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The Arctic Maritime Corridor

The Arctic Maritime Corridor “Ice Ice Baby” on the frozen dance floor

In the context of ever-growing concern regarding global climate and the consequences that will impact our society in its entirety, it is worthwhile to approach a topic that may be seen in a positive key – the emergence of a new transport route through the Arctic Ocean. This arctic passage would facilitate the maritime commercial link between East Asia and Western Europe and the East Coast of North America by providing an alternative route. On paper it is shorter and therefore could be deemed as a great economic advantage. This article gives a short analysis of the true feasibility of this new and presumptive transport corridor by examining it briefly from 4 points of view: geographic, logistic, economic, and in the end, the geopolitical perspective.

In theory, around the year 2050 (give or take 10 years), as an effect of continuous global warming, the polar ice cap will melt to such extent that it will be possible for big cargo transport ship to pass through the Arctic Ocean in their journey between Asia and the North Atlantic area. This would be the “small good” in a potentially transformative event for our entire civilization. Nevertheless, mankind in its modern form has a degree of flexibility and resilience to non-favorable changes and will probably overpass this hardship, but not without significant loss. If these climatic changes occur according to the different scenarios predicted so far, they will certainly generate events with predominantly negative effects: raising sea and ocean levels will affect coastal areas, cities, access to resources etc.

The premise for our hypothesis is that Asia will retain its status as the world’s manufactures workshop and Western Europe will be one of the main markets for these manufactured products. The new maritime link will be bi-directional from a technical perspective, but economically the merchandise flow will mainly be from Asia to Europe, as it happens now by the classic route. Because no one can foresee all the circumstances of the year 2050, we will conduct this analysis based on current aspects of the society and global economy, considering a linear evolution of these parameters. We do not take into account catastrophic events that could dramatically change world evolution in the short term, because, even if these are possible, the probability of occurrence is relatively low.

Since the increasing interest for the area in the last decades, it seemed necessary for an organization to be created to maintain a good relation between the states bordering the Arctic Ocean. However, this organization, called The Arctic Council, is currently more of a discussion forum and share-the-ideas platform than a true governing body for the area. In fact, the jurisdiction over the Arctic mostly belongs to the states and, in multiple instances, the interests of these countries are divergent. 

Geography – the fundamental premise 

Firstly, it must be mentioned that there are already two routes in the arctic area, but these do not pass directly across the middle of the Arctic Ocean; instead are following the coastal line of continents: the NEP – North Eastern Passage – passes mostly along the Russian shoreline and the NWP – North Western Passage – follows the Canadian sea line. However, due to the climate, these are available only a limited time interval per year – a few months in the Northern hemisphere summer (July-September) when the ice retreats and a corridor is created between the coast and the rest of the polar cap. Because of the proximity of land, the water depth is reduced and can accommodate only ships with low draft, which can be translated as low cargo capacity. The NEP is more commonly used since it is in a straighter line than its counterpart (the North American seaboard is extremely fragmented and the ice melts to a lesser extent).

Overall, both alternatives are of little practical use for large scale freight because of the geographic constraints and are mainly utilized for local supply of the small communities in the area or for small convoys of ships carrying mineral ore extracted from the arctic region.

Yet these things can change with global warming and the possible rise of the ocean levels. In the moderate version, according to National Geographic (Nunez, 2019) for an increase of only +1.5 degrees Celsius by 2100, the rise in planetary ocean levels will be between 30 and 77 centimeters. But there are also scenarios with a more pessimistic note, stating that the actual rise of water levels will be around 6-7 m, and will happen in a shorter timeframe.

This rise will have a series of consequences: the change of shorelines in some parts due flooding, and a general rise of water levels. Still, even with a coarse rise of +1 m, the parameters of draft for NEP and NWP will not change in a significant way. Even if the timeframe for free navigation will be extended in the proximity of shores for multiple months or for the full year, the low draft will still be a difficult-to-overcome barrier for an increased use of these routes.

Still, at the same time, a withdrawal of the ice would reveal new navigation possibilities, further away from the coast line and the chain of islands with dangerous straits and seas with low depth (like the Laptev Sea) through which the current routes pass. The variant of freight shipping through the trans-polar corridor could become more attractive both in terms of distances and lead time for deliveries. In comparison with the classic Pacific-Atlantic route via the Indian Ocean, the Suez Canal and the Mediterranean Sea, the distance to be traveled would be reduced by about 25%, to approximately 14,500 km (7,829 nautical miles). Considering the Shanghai and Rotterdam major ports as fixed landmarks, the Suez Canal route is 19,552 km long and the NEP current route would be 14,901 km (8,046 nautical miles) according to figures from Commercial Arctic Shipping through the Northeast Passage: routes, resources, governance, technology, and infrastructure (A. Buixade Farre et al., 2014, p. 301). The entire route can be split into 3 main segments: the Pacific, the polar segment and the Atlantic area. However, our focus in this article will be on the Arctic part.

