grapple for their share of the zone
    5) May require a different kind of ship with low efficiency of fuel and higher wages to labour
    The industry must consider all of this pro’s and cons and should calculate the net social impact of the same and then come to a conclusion

  29. Gautham Ravindar says:

    There is still a lot of uncertainty associated with the global trade routes and whether they will be open for more than 10 months in a year by 2050. COP aims at reducing the emission levels drastically and capping the global warming, sea temperature rise to under 2 degree Celsius compared to the pre-industrial era. 60% more food by 2050; Energy consumption to grow by 50% by 2035; Global water withdrawals for irrigation projected to increase by 10% by 2050. These are some of the projections by the UNFCCC (Climate Change organization). 194 countries signed the Paris Accord in 2015 and in the coming decades we would possibly see more efforts by all of the countries towards mitigating and containing the damage that has already been caused.
    Considering all of this, manufacturers should plan for the global trade routes considering they are going to remain open for the same amount of time they are today even though there is a possibility of not achieving a dramatic CO2 reduction to stop the drastic melting of the polar ice caps. But if it routes does open up, companies should consider the implication on the environment/sea life et cetera and only then be allowed to use the trade routes. Transport cost is one of the major drivers of the price of a product. A reduction in transport costs by a third along with a reduction in time to deliver would see a fall in prices and increase in trade across the globe.

  30. Ramya Janakiraman says:

    Data predicts that even with moderate level of Global warming , Arctic shipping routes would be available for normal shipping liners by 2050.But here lies a great moral hazard , where few countries ,just to take advantage of the situation and increase the trade , can contribute more to Greenhouse emission and aggravate the cycle indirectly for the following benefits: Less shipping lead time and fuel saving.
    This being one consideration ,the shipping companies would not be ready to start using this route as a standard one as there would be higher costs incurred in the initial stages such as building strong ice breaking ships ,high insurance cost , restrictions on the kind of cargo that can be moved in that zone and uncertainties that include the varying conditions of ice sheets year to year and other safety considerations.
    So in the near future, trans arctic shipping route remains as a dream for many countries ,cognizant of the above issues and would refrain from using this seasonal route for high-precision shipping.

  31. Chinmay Sahoo says:

    Even as manufacturers plan to see the impact of these routes opening up (subject to the IF statement – CO2 emissions leading to reduced ice caps due to global warming), there is still the ethical and the cost argument.

    1. Cost – Shipping companies will face variability and uncertainty in terms of ice caps and open routes and icebergs. Next, Repairs and maintenance may go up, life of ships may go down due to exposure to extreme arctic weather, and insurance costs may go up as well. Fuel burn will be more, any draft restrictions and cargo type restrictions may also play important role. Hence, total cost advantage may need to be seen. At the same time,this will need to be traded off against the reduction of 8-10 days of travel time.

    2. Ethical – If it comes up, and even if it attractive, it ma not be worth it, as one is going over areas that were destroyed by the global industry.

    Even if quantitatively it is attractive, the very act of doing this will be difficult. Hence, implementation of this may be a challenge. Plus, the reduction in cost may not be much (due to point 1)

  32. Aditya Jain says:

    Side Effects of global warming have been long debated and melting of polar ice caps is another manifestation of the same. Asking a shipping company to not take a shorter route as the route has been created due to global warming is fighting a bigger elephant using a needle.
    Shipping companies, in order to be profitable have to reduce cost. Thus, it makes sense for them to leverage the new route. Solving the global warming problem is a bigger problem that needs to be addressed either way.
    Using a longer route to for the same purpose generates more global warming that makes the situation worse.
    However, shipping companies need to understand the risks of using different routes in different seasons, does it impact cyclicity, predictability, how much cost does it reduce??
    Given these parameters are favorable, shipping companies should leverage these routes.

  33. Ankit Singh says:

    With growing awareness about global warming and more and more countries focusing on use of cleaner fuels and efficient technology, I believe that there will be significant reduction in carbon emission. This will mean that the arctic routes will not be available year long and hence, the benefit in terms of shorter trade route provided by them may be limited. Even if the carbon emission is not controlled and these arctic routes are available yearlong, I believe the use of them may create far more environmental damage than the benefit provided by them in terms of reduced travel cost. The Arctic zone, which presently has a minimal human interaction may become heavily impacted by human activities leading to environmental damages. In addition, newer trade routes may start political conflicts between nations regarding who controls these routes. Hence, I feel that instead of planning to exploit these routes, we should focus on other means to reduce the travel time, such as advancement of the ship manufacturing technology, use of cleaner and efficient fuels.

  34. Hanumantharao V says:

    I think the main issue here is not whether the lesser transportation time of using Arctic Sea is advantageous or whether it will produce any cost advantages to the companies that are using this route for transportation. But the main issue here is raising levels of CO2 causing the melting of Arctic Icebergs opening up the sea for transportation. The lower transportation time and cost come at a greater cost of polar ice cap melting, raising sea levels jeopardizing the survival of mankind.
    I feel that rather than focusing on estimating the cost advantages of using these routes, the focus should be on reducing the CO2 emission levels for the businesses to survive in the long term. Rather than exploring this route, exploring other alternative routes which are environment friendly would a better risk mitigation strategy in this scenario.

  35. bharath chintapatla says:

    Economically speaking these Arctic Ocean routes seem very attractive but there are two main issues associated with using these routes.

    First thing the availability and feasibility of using these routes is still unpredictable. These new routes will come with its own set of issues as the ship’s required capability might be different from what they currently have as they will need ice breaking capabilities etc. Other issues to consider is about the weather in arctic compared to existing routes, we need to make sure that the chances of extreme weather in arctic is less and navigation is reliable.

    Other issue is the moral dilemma, should a shipping company exploit a situation which was created in first place by human exploitation. First thing we need to understand is that using these routes is not going to make melting of polar caps even worse. If this is not going to have any impact on ice melting, we can explore the idea of using these routes by working with environmental agencies and taking their inputs.

  36. Monomit Nandy says:

    The availability of the Arctic routes for a longer duration will certainly reduce travel times but how much economic advantage will such a route provide is still a question. Though the fuel costs will reduce due to reduced distance but other costs may increase like special type of ships and containers may be required for transportation in low temperatures, extra duties which governments may impose to discourage use of this route (as the governments will now be more cautious about preserving the Arctic ecosystem due to pressure from the green groups), increased cost of insurance etc. All these factors have to be evaluated in order to assess whether there will at all be any cost advantage. However, one thing which definitely shall be affected is the travel time. As the travel time is reduced organisations can use this route to make their supply chain more resilient i.e. whenever organisations need delivery to be made in shorter duration of time they might use the Arctic route even if it means higher costs and thus make their supply chain more resilient and for situations where time is not a concern old routes will be used. Hence, the combination of the two routes can be used by organisations as per the demand which their supply chains generate.

