Future Commercial Rewards from Expanded Arctic Shipping ‘Surprisingly Small,’ European Scholars Say, but ‘Environmental and Geopolitical Risks Remain Substantial'

Paul Goble

            Staunton, Nov. 9 – Many have accepted Moscow’s vision that the Arctic will be a major route for maritime shipping, Boris Vergote says; but the rewards from the retreat of sea ice may be “surprisingly small” while “the environmental and geopolitical risks” are likely to “remain substantial.”

            Vergote, one of the co-authors of a 56-page study of these issues by European scholars, says that their research shows that Arctic routes are indeed shorter but that by itself doesn’t mean they are more cost effective or less risky. (The full text of the report itself is available online at  cdn.bfldr.com/WF0QU2QB/as/k97r4kr5v4m7r9ggnn5zr9/Systemiq_-_Breaking_the_Ice_Report A detailed discussion of its key findings can be found at arctictoday.com/arctic-shipping-brings-shorter-routes-but-few-rewards-new-research-finds/.)

            Among the greater costs that shippers using the Northern Sea Route or other Arctic routes must bear are building ice-capable ships, higher insurance premiums, lower speeds, and sparse infrastructure on shore in the case of accidents or for intermediate stops, the last of which is a major component for container shipping elsewhere.

            As a result and despite boosterism in Moscow, Beijing and some other centers, the report says, shipping in the Arctic is unlikely to form more than 0.2 percent of global maritime trade by value in 2050 because shippers who use these routes will save only 100 million US dollars by doing so, a drop in the bucket of spending on oceanic shipping worldwide.

            The European report also stresses that such shipping will cause serious environmental damage and will likely involve geopolitical competition among major powers given the location of Russia along much of the route and the US location at the entrance of the Arctic from the Pacific.

            The report thus serves as a useful corrective to the enthusiasm of some and the fears of others that the Northern Sea Route and other Arctic shipping lanes will soon radically transform international trade routes. Arctic routes may play a key role in the extraction of resources there, but they won’t transform international trade in the near term nearly as much as some suggest.