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OM in the News: As Ice Melts, Shippers Look to Arctic Route

June 14, 2019

An Sovcomflot icebreaking supply vessel moored in Murmansk, Russia.

As we note our discussion of Transportation Mode Analysis (Example S4) in Supplement 11 (Supply Chain Management Analytics), speed of transportation is critical.

So it is no surprise, writes The Wall Street Journal (June 6, 2019), that Arctic routes are drawing greater attention as the global climate warms and polar ice recedes, potentially opening new paths between Asia and Europe. The mostly frozen Northern Sea Route (NSR) seaway is considered a likely commercial lane because it already is used in warmer seasons to move part of Russia’s extensive energy exports.  Russia is promoting the lane as the shortest distance to ship containers from Asia to Europe, and a possible rival for routes that now take ships through the Suez Canal.

Russian shipping giant Sovcomflot tankers crossed the NSR more than 100 times last year, handling crude exports from Gazprom’s port oil facility in northern Russia. Crude tankers account for about 45% of ship traffic on the NSR. “The driver for transportation economy is basically distance, and the NSR cuts sailing time by around 20% compared to the route across the Suez,” says the CEO of Sovcomflot. “Cargo will always find the fastest way to move.”

Denmark’s A.P. Moller-Maersk, the world’s largest container ship operator, sent a small container vessel across the NSR last summer from Vladivostok to St. Petersburg. The Venta Maersk saved more than 10 days of sailing time compared with travel via the Suez.

Classroom discussion questions:

  1. What country will lose out if the NSR is successful more months?
  2. Is the time it takes to ship from China to the U.S. becoming an issue for suppliers?



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