  37. Charu says:

    An ideal mindset may like to suggest not to take advantage of the new routes opening up because that too would aggravate environmental degradation with increasing habitation/ utilization of that space. However, it must be borne in mind that practically speaking some or the other industry / company will make the first move to leverage the opening up of a shorter route and others will follow. Therefore, it makes a case for thinking of ways to adopt and adapt to this than to say that companies shouldn’t use these routes.
    Policy should be made around usage of this route though quotas such that traffic is distributed among the new and old routes. Just like environmental control licenses that are sold and inter-traded between companies, these route passes can also be transacted with.
    Additionally, without extra CO2 emissions, the few months that are available for transport can be operated by a similar approach

  38. Bikas Panda says:

    Opening of arctic sea routes will have immediate impact on the sea transport. Northern Sea Route will represent a reduction of approximately one third shipping distance compared to the currently used on the Southern Sea Route. 8% of the global trade is transported through the Suez Canal currently and a large volume of this will be re-routed to the new route which will change the geo-politics in the long run.
    However, a lot will change if the collective conscience of global community decides to reduce the carbon dioxide emissions in the coming decades. Innovations such as electric vehicle have already picked up steam and it may not be long before concrete efforts are made for reducing the carbon footprints. These routes need to be open for longer duration to reap benefits hence any probability of a shorter window may hamper the prospect of northern sea routes.

  39. Mrigank Mishra says:

    Opening up of alternate routes would be an added advantage for global firms. Arctic routes would give access to newer markets in Africa, Japan and other geographies. This would also give access to untapped resources in Africa. To use these routes, countries would have to settle the ongoing tussle for zone demarcation in Arctic areas. The newer routes would not only reduce fuel costs and travel time but also allow for reduced toll charges for using the canal which would add to total cost savings for firms.
    All said, this doesn’t mean that we do not reduce our carbon emissions to reduce global warming. We might end up destroying more in order to gain very less.

  40. As a Former Marine Engineer Officer with 3.5 years of sailing experience at Maersk Line, I can comment on the feasibility of this strategy. An unknown and often overlooked factor are the difficulties for the crew members while navigating throught cold weather conditions.
    1. The thickness of ice is unpredictable. Over the course of time that the ship operators recieve information on the navigability of the region to the time that the ship actually reaches there, the ice thickness of ice sheets could change. Previously, in order to traverse these routes ships would be followed by an “ice breaker” ship which would “clear the path”. If a ship operator wishes to navigate this path he has ro bear the weather risk of ice thickness. Navigating thick ice without the assistance of ice breakers could increase fuel consumption, cause damage to the hull, could increase stresses on the internal components of the engine – such as bearings which can create internal hotspots leading to crankcase fires and explosions.
    2. The ship runs on HFO – Heavy Fuel Oil. This oil needs to be heated to a temperature of 130 degress before it can be fed to the engine. Secondly all fuel lines are “trace heated” – the fuel in the pipelines have small copper pipes around these pipes to ensure the fuel in the lines are heated. In essence passing through these cold areas significantly increases the steam consumption for the ship. Steam production is easy when the ship is at high speed – through the exhaust gas boiler, using heat from the exhaust gas from the main engine; however when the ship is at slow speed navigating across Arctic regions, this steam source is unavailable. Hence there is a significant risk of losing steam supply with the result that the ship maybe stranded without “usable” fuel.
    3. Crew members are at risk – especially deck hands for frostbite or their body temperature falling below normal. Crew wellness must be considered and this process has serious health hazards for crew members and officers.
    Therefore these risks must be considered – in addition to the cost benefits while deciding these routes. I have experience of sailing to extremely cold regions – Vostochiny and Novorrosiysk Russia and there are significant challeneges which can add to the operating costs.

  41. Balabhadruni Kamaraju says:

    Trans Arctic shipping routes decreases the lead time and lower the shipping costs for the companies. Following are the advantages by using this routes:
    1. More accurate forecasting of demand as the lead times are lower
    2. More flexible in the supply chain, to incorporate the ad-hoc changes in quality and demand

    However, as the route is not available for all the months in a year, following are the disadvantages:
    1. Costs for using other routes when Trans Arctic Ocean in not open goes up, due to lack of economies of scale
    2. There is uncertainty availability of route, if we plan get goods through Trans Arctic route and suddenly Trans Arctic route is closed, then we do not have enough time to bring goods through other routes, which are longer.

    Therefore we need to carefully chose route depending on the commodities that we are transporting.

  42. Syed Qaim Mujtaba Kamoonpuri says:

    Since none of these scenarios do not bring significant reduction in the transportation time, manufacturers should avoid using these routes to show their resolve commitment to efforts to counter climate change.

    Furthermore, looking at such a time horizon, there will be some disruptions in long distance travel. There are a lot of companies like Hyperloop attempting to revolutionize long distance travel using clean energy. Manufacturers can rather place their bets on these forms of future transportation.

  43. Sethuraman Subramanian says:

    While the US may not see any immediate direct benefits from this possibility, it would be difficult to predict any derived benefits not just to the US, but to newer regions that could benefit from the trade. Perhaps,the larger question, according to me, is how much worse/better would be world be because of this. While trade, commerce and connectivity certainly improves, potentially opening up tourism to hitherto inaccessible places, what is the price we would be paying in environmental damage due to such a move. Could a Trans-Arctic shipping route aggravate the ice caps melting? While there is an overwhelming consensus that the reversal in climatic patterns in a human creation, the United Nations Organization must be able to step in to take collective feedback in the costs-benefits analysis of this possibility. Merely taking more carbon credits for taking this route may not suffice, if there is a domino effect unleashed to the bio-marine and ecological balance in the region. In summary, the nations should come together to objectively evaluate the payoffs from this move. If economics turns to be the most powerful driver to arrive at a decision, then amends must be made to use this route judiciously.

  44. Kreena Patel says:

    Designing a new route based on probable weather patterns is not prudent. With the Paris Agreement signed by all major industrialized Nations and the push for clean and green energy further puts a big question mark on availability and reliability of the Artic route in the timelines predicted.
    Though the benefits of time and fuel savings are potentially huge, the unpredictability of weather makes this an unreliable route for operations, regularly.
    The Supply Chain impact of these would he minimal until this route becomes more operable and reliable.

  45. Gita Kumari says:

    If these arctic routes open, it is optimal to take advantage of these routes. Reduction in travel time would provide manufacturers exposure to new markers increasing the demand for their products, as they would be able to serve customers in short period of time. In highly competitive industries, companies also need to work on to reduce their production costs. In order to achieve cost advantage, Manufacturers could make some changes in their supply chain, for example they could look for cheap suppliers with a trade off in delivery of supplies (cost vs lead time), thereby further decreasing their production cost.
    As sea travel time decreases, transportation costs would decrease. As a result, we could observe increase in the competition to US manufacturers from the international manufacturers. Manufacturers from Asia have clear cost advantage over US due to cheap labor costs. Reduction in transportation costs would further promote the international trading as customers prefer lower prices if quality provided by the manufacturers is more or less same.

