ABSTRACT
The feasibility of the Northern Sea Route (NSR) is assessed against the established Suez Canal route (SCR) and the longer Cape of Good Hope route. The analysis reflects real practices of route choice for oil products between the Far East and Europe depending on varying market conditions. A required freight rate (RFR) model is developed based on both optimal speeds and real speeds. Automatic Identification System (AIS) data are used to identify route choice patterns and real speeds of Long Range 2 (LR2) tankers during 2013–2020. Cargo value on-board and alternative fuel types/modes based on oil, and current and future technologies of dual fuel Oil/Liquefied Natural Gas (LNG) are considered. Cape is a competitive alternative under low fuel/commodity prices, and its use is explained, especially during the oil oversupply in 2015–2016 and 2020. The NSR is more competitive when moving towards short-hauls, under high fuel/commodity prices, and discounted or zero icebreaking fees, but is uncompetitive most of the times when ice damage repairs are included in the model.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Supplemental data
Supplemental data for this article can be accessed online at https://doi.org/10.1080/03088839.2022.2119613.
Notes
1. Another two LR2 laden voyages were conducted in 2013, but these involved naphtha cargoes from Europe to the Far East (CHNL Citation2021).
2. This is known as ‘backwardation’ and occurs when the price of a commodity trading in the futures market is lower than the spot price.
3. This is known as ‘contango’ and occurs when the future price of a commodity is higher than the spot price i.e. the opposite of backwardation.
4. An OD pair linking Northeast Asian ports with the UK is chosen instead of France due to proximity of the later with the biggest importer i.e., the Netherlands.
5. The distance leg under which VLSFO is used on the NSR at the 1,700 m3 sub-mode is 188 n.m., compared to 6,571 n.m. and 3,144 n.m. on the Cape and SCR routes, respectively.