Economic and environmental feasibility of Northern Sea Route for container service: impact by ice besetting events

ABSTRACT

Northern Sea Route (NSR) has attracted much attention from the academia. However, the relevant issues, namely, the seasonal variation of sea ice coverage, the possibility and delay of ice besetting events (IBEs), formulation of ice-breaker escort fee and rescue fee, and the internalization of environmental costs, are considered in past models, but not in a systematic manner. To break through the limitations of previous studies, this paper investigates the economic and environmental feasibility of the NSR for container service, and clarifies the said issues using the latest survey data on a business case. Specifically, a novel evaluation model was developed to estimate the required freight rate (RFR) comprehensively, from the perspective of economic and environmental costs. Based on the modeling results, the optimal scheme was designed for all-season commercial liner transportation via the NSR. Besides, the RFR-based logit competitiveness model was adopted to evaluate how the NSR as an alternative to the Suez Canal Route (SCR) is affected by multiple factors: the delay induced by the IBEs, carbon tax rate, loading factor of eastbound containerships, and fuel price. The research results provide reference for decision-makers to formulate operations plans for ice class, navigation speed, and ship type.

KEYWORDS:

• Northern Sea Route (NSR)
• Arctic container shipping
• ice besetting
• required freight rate (RFR)
• ice classes
• Suez Canal Route (SCR)

Acknowledgments

The authors would like to thank anonymous reviewers and editors.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

The work was supported by National Natural Science Foundation of China [grant number 72072017, 71902016, 71831002]; Natural Science Foundation of Liaoning Province of China [grant number 2020-hylh-41, 2020-BS-213].