  46. Vasu says:

    Climactic changes have impacted a lot of industries since the early industries that have cropped up. Increasing global warming has lead to reduction in fishing activities in several coastal regions due to marine life migration towards the depths and polar areas. A lot of agricultural land has been rendered useless across nations in Africa and Asia causing impact to local produce. The melting of polar caps is another phenomenon. It may lead to certain efficiency but is highly unreliable to supply chain operations primarily for following reasons : uncertainty of the impact of weather conditions to ice in such areas, impact of such cold temperatures on the crew as well as ships passing through and finally the impact on any mishaps. The fact that these routes remain uncharted and pose risk to human lives gives high support to not focus on developing such routes. Also,encouraging the development in such routes may just motivate many industries to further impact climactic conditions adversely.

  47. Prateek Tiwari says:

    Global warming is the harsh reality of inability of the world population as a whole to reduce emissions. While the new routes will minimize travel time, it is an ethical debate whether one should use these or not. Manufacturers should prepare for these impact by setting up a more robust supply chain operation. Better demand forecasting can lead eventually to better planning. Firms and companies should put more effort to better estimate demand levels and reduce error as much as possible. If the new routes open, in my view, we should take a moral stand and not use them. These routes are not frequented ones and may put the ship, material, and labor at risk when being used initially. Additionally, it puts the additional threat to marine life previously undisturbed from human contact. But not all firms will take the right stand and hence its crucial to plan for these events and make sure to improve supply chain operation to offset any gains other companies will make from using such routes.

  48. Sowmya Dasika says:

    Although the new arctic routes come with decreased cost and other advantages there are much bigger that need to be considered. Lets first look at the pros-
    1. Decreased transport cost can be reflected on decease in prices
    2. Decrease in Lead time of supplying the goods/products
    However , the bigger risks and uncertainties that are to be considered are
    1. Uncertainty in weather conditions : There is a high sense of uncertainty involved in arctic route
    and the kind of equipment required to transport the good should address those weather conditions which are quite different from just travelling across sea(water)
    2.Sustainibility : Is this mode of transport sustainable in the long run, be it reputation risks or be it affecting the ecosystem the flora and fauna.
    Thus , the risks are to be hedging before taking a decision to leverage the advantages of arctic route.

  49. Atul Shrimal says:

    The article ‘Arctic Ocean shipping routes ‘to open for months’, describes the scenario in coming decades where arctic ice would be navigable for as many as 10-12 months per year due to global warming. Article illustrates how scientists have simulated the reduction in arctic ice sheet under different climate change scenarios and even under the Paris Agreement for climate change the reduction in ice would be sufficient to open shipping routes through arctic more often than now. Of course, this is one of the alarming signs of climate change, however, for manufacturers around the globe this could have no. of supply chain implications – from reduction in lead times to sourcing from newer suppliers. While some might argue that manufacturers should plan to take advantage of this opportunity by actions such as chartering ice-strengthened vessels, developing arctic ice navigation capabilities, we must also consider the adverse impact of such shipping on the fragile polar ecosystem and on the thin ozone layer above poles. For shipping industry is considered one of the major polluters and even the latest vessels such as mega oil tankers have capsized/leaked in the recent history and have caused much damage to aquatic life. Ultimately it has to be a value judgement between saving a fraction of lead time (as much as 25%) and fuel in shipping between certain regions and the risking fragile arctic ecosystem. For me sea vessels of current generation have to improve a lot in their safety record and emission levels before operating them on arctic routes would be environmentally safe.

  50. Mahesh Sharma says:

    It makes economic sense to go ahead and use this route for shipping. However, the most important thing is to take into account the competitive Response. Even if one company starts using such a route, almost all companies will be forced to move to using this particular route to maintain competitive lead times. Therefore, a sustained competitive advantage can’t be build by switching to this route.

    However, this can lead to less incentive among companies to manage carbon levels. A huge environmental risk is created due to usage of such a route. The government should ban usage of this route or allow usage only to certain companies based on carbon emissions.

  51. Li Zhao says:

    shorter distance means shorter lead time, which would help to decrease the cycle inventory cost. we should take advantage of that but be aware of uncertainty of closing routes for some period. Follow the emission scenario. If the routes are going to be closed for some period, we should order earlier to adapt to the prolonged lead time. Transportation cost won’t be affected very much by the shortened transportation time because it is decided by transportation cost per time and how many times to order. Naturally transportation cost per time would decrease a little because time is shortened and energy would be saved. For global trading environment, shortened lead time is beneficial. It helps to decrease the total cost and speed up turnover of goods.

  52. Shih-Feng Chiu says:

    If the emission of CO2 keeps decreasing, then the artic routes may not always be available for shipping, which is a trouble for ships traveling between East Asia and North America. We know that shorter lead time can decrease the cost spent by the shipping companies. If the average shipping time decreases, then the shipping companies can definitely charge more for the delivery due to the higher efficiency. From the perspective of global trade, this could boost the competition level between shipping companies in terms of lead time, cost….. Like artic airline routes utilized by several airline companies, especially from East Asia to North America or from Europe to North America, most companies choose to fly through artic routes. Therefore, if the arctic routes open, the shipping companies should take advantage of this.

  53. Li Yize says:

    The main consideration of manufacturers is lower their cost. They will also consider new route if it can save their cost. Also, the production plan will also influence their decision about selecting route, for example, if the factory decide to delivery big order, they will consider more about cost. If the factory decides to delivery small order but emergency, they will consider more about lead time.
    If the arctic routes open, there will be something other consideration like, safety, the training of stuff, new adaption of equipment. Those corresponding investment will be considered when make a decision, which will be large long-term cost for manufacturers or transporation company.
    The whole world will be more connected by the low lead time and low cost. Global business will be developed by the fast transportation. It will also make the impossible things to come true like people in US can using Africa wood because of its high quality.

  54. Yuang Wang says:

    I think there are advantages and disadvantages to opening up the Arctic route:
    The advantage is that it can reduce the risk of out of stock and transportation costs, while increasing the manufacturing output advantages of East Asian countries such as China. But there are also disadvantages. The disadvantage is that the cycle is unstable and it will pay for the environment. Therefore, I believe that with the development and application of clean energy, carbon emissions will gradually decrease, and the Arctic route will gradually become unavailable, and it cannot be used as a common choice.

  55. Ke Wan says:

    There is no reason for maunufactors refuse to operate this time-saving routes as their high economic efficiency choice, cause shorter lead times can lead a lower transportation cost. However, the open time of this route are based on the melting ratio of iceberg at the Arctic ocean. The longer route open time, the more serious of melting iceberg.
    Base on these analysis, the high economic effiency choice is based on the impact of the destorying of the Arctic eco-environment. Thus, the authorites should formulate corresponding regulations to regulate commercial transport activities at the Arctic. Besides, multilateral organizations, such as UN or Arctic Council, should help each countries to focus on the eco-recovery of this region.

