New Shipping Route to Change World Trade

The Arctic Ocean has traditionally been covered in ice and very difficult to travel through with a ship. Currently the ocean is travelable for four months a year as polar ice caps melt due to global warming. One country taking advantage of the newly opened route is China. A Chinese shipping company, COSCO, sent a ship from the port of Dalian to Rotterdam in the Netherlands, a 3,380 mile route that would take just over 30 days.

The alternative route for China to take would be the Suez Canal, which is about two weeks slower than the newly found route from Asia to Europe. Although other ships have traveled this route, COSCO’s ship the Yong Sheng, is going to be the first container transporting vessel to sail to Europe through the Arctic. According to a Wall Street Journal article, the Northern Sea Route (NSR) is ran by a Russian Administration that has issued 393 permits this summer to travel the waters which boarder northern Siberia. This is a large increase from the 46 permits the issued last year and four they issued in 2010.

According to Sergey Balmasov, the head of the NSR Information Office, the best months to travel the route are September and October because there is barely any ice across the whole route. He went on to state, “We expect a substantial increase in permit application if temperatures continue to rise in coming years. But climate change could work both ways, so if temperatures come down the route will become impenetrable without ice breaking escort ships.”

China is also hoping to access the artic for its resources in order to fuel its economy. There are untapped natural gas reserves in the Artic and they are held by China’s political ally Russia. Three months ago China gained observer status to the Artic Council, which is a group of nations with interest in the Arctic region. Currently the council has eight members, which include Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden, and the United States.

The European Union being China’s largest export destination, with 290 billion euros in goods sold last year, which creates a great opportunity for cost reduction and increased exports through the Northern Sea Route. Although there is great room for growth, in the near term the economic value is not large. Also, with growing economies in Southeast Asia and Africa and a slowing economy in Europe, the importance of the newly founded route may be lessened.