The Chinese Haijie Shipping Company is launching a regular, albeit seasonal, China-Europe maritime transport service across the Arctic Sea. The route aims to shorten travel times and cut (inventory) costs. Some see it as a competitor to the Middle Corridor and conventional maritime routes, others mostly see obstacles.
In a first iteration of the new Arctic service, the Istanbul Bridge ship will depart China on September 20. It will connect Qingdao, Shanghai and Ningbo to Felixstowe, Rotterdam, Hamburg and Gdańsk. By crossing the Arctic, travel times are cut down to just 18 days. That is much quicker than the 40 days needed to pass the Suez canal and the approximately 25 days needed for China-Europe rail.
Industry experts and Chinese media, such as the South China Morning Post, have highlighted the Arctic route’s benefits. Some argue that the icy but thawing north could help China and Europe diversify away from conventional but high-risk routes. Moreover, shortening travel times could accelerate capital turnover and speed up the delivery of electronics and pharmaceuticals, for example.
… could it really, though?
However, there are also skeptics. And those skeptics might, at least for the time being, be right. Some of the world’s biggest shipping companies themselves fall into that camp. A representative of Maersk points to the limited time window for Arctic shipping: only in summer is the route ice-free and navigable. Still, it is not possible to know exactly when that time window opens and closes, and even in summer there might still be ice blocking the way.
As a consequence, you’d need ice breakers from the area to be available at all times. Since most of the route runs through Russian waters, that translates into a need for Russian vessels. Yet, because of sanctions, Maersk does not do any business with Russia, making the use of their ice breakers an impossibility.
Even without those sanctions, the remoteness of the Russian north presents a challenge. For safety reasons, you need to have proper infrastructure nearby (also including ice breakers), which is limited in the sparsely populated coastal areas. A structural limitation in the capacity of the Arctic route.
Far away from the existing network
Moreover, the Arctic route bypasses key hubs, such as in Singapore, Oman and Gibraltar. A Financial Times source told the publication earlier this year that that could be a reason why Maersk is uninterested in making the journey across the Arctic. The company heavily relies on its hub network.
“We have for instance in recent years invested more than three billion dollars in infrastructure (ports/terminals) on our Asia-Europe service”, a Maersk representative explains. “It’s an advanced network with transshipment capabilities as well in between the starting and end point of the services.” The Arctic route is not a part of that global network.
Lastly, there are environmental issues. Large shipping companies signed a deal in 2019, promising not to operate on the Arctic route to avoid polluting the area. CMA CGM underlined this at the time: “The use of the Northern Sea [Arctic] Route will represent a significant danger to the unique natural ecosystems of this part of the world, mainly due to the numerous threats posed by accidents, oil pollution or collisions with marine wildlife.”
The shortest possible route
Even if the sanctions against Russia were no issue, the full-length Arctic route would not be the most beneficial route to take. Rail freight consultant Xavier Wanderpepen points out that the shortest way from China to Europe going through the Arctic would be the Shanghai-Mongolia-Arkhangelsk-Europe route. Note that the majority of that route is land-based. It adds up to around 10,000 kilometres, compared to the entire Arctic route passing through the Bering Strait (16,000 kilometres) or around the Cape of Good Hope (26,000 kilometres).
In other words, when purely looking at distance, the Arctic route is most competitive when transiting most of Russia overland. But even that route via Arkhangelsk seems unfeasible. “At first glance, the Arkhangelsk route seems attractive. However, it remains blocked for much of the year due to the freezing of the polar seas”, says Wanderpepen.
Even a shorter maritime leg would still present the same weather problems as the long way around. “Implementing a solution that works only six months a year, and then stopping everything, is unrealistic”, Wanderpepen adds.
Chaotic transit times
Despite the favourable short length of the route, the rail infrastructure is not in place to accommodate freight flows. For example, there are no regular container trains in Russia to Arkhangelsk. “Transit times would therefore be chaotic, as containers are transported mixed with other cargo. The same issue exists for shipping between Arkhangelsk and Europe: there are no established container shipping lines on this route.”
In other words, a Chinese operator would have to charter a vessel for a couple of dozen containers and face that same challenge to book a train in Russia. “Moreover, there would be no return back cargo to balance costs, meaning clients would pay not only for the loaded trip but also for the empty return, both by rail and by sea”, Wanderpepen adds.
The need for specially chartered ships and trains contrasts with regular lines, says the rail consultant. Regular lines offer much more competitive prices.
Haijie Shipping Company’s offer is seasonal, likely until November. That reflects another issue with this route, according to Wanderpepen. If temperatures drop below -10°C or -20°C in winter, which happens every year, some goods cannot withstand the cold. That includes plastics and electronics.
Traditional success and the limitations of the Arctic
“The success of the maritime route between China and Europe is due to regular ship departures – every day – with vessels that can carry 7,000 to 8,000 units of 40-foot containers. This scale keeps prices very low”, explains Wanderpepen.
In other words, weather, politics and infrastructure conditions make both the Arkhangelsk and the Arctic route around Russia unattractive, if not outright impossible. Even if Chinese companies not bound by sanctions start operations, those will be impacted by unpredictable weather conditions and limited infrastructure. The service offering will remain restricted in scope.
The Arctic route is therefore unlikely to be able to compete with the traditional shipping routes and the Middle Corridor. Both offer more reliability, predictability and infrastructure, even if the Middle Corridor is still very much in development.
The governor of Arkhangelsk has said that the Arctic route could be navigable year-round by 2030, which could help relieve some of Russia’s most congested railways.