  56. Mengying Song says:

    The development of new arctic shipping routes will facilitate the transportation of goods between Asia and Western Europe. This will help further develop the arctic shipping lanes into a global commercial transport corridor between the Pacific and Atlantic basins, and play a role in further optimizing the flow of international trade, promoting world connectivity and economic growth. As the sea travel time decreases, the lead time will decrease accordingly, which is beneficial for global trade. Due to the shorten lead time, the pattern of short distance, high frequency, and rapid transportation will be the possible development directions.
    Of course, ensuring the reliability and safety of the development of arctic shipping lanes is a prerequisite for everything.

  57. Pauleth Charris says:

    Although projections might show a high possibility of using arctic routes (TSR particularly) throughout the year by 2050, there is still a lot of uncertainty about the conditions of the climate with alarming warmer temperatures. Chances are that navigation might be still hard and requires special shipping adaptations for new climate conditions. However in the case that arctic routes are open for a period of 10 to 12 month, this definitely will motivate an active transit over the arctic with shorter lead times and cheaper shipping. We could expect a higher trade interest between Europe and the East Asian countries (mostly on located in the northern hemisphere). Should the manufactures of both start considering this scenario? yes, they should since prices are expected to drop therefore competition will be more aggressive.
    As challenges, manufacturers and shipping companies must consider regulations to protect wildlife and the environment in the arctic polar, new vessels infrastructure and the cost of fueling in the middle of the arctic.

  58. Ravleen Kaur says:

    Shipping routes through the arctic will result in shorter lead time which means less fuel ,increase in the availability of goods to customers, reduction in safety stock but it will also result in increase in shipping traffic, use of cheap polluting oil and the harsh conditions of Arctic leading to more accidents. Moreover, the emissions from the ships will not only affect the climate but also affect the marine life and endangered species. It is recommended to impose heavy taxes on shipping industries for using heavy polluting oil and enforce transparency in the supply chain. Since there is high uncertainty in the number of days the routes will be open and lack of infrastructure ,the shipping companies will need to formulate strategy that has an impact on transportation cost ,inventory, routes and demand uncertainty.

  59. Jilan Liu says:

    The improved availability of Arctic routes will benefit the shipping industry as well as the globe for sure. But the utilization of Arctic route also brings additional uncertainty. Unlike traditional shipping routes, the Arctic routes have limited infrastructures and more unpredictable weathers. Thus, extra delays and incidents should be expected, and their contingencies should be planned ahead by companies who would be like to rely heavily on the Arctic routes.
    Therefore, for individual firms, when making decision of whether taking the advantage of the Arctic routes, the cost of contingency plans, the cost of taking extra risk and the cost of adapting to new changes should all be considered together. It might be the case that these extra costs outweigh the cost saving of using the Arctic routes.

  60. Hee-kyoung Han says:

    Even though the arctic routes will be open with the expectation of shorter shipping time and lower cost, the overall environment of the routes is still much harsher than regular routes that is passing through Suez canal, which means it is necessary for shipping companies to invest money on building additional vessels to provide services via arctic routes. Therefore, I think the immediate cost savings are not very significant in the near future because the shipping companies want to collect their investment as early as possible by maintaining relatively high shipping rate than what is actually required. And also in the sustainable operations view point, even if the shipping time is short so there is expected benefit for using arctic routes, shippment through the arctic routes will destroy the environment even faster, which will create another huge social costs that everybody living in the earth should pay for. So, in my point of view, in a short-term, it is not significanly cost beneficial way for the company to use the arctic routes for shipping, and also I think even if it gives the company some economic benefits, there should be a consensus in a global society to protect the environment, which is eventually a way to save the cost in the long term.

  61. Ryan Ma says:

    The benefits clearly outweigh the negatives of the operation. The major negatives include the risk that vessels will undertake if they are not equipped with the proper technology for arctic seas. A thirty percent reduction in lead times from thirty to twenty-three days is enticing for any supplier delivering to its customers. Over the years, there may be more opportunity for manufacturers of arctic based vessels that are able to use this new opportunity. This will also help expand the insurance market by either having new markets catered to this new route or have new premiums from existing providers.

  62. Dan Sun says:

    From the perspective of sole transportation, these routes definitely will improve the shipping efficiency. However, the arctic routes are quite uncertain due to the increasing temperatures in the two poles. Thus, we are not sure about the open period for arctic routes. Also, the transportation fee is not a sole matter for manufactures. Business partners should negotiate on which incoterm to be utilized, and how tax and tariff should be treated properly. Currently it is hard to say if it is optimal to take the advantage of arctic routes because of those uncertain factors. The investment in opening these routes is a huge output as well. How long will it take to recover the cost, and start to take advantage? Are those routes stable in a certain period of time? Will disputations take place on how advantages are taken? From my perspective, with so many uncertain factors under consideration, the negative impact of opening up arctic routes are greater than the benefits they may bring.

  63. Gokul Siddharthan J says:

    Utilizing the Arctic shipping routes depend on many factors, such as fuel costs, weather, cargo type, international fees, insurance, final destinations, emissions. These routes are more useful for European destinations than for North American ports. Only the worst-case scenario has the most benefits for shipping through that route, a 30% decrease in time by 2050. The public’s climate change outlook has become more alarming than it was a few years ago. So the chances of a worst-case scenario are not very likely. The problems of high emissions outweigh its benefits a lot, considering the loss of many cities, impact on agriculture, etc. Nobody knows what weather patterns are going to arise from more than 2 deg rise in global temperatures. Maybe the whole scenario could backfire for shipping companies who are banking on this situation.

    Manufacturing and shipping companies need to hold on their investment and assess slowly the changes in weather patterns. After all the investment in a few ships can be done in a shorter time. Time is on the side of shipping companies, so they can wait it out before jumping in. Meanwhile, they should take advantage of the existing benefits of the Arctic routes. And, the whole arctic shipping route is under one big assumption that manufacturing will be concentrated in East Asia in the coming decades. Considering the rise of Africa, if manufacturing shifts to countries in the continent then utilizing polar shipping routes will not be a major point of discussion.

  64. abhilashajks says:

    I agree that these new shipping routes will come with many pros- shorter lead times, smaller inventory levels and lesser safety stock, lesser consumption of fuel, and many more, leading to possibly more efficient and cheaper supply chains. There will also be many cons, such as no way to figure out the exact duration the routes will be open for due unpredictable weather, unused thus unknown routes and limited infrastructure and accidents associated, resulting oil spillage, etc. The environmental impact causing these routes to open for longer durations and the environmental concerns that will result from these routes being exploited by shipping companies, will have far more damaging consequences. Shipping routes often pollute the area around them, that will negatively impact the aquatic life. Further, the rise in temperature which would cause these routes to open up may end up submerging many cities around the coastal lines and can cause many over devastating natural hazards. I believe we need to move more into 3D printing than just worry about shipping lanes. We should also stop being myopic and just look at overall efficiency and profits and think more about discouraging the companies from using this. We need to focus more the existing routes. Bring different countries together so that no one country can start creating blockages for the rest. And work much more aggressively in preserving the earth as we know it, before its too late.