Since we do not know how the future ice cap will look, and because it is improbable that all ice will melt by 2050, the real route will not be quite in a straight line from the Bering strait to the Svalbard Islands; most likely, it will follow the new ice line, at a safe distance, but much further away from the continental littoral than the actual routes. This is why it is impossible to estimate the real travel distance reduction compared to the existing situation. Even if the reduction in distance compared to the NEP will be insignificant, there is one other important aspect: a greater water depth will permit heavier and bigger cargo ships to navigate the area safely. Inevitably, there will be a set of problems for safer navigation, such as the violent polar storms, atmospheric temperatures that will still be very low or the existence of massive floating ice blocks detached from the ice shelf. 

 

Concluding from the perspective of physical features for the possibility of massive freight through the trans-polar corridor, two major conditions must be met: the water must be deep enough to allow the vessels to pass without incidents and, at the same time, there shall be no continuous ice on the surface of the water in order to overcome the necessity of special transport vessels (Polar Class reinforced type) or ice breakers to accompany the convoys. 

Logistics – the sinews of our world 

The ability to optimize the production process and to cut transport costs in order to enhance the global division of labor and gain new efficiencies will make the difference in terms of competitiveness and global rates of growth. Considering the secular trend of increased trade and the need to carry a growing volume, the necessity to optimize costs in all departments became an economic imperative of modern management. As the supply chain develops and grows in complexity, every little advantage adds up to improve market positions. In the case of maritime transport through the Arctic, in the face of a radical but not devastating climate change for mankind, we ask ourselves how viable the trans-polar route will be from a logistical perspective.

In the prior section, we focused only on the segment of the polar zone. However, from the logistical point of view, we must approach the whole Northern route consisting of the three segments linking the Pacific to the Atlantic, or rather East Asia with Western Europe.

The polar route is unique because it combines normal maritime shipping with transport under specific Arctic conditions and, from a utility point of view, it can be considered to have basically three basic functions. The first and most important function would be the transport of goods and raw materials between the North Atlantic and Pacific basin. The second function is to facilitate the transport of raw materials from extraction sites situated in the Arctic zone, both coastal and submarine. A third function is the commercial supply of new economic development centers (cities, industrial areas, offshore platforms) where improved climatic conditions will allow them to emerge and maybe even flourish.

We have already presented some of the limitations of the NEP and NWP and it is a fact that some of these impediments could be solved by the new route, but still there are other aspects to be considered before jumping with the conclusion of a new and fantastic logistic opportunity.

One of this is the low speed for cargo ships. The inherent danger of collision with icebergs that could damage the hull (and not necessarily sink the ship, because the Titanic era is bygone) imposes a lower cruise speed. And this drastically erodes the shorter distance advantage.

One of the other aspects that must be acknowledged is that the very low temperatures lead to the impossibility of transport for a series of products that are sensitive to cold. These include most electronic products where shrinkage caused by excessive negative temperatures can cause cracks in LCD screens or integrated circuit boards, as well as organic products such as wet wood products, foods, beverages or cosmetics that can be damaged by freezing.

To overcome this shortcoming, it would be necessary for ships to transport the goods in a controlled temperature environment, whether it is a ship's keel or special containers that can be heated, but this solution is more difficult to implement and significantly more expensive. The investment needed would not be justified by the gains in monetary terms from taking this shorter route against the classic route.

Arctic transport is “friendlier” with goods with a low degree of processing and complexity or with raw materials and subassemblies, provided they are not affected by frost.

If we consider that the flux of goods from East Asia (China) to Europe consists mainly of finished goods that are transported in containers, then the arctic alternative is less than perfect. This is because container carrier vessels have a tall stack over deck without a system capable of confining the containers to withstand the arctic storms, winds and waves. There is a real danger of damaging or partially losing the cargo during the traversal of rough seas.

Moreover, the Arctic corridor is very unpredictable due the hard weather and would be difficult to plan and meet a delivery schedule. So, in this light we can conclude that the trans-polar corridor is not suitable for the just-in-time approach in minimizing warehousing costs or for urgent deliveries.

In summary, although the direct arctic corridor would substantially reduce the physical distances, this being the major advantage of the route, however, there are some inconveniences and additional costs to be calculated.

The ideal transport logistics from the direct trans-polar route would mean that much of the Arctic ice cap would melt, which would allow the passage of deep-water areas and thus eliminate draft restrictions combined with reduction in intensity of meteorological phenomena that endanger the ship and the cargo. Unfortunately, nothing is ideal, and even if some of these aspects are met, the cumulative disturbing factors and all the shortcomings cannot be eliminated at the same time. 

