Modelling container ship transport flow: an application to alternative sea routes between Northeast Asia and Northwest Europe

ABSTRACT

The Northeast Passage (NEP) has always been an attractive transport alternative for trade between Northwest Europe and Northeast Asia due to its shorter distance. While a growing body of literature addresses the economic and technical viability of NEP transit shipping, there is still a need for increased knowledge on the features of maritime trade between the regions that could potentially use the route. This study aimed to propose a conceptual model to explain the main factors influencing the cargo demand transported by container ships in order to analyse the types of trade that could increase by using the NEP. Structural equation modelling (SEM) was applied to the empirical data on trade volumes between Northwest Europe and Northeast Asia and suggested that logistics performance has the greatest impact on total volume of container ship flow between these regions. The data of maritime trade volume are further disaggregated to examine how the impact of the analysed factors varied between commodity groups. This study contributes to identifying which type of cargo flow may be the most receptive in case of opening the NEP for regular shipping whilst offering insights into the impact of global economic policy uncertainty on container ship demand.

KEYWORDS:

• Container shipping
• Logistics performance
• Economic policy uncertainty
• World uncertainty index (WUI)
• Maritime trade
• Northeast passage
• Structural equation modelling (SEM)

Acknowledgments

First and foremost, I express my gratitude to Prof. Terje Andreas Mathisen for his useful suggestions on the preliminary versions of this manuscript. I also wish to thank the editors and reviewers at the Journal of Maritime Policy & Management, as well as reviewers at the IAME Conference 2021 Rotterdam - ‘Accelerating Transitions’, for their valuable comments. Additionally thanks go to Lydia Mehrara, Tomi Solakivi, Gisle Solvoll, Albert Satorra, Henrik Falck and Björn Gunnarsson for their feedback at different stages during the production of this work.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. Aggregated trade means total trade volume without splitting in commodity groups.

2. Sample includes more developed countries than developing countries (Section 3.2). It is, however, uncertain whether this skewness influences the estimation results.

3. Like Table 4, the full model was applied, but only the variables most relevant to NEP were presented using westbound trade as an example. Model results for all four commodity groups provide sufficiently good model fit similar to that accounted for in Section 4.1 for the overall model.