  65. Sumit Singh says:

    The use of arctic shipping routes is a trade-off between lower lead times and slightly higher costs as ice class ships are needed to traverse these routes. These ships have higher freight charges as compared to normal ships. Another thing to be considered is the aggressive emission control policies implemented by the IMO (International Maritime Organization), which has put very stringent fuel regulations on the shipping industry, which increase fuel costs and ultimately freight costs. The ships traversing through arctic regions cannot use normal marine fuel, and must switch to more expensive low sulfur fuel which increase costs for ship operators, not to mention increases complexities of the on board machinery.
    Thus with the current emission control plan of IMO, which aims at cutting marine emissions by 80%, by Jan 2020, costs are going to go up and shorter routes will not affect logistics costs that much. Faster ships with more efficient fuel consumption pattern time may offer a better alternative to bring down logistics costs.

  66. Aloma Aurelia DSouza says:

    In case there is no change in the Co2 emissions, the Arctic Ocean shipping routes will be open for 10-12 months of the year resulting in shorter transportation times between Europe and Asia. This would result in fuel and logistics savings and companies can certainly account these benefits directly into cost savings.
    On the other hand, there also exist aggressive approaches to reduce Co2 emissions which would result in the shipping route being open for only few months of the year. In such situations, it becomes difficult for companies to change their logistics routes for only 2-3 months and cannot be considered as potential savings.
    There will be a positive boost in global sales with the sea travel times decreasing considerably. An important point to be taken into consideration before accounting for these savings is the geo-political aspect that this new sea route will open up and which countries may gain a political advantage due to this.

  67. adityavats31 says:

    This article reflects much upon the scenario of sustainability and the world’s duty for environment. Being a sailor and a volunteer at Greenpeace, one of the things I witnessed and learnt was how damaging the excursions of ships is to the sea/ocean environment. Not only does the fleet of ships pollute the air and water and increase the warming of the polar regions, it also hampers the ecological balance of the arctic.

    Saying so, if the window gets open, it will incur substantial loss to the environment. Now it comes to a very important scenario – Supply chain should not only be economical it should be sustainable as well. If the companies decide to traverse from the said polar routes, it will prove economical to them, however it will increase the CO2 emissions furthermore due to the exhaust of gases from the ships.

    Manufacturers should consider the trade-of between the sustainability and business. I firmly believe that howsoever positively global trade gets impacted with diversion in the arctic route, the same needs to be weighed on the negative impact it projects on the environment. Here the Government should come into picture and regulate the sailings with respect to the emissions and keep a check on the pollution from these ships

  68. Archit Bimal Shah says:

    The new sea routes through arctic do not give any advantage to the US from East Asia, as it is still efficient to go through Suez canal, although shipping from Japan /Russia to East Coast would be better through the Arctic, and with diverted traffic the cost of sea routes and ports used today will go down.

    It is a known fact that Climate Change is happening now, and due to current political scenario, it is not going to stop, and global warming is happening at an increasing rate, and the Paris climate agreement is doing no good. Thus ice is going to disappear in the Arctic, making routes open. Ideally, the one should refuse to use them, but since the companies are doing things for profit, they will use it for the reduction in lead times (25% to 50%) and cost. The new routes will reduce the cost of global supply chains as the seaports and channels will become less crowded and lead times will reduce, but it will further harm the worsen the already jeopardized arctic eco-system.

    The end customer and the upstream customers in the supply chain should refuse to use the routes and force their downstream suppliers to follow the same. A better and more aggressive climate deal is required, with participation from top-emitting countries both in past and present. A joint global effort is needed to save the planet Earth, as no issue should be more important than something which threatens the existence of the only life-supporting planet.

    The new routes are lucrative to the companies involved in global trade, as it will drive down traffic on highly used routes and seaports in present-day, reduce lead time and fuel cost, but also will demand infrastructure in the arctic and with increased human activities in the region will start warming up even more increasingly, accelerating the rise in temperatures. Thus the people, governments, and companies should be responsible and discourage the arctic sea routes.

  69. Yu-Ting Hung says:

    The increase in the duration of the use of these Arctic routes is good news, but it is bad news that people continue to emit carbon dioxide. It is best to use them, but we can’t increase emissions because we want to make this happen. Natural changes are like chemical reactions and never come back. The government should establish regulations to protect the environment and all wildlife that live in the Arctic from personal injury. In anticipation, manufacturers have an opportunity. Due to the reduced transportation time, they can reduce inventory levels and thus reduce transportation costs. At the same time, they should consider the feasibility of taking advantage of this opportunity. The Arctic route is not like the traditional route. The weather is unpredictable and the infrastructure to maintain the vessel is limited. Only after overcoming these difficulties can we benefit from it.

  70. Srijan Saurabh says:

    Opening of the Arctic routes will certainly the shipping companies save a lot of fuel costs making supply chain to become more efficient and responsive.
    Also, thinking of sustainability we have to believe is companies should use the route or refuse to use it? The companies have to perform a cost-benefit analysis in that case. The trade-off is the disturbance of the protected ecosystem of the Arctic belt. Considering a bigger picture, where profit-making while conserving the environment should be the objective of the companies. As soon as the route is commercialized, the traffic will increase, and investment in technology up-gradation to observe the climate to provide the best possible way will happen.
    The US will not see an immediate effect, but with different regions benefiting from the new trade route will generate a more modern stronger market for the USA where it can export its product gaining a higher return.
    Summarising, world leaders should discuss the potential benefits and trade-offs and decide a holistic approach to utilize the newly created route with sustainability.

  71. Akshara Anand says:

    The use of a new route created due to a man-made disaster like global warming is not at all justified. Companies taking advantage of sea routes created in the Arctic Ocean would only create more pollution, but there would also be increased CO2 emission in the area, and more sea traffic, thereby affecting the ecosystem and wildlife, let alone the risk of oil spills causing massive damage to hundreds of square miles of ocean water and life.

    Since there is so much pressure to reduce greenhouse emissions from all major countries, we can hope for a dramatic reduction in CO2 in coming years. However, if companies do end up using the route to decrease their transportation cost, they should be made to invest a part of their savings to environmental causes, and be encouraged to reduce their own carbon footprint by their governments.

    Global trade would be impacted in a positive manner, as due to reduced shipping costs, there would be easier flow of goods to and from countries that were otherwise constrained by their location and transportation costs. A reduction in lead time would also result in better inventory management, and would make it easier for companies to keep up with fluctuating demand patterns.

  72. Siddharth Sourabh says:

    The companies should not refuse to use these routes once they open up, based on both business acumen and moral standards. For the better of humanity, if the environment has already reached the stage where the routes have opened up, then by utilizing these shorter routes the companies would refrain from polluting extra due to the extra travel that the shipments used to do. Business wise, shorter routes would reduce lead time and profits. One way manufacturers can start planning on utilizing these routes from now is to build distribution facilities in Europe and then later handle logistics from Europe.
    The decrease in sea travel may help reduce cost to the end consumer but the whole possibility depends upon a lot of factors like the change in environment may already lead to short supply of raw materials of a lot of products, countries on route may increase their route taxes, type of material being transported, threats and risk at sea, behavior of competitors and most importantly, developments in air transportation.

