Northeast passage in Asia-Europe liner shipping: an economic and environmental assessment

Abstract

In recent years, the Northeast Passage (NEP) has been widely discussed in the shipping industries since it can potentially bring economic benefit thanks to its relatively short sailing distance vis-a-vis the conventional Asia-Europe route via the Suez Canal. Concomitantly, due to the recent advocacy of green shipping, how to deploy effectively a shipping fleet so as to reduce the environmental cost has become an increasingly crucial issue in the shipping industries. However, it has not been investigated how the optimal shipping allocation between the conventional Asia-Europe route and NEP, based on both economic and environmental considerations, will be influenced by different aspects of shipping costs respectively, which will further affect the ocean carriers’ decision and adoption attitude toward the NEP. In this paper, a quantitative assessment model considering the shipment operating cost as well as the external cost of various pollutant emissions is presented to analyze the multi-port multi-trip liner service in an Asia-Europe container shipping network. Based on the shipping network with cargo demand of an Asian shipping company and empirical data from the existing literature, our study demonstrates how the optimal shipping allocation varies between scenarios by performing sensitivity analyses. Our findings indicate that the icebreaker fee, as well as Suez Canal toll, plays a more decisive role than the fuel price in affecting the adoption of the NEP. The relevant policy and managerial implications are discussed.

Keywords:

• External cost
• liner shipping
• Northeast passage
• pollutant emissions

Acknowledgements

The authors are grateful to the editors and the anonymous reviewers for their constructive comments that have improved the earlier version of this paper. The second author Zhou is the recipient of the 2018 UTS Research Training Program (RTP) Scholarship.

Author’s contributions

P.-.H Tseng: Literature search and review, study conception, content planning, acquisition and interpretation of data, and manuscript writing. A. Zhou: Model derivation, computer programing, analytic calculations, and manuscript writing. F.J. Hwang: Theoretical development, study conception, experiment design, insight analysis, manuscript writing, and critical revision.

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Notes

1 Please refer to the natural gas liquefaction and shipping project Yamal LNG (http://yamallng.ru/en/).

2 http://money.cnn.com/2018/08/21/news/companies/maersk-line-arctic-container/

3 The name of the shipping company is concealed due to the commercial confidentiality.

4 International Maritime Organization (http://www.imo.org/en/); Niini (2008).

5 http://www.bunkerindex.com/prices/region-south-asia.php.

6 http://www.suezcanal.gov.eg/English/.

7 Actually, the icebreaker fee is negotiable in maritime practice (Northern Sea Route Information Office, http://arctic-lio.com/). In this study, we set a range of reasonable icebreaker fees by referring the nominal value to perform the SA for simulating various scenarios (cf. Table 4).

8 It is noted that a qualified ice-classed containership might not need the icebreaker service in the low-ice season (e.g. summer), which can then reduce (or even be exempt from) the transit fee.

9 It is possible that the feasible sailing season will extend to June-November in the future due to the effect of global warming.

Additional information

Funding

The first author Tseng was partially funded by the Ministry of Science and Technology of Taiwan under the Grant MOST 108-2410-H-035-039.