A Study on the Northern Sea Route and its Economic Feasibility By Niki Bouchalis Graduate Student at SUNY Maritime College Faculty Mentor: Dr. Shmuel Yahalom

4. Advantages Vs. Disadvantages of the NSR Usage Outline: Globalization Demand for trade Suez - Panama Canals 2. Aim of this Study 3. Definition of the NSR 4. Advantages Vs. Disadvantages of the NSR Usage 5. Limitations/ Suggestions for Future Research 6. Conclusion

Introduction Globalization began right after WWII. Suez and Panama Canals opened in 1869 and 1914 respectively. Despite its expansion in 2015, the Suez Canal might not be able to compensate the increasing number of container ships. Suez Canal Panama Canal Image retrieved from: https://worldmaritimenews.com/archives/167189/egypt-on-high-alert-ahead-of-suez-canal-inauguration/ Image Retrieved from: http://www.bestourism.com/

Reasons why the Suez Canal might cease to be the preferred route: Introduction (Cont.) Reasons why the Suez Canal might cease to be the preferred route: The volume of containerized cargo will be increased more than 600% . The economic growth of China is moving from the Southeast  North Picture retrieved form: http://picphotos.net/map-of-southeast-asia-and-north-pictures-4/ Picture retrieved from: http://www.hotelstravel.com/china-ne.html

This research explores: Introduction Cont. Alternative routes for satisfaction of demand are needed. One of these is the Northern Sea Route (NSR). This research explores: Is NSR economically feasible in the liner vessels? What are the positive and what are the negative aspects of Arctic exploration and commercial exploitation? Image retrieved from: http://barentsobserver.com/en/arctic/2013/03/china-starts-commercial-use-northern-sea-route-14-03

Definition of the NSR 2.100-2.900 nautical miles approximately. Picture retrieved from: http://barentsobserver.com/en/sections/articles/preparing-next-years-northern-sea-route-season 2.100-2.900 nautical miles approximately. Distribution of sea ice all over the route. Shortest connection between Northeast Asia and Northern Europe. Primarily an internal Russian shipping route. Little usage (one of the highest transit volumes (208,600 tons in 2003) accounts for only 7% of the total global shipment that year.)

Temperature Changes and Ice Conditions of the NSR Image retrieved from Nasa

Shorter Distance/Voyage Time Shipping Advantages of NSR Usage Shorter Distance/Voyage Time NSR is 40% shorter than the Suez Canal between Rotterdam and Yokohama  7 days off the shipping time Less CO2 Global Emission Bunker Consumption will be reduced Avoidance of the Somali Piracy Since 2007, Somali pirates have netted $7bn & have taken 1,000 hostages. Picture retrieved from: http://worldmaritimenews.com/wp-content/uploads/2015/05/Northern-Sea-Route-to-Overpower-Suez-Canal1.jpg

Shipping Disadvantages of the NSR Usage Insufficiency of Infrastructure: regular container liners cannot be optimized since they cannot access a network of developed communication lines. Only Certain Types of Cargoes: indifferent to long periods of isolation. Little or No Technical Support: little or no response to problems such as hull fracture, damage to propellers, shafts and steering gear. High Cost for the Qualified NSR Vessels: only special ships (1B Class and above) build for extreme conditions are qualified + an Icebreaker. Image retrieved from: https://news.usni.org/tag/icebreakers Image retrieved from: http://survincity.com/2013/10/northern-sea-route-eyed-swede-part-2-2/

Shipping Disadvantages of the NSR Usage (Cont.) Time-Consuming Procedures to be followed when NSR is used: Request for official permission at least 4 months in advance to the NSRA in Moscow. The procedure for the Suez Canal is much easier and less time-consuming (only 4 days!). The vessel should also be inspected for ice worthiness by MSC or FESCO. Russian NSR Fees: (I.e. ice-breaking fee (1 TEU (24 tons of cargo) will cost $980).

Environmental Consequences: Shipping Disadvantages of the NSR Usage (Cont.) Operating Costs: Route recommendation based on meteorological and ice forecasts (e.g. 1 day forecast costs $231), Salaries of the Russian helmsman ($33per day if the vessel does not have a qualified one for ice navigation), Maps, guidebooks, tide tables, signals book, etc. that can cost up to $900 for each route. Environmental Consequences: 1) smaller vessels = additional voyages 2) sea ice  increase of the vessel’s power 3) the vessels’ emissions will be emitted in sensitive areas prone to large impact.

Future studies should: Limitations/Suggestions for Future Research Limitations: No concrete information about the future of the Arctic sea. Focus only on liner vessels. Future studies should: Investigate the advantages and disadvantages that the NSR has to offer to other types of shipping services (i.e. tramp service). Focus on the estimation of the shipping insurance costs both for the vessel and the cargo.

capital and operating costs too high Conclusion “the quantitative factors” (i.e. transport distance and time) > “the qualitative factors” (i.e. cost and safety) capital and operating costs too high the NSR is economically unfeasible in comparison to the year-round SCR for the time being

Thank You! Niki Bouchalis Graduate Student at SUNY Maritime College Cell: 347-510-6855 Email: nikibou.16@sunymaritime.edu