  73. haocai1227 says:

    Hopefully, this new shipping route can decrease transport lead time siginficantly, therefore, the shipping cost can also decrease in the needs of less oil. Because of this benefit, it can be predicted that there will be lots ship willing to try this way. With this route, the global trade will be carried easily.
    However, what can’t be determined is the safety and relaibility of this route, there might be some risk to change to the new route. What’s more, the CO2 it produces will influence the environment without doubt. More advanced scientific survey need to be carried. By the way, for governments, they also need to calculate whether the reduction of shipping cost can cover the spent of protecting environment or not.
    Another thing whcih needs to be stressed out is that the reduction of lead time might be achieved by 2050, we are not sure whether this project can be continued or not. Speaking of that, I think maybe some companies are not interesting in the new route.

  74. HANOOSHA NAGIREDDY says:

    Firstly, the melting of the arctic ice is a serious global issue that has to be dealt with. The waterways from these oceans are highly unpredictable and unreliable as these were never explored before. Though it claims to decrease transportation cost, it would still be a risk to pursue these ways. The ships that carry goods pollute that part of the ocean and can lead to a lot of other side effects too. Also, since there is not any significant difference in profits, I think it is ideal to show moral support by not using the new route and involving in CSR that prevents this and helps earth sustain longer.

  75. Aishwarya P B Naga says:

    If the shipping routes through Arctic Ocean open up, then it is advantageous to the manufacturers as it reduces the travel time. Shipping through sea is the cheapest mode of transport and hence helps in reducing the transportation costs to a large extent. This will also help them to meet the uncertainty in demand without maintaining higher levels of safety stock and not procuring from the more costly near by suppliers. This will result in increase in the global trade via seas and thus increase sea traffic. This is advantageous to the supply chain. On the contrary, the manufacturers should also make a note that increase in the sea traffic would result in increase in the pollution thus increasing the global temperature and causing harm to marine life.

  76. Shane Bryant says:

    I believe the way this article is presented, anyone analyzing it from the perspective of a manufacturer would agree that they should take advantage of this opportunity. The chance to reduce travel time significantly, along with the cost reduction that inherently comes with it, is a no-brainer. If it was possible to run a pseudo Monte Carlo simulation factoring in all the risks associated with this opportunity (regulation, better equipment needed on the ships, uncertainty in travel times, environmental costs), one could see that the global supply chain might not be better off because of these routes opening up. I don’t believe the global supply chain’s benefits in travel and transportation reduction justifies the Pandora’s box of risks that would be opened up by taking advantage of it.

  77. Brandon K Black says:

    It seems clear that utilizing the routes would yield a clear economic advantage, most likely with the added risk as well. Reducing shipping time by 1/3 is huge. They look for gains of 1 day at a time if possible. 10 days would clearly save them enormous amounts of money. This in turn would likely increase the amount of Asia imports coming to Europe. It may even be a breaking point for some goods that are on the edge to switch from a U.S. import to an Asian import with the reduced shipping costs and lead time. However, it is not clear if this would be the right thing for the environment. A lot of thought and study should go into whether or not it would be the right thing to do, not just the best economic decision. Generally I would say if it is bad for the environment, in the end it will most likely be a bad economic decision. They need to research this further.

  78. Sounak says:

    If the arctic routes are opened for 10-12 months of the year, they will definitely decrease the transport lead time and transport costs, and also increase the volume shipped. In fact, the ships can use a peddling mode, where they drop the goods in US first, and then head towards Rotterdam (assuming the ships sail from east to west). Opening a new route is costly and proper analysis need to be done by manufactures before drawing any concluding. Also, to get the benefits of cost, the route should be use all around the year, and not just 2-3 months. In case the routes can be used for 2-3 months, it better to use the original path that is through Suez Canal. In long duration of routes, the supply chain will become efficient and responsive.

  79. The rapid decline of the Arctic Ocean ice cover has increasingly created the opportunity of using the Arctic Ocean as transport corridor between the North Atlantic and East Asia. These passages reduce the distances by a significant amount compared to the contemporary shipping routes potentially lowering both fuel consumption and voyage time.
    Although Arctic shipping potential is limited by diverse factors, including economics, infrastructure, safety, and have important implications for trade, environmental risk, and evolving strategic and governance policies for the region.
    Currently, due to unpredictability, seasonality and nonregularity of navigation, Arctic sea routes are possibly more economical for bulk cargo vessels than for container vessels, since the later depend more on precise schedules for loading, shipping, and unloading to keep costs down.
    Physical risks to the ship and crew from extreme weather, cold and ice conditions. Contact with ice floes and icebergs, restricted visibility and operational malfunctions due to cold. All can potentially contribute to cause delays and damage to the ship, her crew and cargo.
    Lack of infrastructure such as search and rescue (SAR), medical assistance, surveyors and bunkering facilities will create another risk factor.
    These all factors will result in higher insurance rates, as well as safety considerations, may deter other efforts. The impact of which has to be considered while doing cost benefit analysis.
    Moreover, the economic benefits will become greater for the mega vessels that are unable to pass through the Suez Canals. (The typical deadweight of a Suezmax ship is about 160,000 tons and typically has a beam (width) of 50 m (164.0 ft).)
    Also, just because shippers could make greater use of Arctic routes does not necessarily mean they will. Ice conditions will still vary greatly from year to year, which would discourage shipping companies for which precise timing of shipments is crucial.
    This will not be going to help majority of manufacturer for whom the time & schedule of container have a major impact on their business model in global supply chain.
    It will provide more clear idea , if the more analysis done on risk associated & cost benefit from using Trans-Arctic Shipping routes,
    We are assuming that the lead time reduction will provide the transport cost saving, but with above all risk the in-depth calculation of net cost benefit needed.
    I came across some research paper which can shed more light on this topic.
    https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/634437/Future_of_the_sea_-_implications_from_opening_arctic_sea_routes_final.pdf
    https://www.maritime-executive.com/editorials/the-arctic-shipping-route-no-one-s-talking-about

  80. Yeqi Wu says:

    If a company choose to use the Arctic Ocean Shopping routes, the transportation time could be reduced. Therefore, the company could have the opportunity to increase customers’ satisfaction with less shipping time, if their customers are sensitive about the lead time. This would become an advantage to compete with their competitors. On the opposite side, if their customers are sensitive about whether this company take their responsibility to protect environment, using the Arctic Ocean Shipping routes would impact the company’s reputation. As a conclusion, I think before a company make the decision, the company should figure out what is the preference of their customers.

