How viable is Arctic shipping?
Houthis, a Yemeni rebel group, are attacking commercial vessels. As a result far fewer ships are using the Suez Canal, a shortcut from the Indian Ocean to the Mediterranean Sea. The volume of trade passing through the Panama Canal, which connects the Atlantic and Pacific Oceans, has declined by 30% since November, after severe drought hit its reservoirs, lowering the water level.
The spot rate for sending a 40-foot container from China to northern Europe has risen by 283% since early-December, according to figures from Freightos, an online freight marketplace. There is a tantalising alternative for long-distance sea trade: a series of routes that could cut up to 40% off the length of journeys made via the Suez Canal. But there is a catch: the Northern Sea Route (NSR), North-West Passage (NWP) and Transpolar Sea Route (TSR) cross an ocean covered in ice.
Could the Arctic be a viable option for commercial shipping? Increasingly, yes—and for a worrying reason. The Arctic is warming four times faster than the global average. Since 1978 ice cover has shrunk by roughly 78,000 square kilometres per year.
In June 2023 a study in Nature Communications, a journal, suggested that the Arctic’s first ice-free summer could come as soon as the 2040s, even if the world significantly reduces its greenhouse-gas emissions. As ice thins and cold-water shipping technology advances, Arctic waters will become more easily navigable. They are already getting busier, if from a low base.
The most popular shipping route in the Arctic is the NSR, which is controlled by Russia. Trade volumes along the route increased by 755% between 2014 and 2022. Russia wants traffic to increase ten-fold from 2022 levels by 2035.
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