Relevance of the Northern Sea Route (NSR) for bulk shipping

• Published in: Transportation Research Part A: Policy and Practice
• Main Authors: Cariou, Pierre, Faury, Olivier
• Other Authors: Kedge Business School (Kedge BS)
• Format: Article in Journal/Newspaper
• Language: English
• Published: HAL CCSD 2015
• Subjects: Maritime transport; Northern Sea Route; Bulk shipping; Profit; Optimal sailing speed; [SHS.GESTION]Humanities and Social Sciences/Business administration; Arctic
• Online Access: https://hal-normandie-univ.archives-ouvertes.fr/hal-02077034; https://doi.org/10.1016/j.tra.2015.05.020

International audience Some scholars consider that today’s market conditions are in favor of the Northern Sea Route (NSR) rather than the Suez Canal Route (SCR). However, the number of bulk carriers using the NSR remains extremely limited, despite higher fuel prices since 2009 and subsequent significant fuel savings. In 2013, there were 53 transits via the Arctic, out of which 27 by oil tankers and 6 by bulk carriers. In this article we show that this result might be attributable to a factor, which is not considered in most studies: the spot freight rate to fuel ratio which governs ship owners’ decisions regarding the sailing speed. Due to a low ratio since 2011, the speed of vessels on the SCR is at its lowest level, and potential NSR fuel savings are too limited to provide a viable alternative. We further argue that, contrary to most studies, internalizing NSR environmental benefits marginally improves the attractiveness of the NSR.