In Depth: Arctic Shippers Navigate Choppy Commercial Waters Despite Geopolitical Push
On Oct. 13, the ship Istanbul Bridge docked at Britain’s largest container port, marking the first complete voyage along a Chinese company’s new sea freight route through the thawing Arctic.
The Istanbul Bridge made the trip from Ningbo Zhoushan Port in eastern China to the Port of Felixstowe on England’s east coast in just 20 days. The trip could’ve been shorter if the ship had been able to run at a faster speed, said Li Xiaobin, chief operating officer of Hong Kong-registered Sea Legend Line Ltd., which operates the route. “It could be done in 18 days,” Li told Caixin.
Even at 20 days, the route is far faster than existing options. Traditionally, trade between China and Europe has relied on shipping via the Suez Canal — a 40-day voyage through the Red Sea — or the China-Europe railway, which takes around 25 days through Russia.
But shipping cargo via these routes has gotten complicated in recent years. The rail route is hampered by growing tensions between Europe and Russia over the war in Ukraine that started in 2022. And ships using the Suez Canal run the risk of attacks by Houthi rebels in Yemen, which abuts the Red Sea.
Li said Sea Legend’s new Arctic route provides a more secure sea passage between China and Europe. His company is not alone. In late 2024, Ningbo Zhoushan Port Co. Ltd. (601018.SH -0.53%) started running a direct route from Zhoushan to Germany’s Wilhelmshaven port that takes 26 days.
These new sea routes exemplify a broader search for Arctic alternatives, driven by geopolitical tensions and Western sanctions that have disrupted traditional trade lanes for countries like China and Russia. However, even as melting sea ice makes the passage easier to navigate, the commercial viability of Arctic routes remains in question. A combination of safety risks, higher costs, a short shipping season and tepid customer demand has limited their appeal.
Commercial challenges
The Arctic routes’ economic value hinges on a combination of factors, including vessel type, port accessibility, navigable months and geopolitical risks, said a logistics provider familiar with China-Europe trade, noting shippers are currently most concerned about getting their cargo to its destination safely and reliably.
There are obstacles to both safety and reliability in Arctic shipping. For one thing, routes are only open four months out of the year, from July to November. “The sailing period we have chosen does not require icebreakers, but if we want to enter earlier or leave later next year, we may inevitably have to use icebreaker services,” Li said.
Even without icebreakers, floating ice remains a threat, along with poor visibility from heavy fog, he said.
Poor weather was the reason for the two-day delay in the Istanbul Bridge reaching the U.K. Li said on social media that it was due to a storm in the North Atlantic.
To help deal with the complications of shipping through the Arctic, Sea Legend has provided crew members with specialized training, modified its vessel’s structure and outfitted it with better radar, Li said.
Li said there is strong interest in Sea Legend’s new route, but acknowledged that “many are still watching and testing the waters.”
That caution can be found among the shippers themselves. On Sept. 29, the world’s largest container line, MSC Mediterranean Shipping Co. SA, announced “there is no operational reason for our fleet and standalone network to transit the Arctic, as we have the capacity and means to safely and reliably transport customer cargo globally without using the Northern Sea Route.”
The Northern Sea Route (NSR), one of the established Arctic corridors, remains underdeveloped for commercial shipping because safe navigation and transit cannot be guaranteed, MSC said.
MSC’s opinion on shipping through the Arctic chimed with that of Chen Feier, deputy director of the port and shipping research institute at Shanghai Jiao Tong University’s School of Ocean and Civil Engineering. Although some shipping companies are exploring new options, customers haven’t been shipping enough cargo through the Arctic to get the industry to invest in more routes.
Caixin has learned that the majority of cargo owners who shipped their goods on Sea Legend’s new Arctic route were Chinese.
New Arctic routes might be faster, but they stop at fewer ports along the way because they pass through sparsely populated regions, Chen explained. This limits their ability to compete with more established trade routes.
Li said that its Arctic route is tailored for high-value cargo that is either time- or temperature-sensitive, including electric vehicle batteries and energy storage systems. While its first stop is the U.K. — China’s largest European hub for e-commerce — the route will also include stops in Rotterdam, the Netherlands; Hamburg, Germany; and Gdańsk, Poland, he said.
The Arctic route, for now, is more expensive than traditional sea routes, though they are cheaper than rail. Hauling cargo around Africa’s southern tip costs less than $2,000 per 40-foot container, while transport via the traditional China-Europe railway costs about $7,500, according to the logistics provider.
For the Arctic routes to become more than a niche business, Chen said their prices will have to become more competitive with other sea routes.
Geopolitical interest
Global political changes have played a big role in driving interest in developing Arctic sea routes.
After the Russia-Ukraine war broke out in early 2022, many European countries barred Russian-affiliated ships or foreign vessels carrying Russian cargo from entering their ports.
The change led to a decline in cargo volumes along the NSR, dealing a blow to Russia, which relies on the route to export oil, gas and other products, as well as to collect revenue such as transit fees, according to Norway’s Centre for High North Logistics and High North News, a newspaper owned by the High North Center at Nord University.
Facing deepening isolation from the West, Russia has sought closer cooperation with Beijing on the Arctic, where more than half of the country’s coastline is located.
The U.S. added to the urgency to explore Arctic shipping with its increased scrutiny over the operators of the Panama Canal earlier this year.
In September, Chinese Foreign Ministry spokesperson Lin Jian acknowledged the growing potential for Arctic shipping routes to become important international trade channels. China will work with Russia, other countries in the Arctic, and any other interested party to develop Arctic shipping routes and protect the environment in the region, he said.
Sea Legend isn’t the only Chinese company shipping cargo through the Arctic. New New Shipping has been hauling cargo regularly between Shanghai and St. Petersburg since July 2023. New New Shipping plans to work with Russia’s state nuclear energy company Rosatom Corp. to design five container ships capable of traversing the Arctic year-round. The first vessel is expected to be up and running in 2027.
New New Shipping has also expressed interest in investing in a deep-water section of Russia’s Arctic port of Arkhangelsk. In July, the governor of Arkhangelsk Oblast said that the Chinese company is prepared to invest 200 billion rubles ($2.5 billion) in the project in exchange for a 30% equity stake in the port, according to media reports.
In October 2024, Sea Legend CEO Fang Yi said publicly that private companies are especially suited to exploration because of their flexibility and ability to make decisions quickly.
As climate change accelerates Arctic ice melt, more such explorers may follow. On Oct. 13, the day the Istanbul Bridge arrived in the U.K., Icelandic President Halla Tómasdóttir told Caixin that while it’s “too early to say” whether Iceland would explore working with China on Arctic logistics, the topic “certainly deserves discussion.”
As an Arctic state, Iceland has attracted growing Chinese interest, Tómasdóttir said. “I don’t know how this will evolve, but … a lot of shipping companies are looking at what this means for transporting goods and services.”
This could create “a new route that’s opening up in the world,” she said, adding “it’s definitely something to keep an eye on.”
Wang Xiaoqing, Bao Zhiming, Hou Wuting and Li Rongqian contributed to this story.
Contact reporter Wang Xintong (xintongwang@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)