Economics – the ultimate judge 

So, from a logistical point of view, the Arctic Corridor does not meet the great expectations that have been drummed up around it, but what about strictly geo-economical, regardless of the hardships of the logistics in the region?

It is true that, at a first glance, the new route does not seem to be a superior alternative to the established one. However, the increasing debates covering the Arctic transport regime for the coming decades are based on concrete economic needs, and it is possible that, in some situations, this route will be more cost-effective than the other options. In this perspective, it should not be a surprise that China, despite not being an Arctic nation, is very interested in participating actively in the development of the trans-arctic maritime corridor (Nakano and Li, 2018). Moreover, the Chinese government officially declares that this route is an "important objective of the new Chinese policy" (Scrafon, 2018). This new corridor is seen by the Chinese side as an alternative route within its strategic Belt and Road Initiative (BRI), and is metaphorically called the “Silk Road on Ice”.

The PRC interest in using an eventual arctic passage comes from the idea that most likely China will maintain its status of top manufacturer and supplier for the world market – the workshop of the world status - and will need a back-up way to ship its products to the North Atlantic area. Of course, the main route will remain the well-known one, through the Suez Canal or around the Cape of Good Hope, but, if at some point any of them will become less practicable due to multiple factors (blockades, terrorism, etc.), there will be at least one technical possible alternative, even if not initially appealing.

From another point of view, the issue can be seen also as a back-up route for China in case of deteriorating relations with ASEAN states due the South China Sea disputes. The common route currently passes through the territorial waters of ASEAN states and through the Malacca strait, a true bottleneck. Ironically, the possibility of China being hemmed in by its neighbors, possibly subjecting it to energy blockades and other forms of coercion is what made China assert its interests in the South China Sea to such a great extent.

And there is also India, which views China’s activities in the Indian Ocean with suspicion and is ambitious, in its own right, to assert a regional primacy in what the Americans are now calling “the Indo-Pacific”. In the competition for market supremacy, it is no secret that India would like to be able to thwart part of the Chinese plans for expansion of the Belt and Road Initiative and gain economic benefits for itself (Shapiro, 2018), even as it plays a double game of increasing ties to China, including as a new member of the Shanghai Cooperation Organization.

The mere existence of an alternative for transport gives a boost to the negotiating power of China and other transporters. And this is why there are other countries interested in the evolution of the Arctic, even if they are situated closer to the Equator. It is important to note that the potential benefits of the Nordic Maritime Route are not only concerned with the states that are members of the Arctic Council, but also those from Asia and Europe that have obtained observer status in this consultative structure. In the Asia-Pacific area, apart from China, we find the following nations which have expressed interest in the development of this route: Japan, South Korea, India and Singapore, and all have obtained the role of observers in this organization in 2013.

But there is more to this than just a simple alternative to be used as a pivot point in negotiations. In case of serious regional thawing, which in turn will create an increased economic and logistic viability of the route and in conjunction with other possible barriers along the classic route, the shorter distance through the Arctic may be exactly the missing trump card for counter-balancing the erosion of the competitive advantage of low wages in the Chinese economy. It is well known that the average salary in China is rising yearly and the manufacturing companies that made investments in production facilities have seen their labor cost advantage vanishing. In order to be able to maintain the prices at the lowest possible level, the rise in costs with labor must be offset from other sources and one of these will be the transport cost. Of course, this model of labor-logistics cost balancing is just theoretical and, in reality, there are a whole set of parameters to be taken into account.

The presumptive economic advantages are also in the viewfinder of the countries adjacent to the Arctic, who may be interested in resources or in developing their own nodes on the Arctic trade routes. That is why the Arctic states would want to split the Arctic ocean into area of exclusive economic interest – and just of their own interests. In opposition, the other countries (mainly China) state that, once the Arctic Ocean becomes navigable, it should have the same regime of open waters like any other ocean and the exclusivity zone to be reduced. Truth is that the ice did not even melt yet but the hunger for profit from the central authorities already began to cut the pie... 

Geopolitics – tying everything together 

Global warming problems are an inherent generator of changes for the geopolitical scene. The possible changes also lead to an intensification of concerns for areas that have so far not been at the forefront of the public eye. Such an area is the Arctic, an area where at present there is no very clear demarcation of the spheres of interest, with most of the riparian countries displaying expansionist tendencies in favor of their areas of influence and control.

