A responsible Northern Sea Route

A viable route that will deliver immense efficiencies

Global commerce thrives on access to goods at an incredible scale, delivered on precise timelines and – above all – as efficiently as possible. Over the past century, international trade routes have been refined to shave weeks, days and even hours off journeys. Achieving this required some of the world's most remarkable feats of their time, such as the construction of the Suez and Panama canals.

Now, dramatic changes in our world are opening another trade route. As ice recedes from the Arctic Ocean for longer periods each year, it is becoming possible to significantly boost the efficiency of trade between two of the world’s most significant trading hubs, Europe and Asia, while also reducing industry CO2 emissions. Through this new course, ships could cleave several thousand kilometers off the southern route currently used, including the Northern Sea Route shipping, which offers a more direct and efficient path.

There is no doubt that climate change is creating expanded shipping lanes, which must be a serious cause for concern. This new development is not without its challenges. As melting ice increases navigability for longer periods each year, some operators argue that, given climate change is causing the polar to ice melt, these waters should be avoided.

Russia’s President Vladimir Putin has made the opening of the route a national priority, allocating $11 billion towards its development and setting a target of 80 million tons of annual shipments within the next four years. According to the Russian Northern Sea Route Administration, more than 100 vessels were operating on the route at any given time during August 2019.

The polar Silk Road does not just provide an incremental improvement to shipping times – it will fully halve transit times and CO2 emissions for ships taking the new route. The shipping sector is responsible for around 940 million tons of carbon dioxide emissions each year. That’s 2.5% of all greenhouse gas emissions worldwide. With one-third of the world’s trade flowing between Europe and Asia, cutting this route in half stands to make a meaningful dent in humanity’s overall greenhouse gas emissions.

The absence of queues at the natural bottlenecks of the world’s shipping lanes, plus a lower risk from piracy, create further efficiencies for shipping coming to or from Asia — a sharp contrast to the more congested North Atlantic Sea Route. Taken together, this could cut costs by an incredible 40%. That immense level of cost savings not only benefits shippers but can underpin the growth of whole industries and even economies. In manufacturing, for example, lower freight prices offer dual benefits—reducing costs both for sourcing raw materials and for shipping finished goods. This allows companies to offer products at price points accessible to a wider customer base while maintaining higher profit margins. On a macro level, this trend of cost efficiency creates significant opportunities

Economies will grow, new sectors will boom, and cities will thrive when the Northern Sea Route comes to full fruition, as highlighted in the North Sea Route map. And, while the route is the direct result of environmental forces that are a serious cause for concern, utilisation of the Polar Silk Road will significantly lower CO2 emissions needed to complete the journey between two of the world’s busiest trade hubs.