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Regular version of the site

Article

Prospects for the Northern Sea Route Development

International Journal of Transport Economics. 2015. Vol. 42. No. 4. P. 431-460.

Last few years have seen a rapid increase in the number of vessels navigating through the Northern Sea Route (NSR). In political debates this route has gained a lot of attention and is considered to be a promising initiative of the coming decades. Officials of many countries have announced their plans to participate in its development. At the same time, numerous studies aimed at evaluating the transportation costs of navigation via the NSR indicate that the route is economically viable only for a limited segment of shipping. This study is dedicated to solve this contradiction focusing on two different aspects of the NSR exploitation: 1) current economic feasibility which is defined by the level of transportation costs in comparison to alternative transport routes; 2) long-term perspectives of the NSR development determined by a set of long-term trends, as well as by strategic interests of various countries. Analysis of these two aspects is carried out by means of principally different methods and the conclusions can be multidirectional. This research builds the framework for the comprehensive analysis of the NSR perspectives, basing on the combination of two methods.

It was revealed that the NSR is commercially viable only for some types of cargo transportation – primarily for bulk cargos in warmer months from and to ports situated not far from the NSR. In the long term the effectiveness of the NSR can increase under the influence of certain conditions such as further ice melting in Arctic waters, development of Russian Arctic regions and, in particular, the development of the infrastructure along the NSR, possibility of including the international maritime transport into the system of greenhouse gas emissions regulation, and the increase of different political and other risks along the traditional trade routes between Europe and Asia. On the contrary, the possible reduction in the price for bunker fuel, growth slowdown in Asia-European trade and the suspension of a number of oil & gas projects on the Russian Arctic shelf worsen to some extent the NSR position.