As we have seen, this attitude has a solid economic background, but it may as well be seen as a dimension of national defense in some cases. With the massive melting of the ice sheet at the North Pole (and beyond), there are two major changes in the area. On the one hand, the current coastlines could undergo changes caused by rising water and, on the other, the Arctic Ocean could become navigable to a much greater extent. The latter consequence would motivate non-riparian countries to demand that this ocean have the same status as the other oceans, open to freedom of navigation. There are views that much of the frozen ocean (in its central section) must have the status of international waters, with the states in the area retaining only a limited area of economic exclusivity around their own shores. But open international waters are harder to control from a national defense perspective and it is no wonder that the military powers in the Arctic would reject this scenario, invoking different reasons such as protecting biodiversity, ecology and so on...

The future evolution of the geopolitical relations around the Arctic Corridor must be divined starting from the hypothesis that, over the next 30-40 years, the major political and military superpowers will remain the ones that are still present and that economic development will continue at a sustained pace in all of these states. Of particular interest for the viability of the cross-polar route will be the economic-political-military relations between the four major actors who have direct interests in the area: the US, the Russian Federation, the EU and China.

It is to be expected that, regardless of what forms of government and what political doctrines the decision-makers will profess at any given moment, there will continue to be a degree of mutual mistrust between the US and Russia, which will maintain and possibly even increase the military tensions. Between China and the US, the economic and military competition for the status of premier power will increase, and the EU, in the hypothesis (less and less plausible) of consolidating internal unity, will strive to gain as much influence as possible.

In the circumstances of the amelioration of hard climate conditions, disagreements may occur between China and Russia due a process of slow migration from overpopulated China to underpopulated East Siberia. The moderation of the Siberian climate may lead to a potential economic flourishing in this vast space with significant resources and arable land and these could prove a motivating factor for migration which will prove impossible to ignore for both governments.

As cold as it is, the Arctic will be the subject of hot debates and simmering conflict, as no power will want the others to gain an absolute advantage in the area, especially if it will be an economic asset. 

In lieu of conclusions... 

It is improbable for the scenarios discussed to be fully realized, but, even so, climate change and the partial meltdown of the ice cap are almost certain events. Most likely, the World Ocean level will increase, but the level difference will be moderate, approx. 1-2 m. Humanity will probably be affected more from other negative effects that derive from global warmth than from the ocean’s rise.

For the Arctic, we find two main consequences:

  1. modification of the shorelines by flooding of some low areas;
  2. reduced ice cap will permit navigation of bigger ships for longer periods of time each season.

Considering that international trade activities will intensify at global scale, it is supposed that states around the world will try to use any opportunity to gain a benefit. In this vein, expanding the polar navigation capabilities, both in terms of the available time window and as usable space, will create the conditions for the emergence of a new major transport route between the Pacific and the Atlantic.

What remains to be analyzed is, on the one hand, what type of goods will be transported along this route and, on the other hand, how reliable it will be in terms of costs and profitability.

Three capital questions can be formulated about this new transport route:

  • Will the Arctic Cost Route be more cost-effective than the Classic Route? Probably not.
  • Could any kind of goods be transported through the polar area? Definitely not.
  • But will the very existence of an alternative route which is geographically shorter be an advantage for the countries involved in commercial operations as part of the Euro-Asian relationship? Definitely yes.

Thus, it is no surprise that countries that are not surrounding the (still) Frozen Ocean such as China, South Korea or Japan are also interested in this transport corridor.

We estimate that, over the next decades, the entire extended polar zone will become a much greater point of interest than it is today, in all aspects: military, political, economic, etc., with the trans-polar transport corridor being just one of the aspects of this increased relevance.

Exclusively from the point of view of maritime transport, this is a favorable situation: if the route will not be viable, nothing changes in the global transport networks, but, if it is profitable, mankind has only to gain. 

References 

  1. Buixadé Farre, A., Stephenson, S., Chen, L. Czub, M., et al. (2014) - Commercial Arctic shipping through the Northeast Passage: routes, resources, governance, technology, and infrastructure, Polar Geography, Vol. 37, No. 4, p. 298-324.
  2. Nakano, J., Li, W. (2018) - China Launches the Polar Silk Road, CSIS, 2.02.2018, https://www.csis.org/analysis/china-launches-polar-silk-road, accessed in 10.03.2019.
  3. Nunez, C., (2013) - Sea level rise, explained, National Geographic, 02.2019, https://www.nationalgeographic.com/environment/global-warming/sea-level-rise, accessed in 10.03.2019.
  4. Scrafton, M. (2018) - China is Planning a "Polar Silk Road", The maritime Executive, 27.04.2018, https://www.maritime-executive.com/editorials/china-is-planning-a-polar-silk-road, accessed in 10.03.2019.
  5. Shapiro, J. L., (2018) - India’s One Belt, One Road-Block, 26.01.2018, https://geopoliticalfutures.com/indias-one-belt-one-road-block, accessed in 25.03.2019.
 
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OEconomica No. 1, 2016