Breaking The Ice:The Viability Of The Northern Sea Route For Transit Shipping

Climate change is drastically changing the Arctic,opening up the previously closed northern region for a new shipping lane.The Northern Sea Route connects Europe and Asia through the northern coastal waters of Russia and has been promoted in the past as an alternative route to the traditional route from Asia to Europe through the Suez Canal.However,it hasn’t been seriously considered until recently,due to the amount of diminishing ice in the region.This thesis focuses on whether the Northern Sea Route will become an economic contender to the Suez Canal for transit shipping in the near future.To test this hypothesis,this thesis employs first a case study on the only shipping company regularly sending container ships through the Northern Sea Route,and then follows up with a probit regression to address whether there is a correlation between transit shipping along the Northern Sea Route and global ocean temperatures to assess the future viability of the route.The main findings of this thesis were that COSCO Shipping Holdings Co,Ltd.’s activities along the Northern Sea Route could not be easily replicated in another company,as its motivations for its voyages were not for financial gain.Furthermore,the probit regression showed there is a stronger correlation between the GDP of the destination and origin countries and whether they use the Northern Sea Route,rather than global ocean temperatures.This means that the rising temperatures of the oceans did not play a substantial role in determining trade routes,dealing a major blow to the assumptions of many that as global temperatures rise,the Northern Sea Route will become more competitive.The final conclusion of this thesis is that due to the high costs of doing business and the operating challenges in the region,plus the short shipping season,the Northern Sea Route will not be an economical contender to the Suez Canal for transit shipping between Europe and Asia in the near future.