  81. Aanchal Narula says:

    A reduction in the travel time of inventory by 10-15 days sounds like a steal-deal and reduce in-transit inventory costs and transportation costs. But there are many factors that would decide how viable this option is – is there enough infrastructure through these routes, rescue/search teams, maybe high insurance premiums for shipping vessels, the melting of ice, vessels that can withstand harsher conditions etc.There are other impacts or replacing the trade route with another impact the economies of the countries that rely on the transit fees of the Suez Canal route. Also the newer trade route would be sparsely populated thus reducing the demand along that route of imported goods. Additionally, there is the question of the environmental impact of this because these routes opening up is a consequence of unhealthy environmental practices and we do not know what the long term impact of further exploiting this might be.

    Another interesting read related to this – https://globalsecurityreview.com/arctic-new-maritime-shipping-route/

  82. Keshav S Nair says:

    A tricky situation. On the exterior, the melting of ice caps and the shorter lead times for transportation seems too good to dismiss, however, this brings to fore the environmental impacts of human activity. Companies are making a commitment to improving their environmental practices and I believe protecting the reservoirs of clean water should be a high priority. Customers will also rally behind companies who will decide on taking a longer route in order to protect the ice caps. The reduced transportation costs will not justify the depletion of precious water resources.

  83. Longyu Guan says:

    If the Arctic routes open up 10 to 12 months of the year, the lead time from East Asia to the US would decrease a lot. This is a big opportunity for multinational companies. It is no doubt that reducing lead time can bring some benefits and business advantages. For example, with shorter lead time, companies have the ability to replenish products quickly to avoid lost sales. Also, companies can design a flexible production plan and response to changes quickly. However, companies may take some risks if they use the new routes. One major risk is the weather in the Polar area. The unpredictable weather would definitely cause to transportation delay, and the late delivery would decrease the customer satisfaction. Thus, companies should evaluate the benefits vs. the risk consequences, and then make the decision of whether using the Arctic routes or not.

  84. Abhishek Chokshi says:

    The question is more geared towards the moral compulsion of the companies. Global warming has been increasing at an alarming rate and until all the countries unite to reduce the same, it is going to continue rising at such levels. If in the future, companies have the opportunity to use the routes, I believe, it is up to the company whether they decide to use those routes or not. They shouldn’t be blamed for those alarming sea levels if they start using these routes to reduce lead time. Furthermore, the global trade will get a huge boom, as lead times are reduced by 33% due to the new routes. But, since it is a gradual change, there will not be significant savings for the companies in their transportation costs. By the time mentioned in the question, the fuel prices might have inflated to extremely high levels and other fixed costs will also increase with rapid inflation thus nullifying the savings made due to the lower transportation costs.

  85. Apurva Desai says:

    Companies can advantage a lot by reducing their lead by 33.33% using the artic route and can be a point of competitive advantage. If a few companies start using the artic route it will compel other companies to be competitive to use of a similar route or another faster mode of transport. There are 2 major points the companies need to take into consideration which are 1. In the long run, it is sensible to protect the environment and with global treaties in place to restricting emission of CO2, the most probable outcome is that the arctic route will be open for fewer months and 2. mode of Transportion are growing faster and better, thus in the future companies might use hyperloop to transport their products. Thus it is only sensible to avoid the use of arctic route as it might be a competitive advantage for some period of time but it won’t be a sustainable solution. Lastly, a board must be placed governing companies use of artic route and indulging in activities to damage environment to take advantage of similar such ways of transporting globally.

  86. Deboleena Sen says:

    In order to evaluate the case, it is important that we evaluate the freight charges for arctic routes in scenarios where the travel time reduces significantly. Does the reduced travel time increase the freight charges imposed by shipping carriers? If it does, then we are faced by the subsequent question: Does the benefit generated by the reduced travel time offset the additional cost? Without answers to these questions it becomes difficult to assess the credibility of the ocean mode transport. Thus, even if the arctic routes open up, it might not be an optimal mode of transport as the increased freight charges might result in a higher total shipment cost than in the scenarios where the arctic routes are open for fewer months in the year.

  87. Shubham N Srivastava says:

    If a new route opens up which decreases the travel time by at least 33%, it will be definitely accepted by the Supply Chain Industry but promoting the new route will be demotivating for the every one who are enthusiastically trying to decrease the CO2 emission rate and environmental condition may get even worse.
    In my opinion, shipping companies should see it as an opportunity to create an impression on the people who are currently not much worried about the global warming effects.

  88. Li-Ren Syu says:

    It’s obvious that if there’s no certain regulation about the new arctic routes, there’s a high chance that the global supply chain owner will consider it as a more cost saving routing, and it’s also more sustainable (less fuel were consumed). However, the greatest concern of this new routing could be the temperature, most of the products were not build for extreme condition such as, arctic, the extremely low temperature can be devastating to most sensitive devices, chemicals or even everyday grocery goods. If the routes were to be used, the cost of using reefer container needs to be considered for the sake of goods safety. It’s still under further calculation result about the total cost impact for using the new routes, but there’s one thing for sure, as long as the routes can provide shorter lead time with competitive cost, it’s definitely worth investing.

  89. Manufacturer’s routing plan may differ in transportation lead time, decreased fuel costs, weather, insurance, draft restrictions, and cargo type. With a quicker lead time it may lead to better customer satisfaction and more efficient supply chain. However, a business is only going to be sustainable when the environment is. Taking advantage of global warming causing sea level to rise (Maldive islands may sink) and adverse weather and natural disaster (more typhoon formation) may in one way or another backfire on our environment.

  90. Krishnajit Bhattacharyya says:

    As far as North American Manufacturers are concerned, their supply chains clearly won’t benefit much from melting Arctic Ice-Caps. However, for their European counterparts, the benefits are lucrative. Drastic reduction of C02 emissions is less likely to occur immediately in spite of global efforts. Thus, new possible routes offer lower transportation costs and reduced lead times for several months. However, this possibility is subject to several questions. First of all, lack of clearly defined routes in the yet to be explored oceans is an immediate concern. Secondly, the higher risks involved and thus higher insurance costs is another question. Power play among economically dominant nations of Europe to acquire these routes may in-turn impose higher costs. Lastly, the incentive to bypass environmental impacts comes at the cost of sustainability of the businesses in the long run. The reduced travel time and supply chain costs may impact the businesses in the long run and is also a matter of ethical and sustainable business decision making.

  91. Keqian Hou says:

    If the route opens, we can expect that there will be even more connections between America and Asia, such as outsourcing activities and material supply. It will be very common to see US companies find Asian manufactures or suppliers and ship finish goods or raw materials to US. The lead time will potentially decreased by 1/3. Transportation cost will also be lower. Global trade will definitely be much more frequent than before.
    However, use arctic route may incur potential pollution to arctic ocean. If most companies take advantage of arctic route, the traffic will increase dramatically. From the sustainable perspective, it’s better to use the second scenario which can lower the co2 emissions. Companies can still use this route for couple months to save cost while the arctic ocean can be protected.

