Now Opening Arctic Ocean Route

Global warming causes a lot of environmental problems, but it has a little good effect. Today’s story is about Northern Sea Route that is expected to have a huge impact of a future supply chain. Northern Sea Route is the route that enables to shortcut between Asia and Europe along Russia's Arctic Ocean coast.

In a long history, Far East countries such as China, Korea, and Japan developed with Europe countries trade routes between Europe and Asia such as the Silk Road before Middle Ages, Indian Spice Routes via Cape of Good Hope in the early modern period, and Suez Canal in the modern history. Now Northern Sea Route has been added to these trade routes because ices decreases in Arctic Ocean.

According to the report written by Yep, in this August, eighty thousand tons of a naphtha arrived in Japan from Norway via Northern Sea Route. In September Korea exports a high quality diesel to Europe by using the route. Northern Sea Route takes thirty-five days to sail between Europe and Asia. On the other hand, Suez Canal route takes forty-eight days to sail. The report mentions that Northern Sea Route is expected mainly to use for import of energy natural resources from Russia and Northern Europe to Asia. By using the route, Far East countries can diversify geopolitical risk such as Suez Canal and Strait of Malacca.

However, the cost of Northern Sea Route is not largely different from that of Suez Canal route. That is because the cost reduction by shortening ten days sailing serves as a counterbalance to fees of an icebreaker and additional insurance. Furthermore, the route is available for only four months in summer at this moment.

Though Northern Sea Route is just getting started, I think that it will be used by the apparel industry and the automobile industry in the future. Meanwhile, I consider that the route will possibly reduce the trade costs between Europe and Asia by getting flexibility of a size of a freighter to which now the width of Suez Canal limits. However, does the route that is built on a sacrifice of polar bears highly please you?

Reference

Hong. H, C (2013, October). Japan to get second LNG spot cargo from Norway via Arctic. Retrieved from http://www.bloomberg.com/news/2013-10-01/tepco-to-get-lng-spot-cargo-from-norway-via-northern-sea-route.html

Yep, E (2013, August). Energy companies try Arctic shipping shortcut between Europe and Asia. Retrieved from http://online.wsj.com/news/articles/SB10001424127887324619504579026031203525734