  92. Xuan Dong says:

    The Arctic route can’t be the main transportation mode companies will use for their global trade because the variability of the accessibility is quite big. in the best-case scenario, the accessibility is 4-8 month and in the worst-case scenario, the accessibility is 2-4 month in a year. Companies are still going to do global transportation in the traditional way. That being said, companies may allocate some of the global shipments to the Arctic route, taking advantage of low charge and short lead time. However, ethically speaking, companies should refuse the Arctic route because of the potential environmental issue caused by global warming. Companies reputation may also get damaged because people will think companies used Arctic route benefit themselves at the expense of nature environment.

  93. Shekar Sankar Raman says:

    The new trans-arctic shipping routes’ benefits are very clear, shorter distance, therefore saving time in transporting the goods and hence saving fuel costs. However I see multiple issues arising due to opening up of these new routes. The first, obviously, is the impact on the climate – although the conditions of Paris Agreement has been considered, the impact these ships travelling through the arctic would have have not been clearly validated. The second drawback is that of additional costs on the shipping companies. Travelling through the arctic comes with a lot of risk and with that risk comes that additional cost. These can be, the cost of ice strengthening the ship, the added insurance cost, in the future we may also see governments taxing companies that use some of these routes. Another problem I see is that of Ice floes. Considering all these factors, we can see a lot of risk and uncertainty involved in using these routes and hence a very unwise idea in pursuing these routes. To make this trade off for a potentially insignificant savings in cost may not be the smartest plan of action.

  94. Gautam Venugopal says:

    The nature of the question being posed is mostly ethical in nature. It is pretty evident that any company with European clients, using Netherlands as their approach route, would see a direct cut of lead time by 1/3rd from that of the present. Constantly using these routes would be detrimental to the environment but there isn’t any reason for companies to not use them. Countries in the vicinity may not be able interfere as it is in international waters where they would not be able to exercise jurisdiction. Ultimately, this is a question of the integrity and moral compass driving a company. The profits may see a rise but the negative publicity, of them ignoring the effects of their actions, might lead to a crash in their stocks and eat into the “savings” that they made by choosing this route.

  95. Sanjula Sinha says:

    Opening up of new routes would be a good opportunity for shippers. It will reduce the distances traveled and also decrease the time of travel hence faster deliveries. In most of its sense, manufacturers should optimize their logistics as per the routes only.
    Yes, the important question remains, whether to take advantage or not, which is not much of a question for business working for profit. Yes, they should, because from the economic perspective, the goal must be to use the cheapest form of the route at any given point. ( Of course subject to charging for environmental harm, which remains the job of Governments across the world.
    Lastly, this opening up of new routes has the potential of being a competitive differentiating factor for businesses for a very transient period but later on as the normalization happens it will dilute through price war.

  96. Pardha Sai Vangavolu says:

    Assuming that the arctic routes remain open on an average of 4 to 6 months even during a low emissions scenario, shipping companies can negotiate for a volume discount during this period with their respective customers as a trade-off against attaining lower transportation costs and reduce the total supply chain costs in the process. This is particularly true for European shipping companies, which currently traverse via the Suez canal and can achieve shorter lead times if they were to use the arctic channel. On the contrary, north Atlantic ports such as the one is New York may not be able to reap the same benefits since the designated north west passage through the arctic is no shorter than the Panama canal passage.

    However, such routing through the arctic can lead to increased shipping thereby leading to congestion and thus affecting the local marine ecology. Such an instance, can raise questions over the sustainability options that the company failed to exercise upon. Moreover, customers all over the world are becoming increasingly conscious upon how their products are being sourced by companies. Hence, it remains vital for companies to look at factors such as sustainability before taking any business decision.

    From a global trade perspective, Russia will benefit immensely from the energy trade through arctic channels since the country has invested quite a lot in developing maritime transport projects in the Arctic.

  97. Junaid Imtiaz says:

    The reality of the situation is businesses are primarily profit-driven and when an opportunity presents itself where costs can be reduced and lead-times reduced most businesses will take that option no matter how much their PR department wants to claim they prioritize sustainability, the environment, and social responsibility. In the short term, the returns for utilizing the arctic routes are no doubt enticing as lead-times would be significantly reduced meaning reduced need for safety stock and thus lower inventory costs and fuel costs for transportation.

    In the long run, though this choice becomes less obvious. The route is very difficult to trek across and safety is a major concern. The weather conditions and lack of infrastructure bring a lot of uncertainty and risk into the equation which is very detrimental as the inconsistency would seriously limit the benefits of the reduced lead-times.. Looking back at the rate of melting ice in the arctic we can see an alarming trend where the rate at which ice has been melting over the last decade has been consistently increasing. In the coming years there is little evidence that could challenge this trend, on the contrary looking at the increased evidence of industrialization in Alaska etc there is little doubt that sustainability is secondary to monetary benefits. When the arctic routes are utilized and large amounts of vehicles are brought into this environment along with the associated infrastructure the impact is only going to be negative. Eventually the melting will make these routes very impractical if not downright dangerous to travel, and considering the amount of investment that is needed to bring this option into fruition, the returns would need to hold for the long term to be truly worthwhile. Also the impact on the wildlife will suffer immensely as Polar bears are already being driven to their brink due to our influence on their environment.

  98. Vrinda Chopra says:

    Adopting the new route if it remains open for a longer time will be advantageous in several ways like lower transportation cost, shorter travel time, shorter lead time and lower inventory levels which would be beneficial to any manufacturer when just considering the cost aspect of it. But then with practices like ethical supply chains and concepts like sustainability in place, exploring the Arctic routes may not be the best practice because it will be indirectly contributing to the increase in CO2 emissions thus depleting the environment. Thus this way we lose the trust of customers and may set a wrong example in the market.

  99. Kartik Misra says:

    Using the Arctic routes will undoubtedly have many advantages for the manufacturers. It will allow the manufacturers to reduce
    1. Lead times
    2. Lower cycle inventory
    3. Have better pricing and thus be competitive in the market

    From a business point of view, It would be prudent to take advantages of these routes, when they are open. As per the “BBC” article, there are many routes which are open to healthy shipping vessels, instead of specialized ones. Even if low emission rates or high emission rate scenario takes place in the future, the routes will keep on increasing. Not to mention the fact that avoidance of fees that are charged through the Siberian waters. From a moralistic point of view, using the Arctic oceans may impact the ecology due to the increasing number of ships transversing.

    The global trade, on the other hand, will see an enormous boost since every manufacturer can have better pricing and have access to new territories. It would even lead product development and launch of new companies and manufacturing plants, thus driving the global economy,

  100. Hsing Chiao says:

    Article mentions that Arctic shipping routes would be available for normal shipping liners by 2050. For shipping companies, this will be their consideration that how to balance the new shorter route that can reduce transport cost and the risk that incur uncertainties which can affect the safety of cargo transport in that area and cause cost increased. Moreover, duo to the probability that can contribute more greenhouse emission if having more ships in transport, moral hazards in using Arctic shipping routes will be a agree to disagree issues in the society. As a result, shipping companies still need lots of proved analysis (cost, moral issue) to decide whether they use the Arctic shipping routes will be profitable.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s