Journal of Transport Geography 19 (2011) 977–983

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Journal of Transport Geography

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The Northern Sea Route versus the Suez Canal: cases from bulk shipping
Halvor Schøyen a,⇑,1, Svein Bråthen b,2
a
Vestfold University College, Department of Maritime Technology and Innovation, P.O. Box 2243, NO-3103 Tønsberg, Norway
b
Molde University College – Specialized University in Logistics, P.O. Box 2110, NO-6402 Molde, Norway

a r t i c l e i n f o a b s t r a c t

Keywords: The navigation distance via the Northern Sea Route (NSR) from a Northwest-European port to the Far East
Northern Sea Route is approximately 40% shorter compared to the route via the Suez Canal. The shorter distance may facil-
International bulk shipping itate more than a doubling of vessels’ operational energy efficiency performance. There is at present sub-
Green logistics stantial uncertainty in schedule reliability via the NSR. Unless the schedule reliability is improved, the
Energy efficiency
NSR should primarily be explored for bulk rather than for liner shipping. A major disadvantage with
Supply chain
the NSR is its seasonality. Shipping operations in the summer time via the NSR may already today be prof-
itable for minor bulk trades. Additional shipping routes may give more flexibility, and the NSR route
choice option may facilitate supply chain agility and adaptability.
Ó 2011 Elsevier Ltd. All rights reserved.

1. Introduction and vessel repair facilities may be located thousands of kilome-

As emissions into air from ships mainly correlate to travel
distances, shorter ocean shipping routes may result in less envi-
ronmental impact as well as corporate savings. The Northern Sea
Route (NSR) is the shipping route along the coast of Siberia, run-
ning from west of the Kola Peninsula through the Bering Strait in
the east. The present predominant shipping routes between Eur-
ope and Far East are via the Suez Canal and Cape of Good Hope
(South of Africa). The commercial annual shipping transit vol-
umes via the NSR and North West Passage are at present negli-
gible. This paper focuses on the NSR and the Suez alternatives;
on NSR because it is the shortest distance alternative, and on
Suez because it is a part of many present logistics structures
facilitating trade between Europe and Asia (see Fig. 1).
The five possible route choices between North West Europe and
the Far East and the approximate transport distances are given in
Table 1.
The Asia to Europe trade is today dependent on the shipping
route via Suez. The present alternative to Suez is via Cape of
Good Hope, more than double the distance compared to NSR
(Table 1). The uncertainty and the risk connected to the NRS
are, among other factors, due to limited accident preparedness
as a ship in distress might have difficulties in receiving assis-
tance from rescue teams and ice-breakers within a short time,
⇑ Corresponding author. Tel.: +47 33 03 1132; fax: +47 33 03 11 00.
E-mail addresses: hs@hive.no (H. Schøyen), svein.brathen@himolde.no (S.
Bråthen).
1
Molde University College, Norway.
2
Tel.: +47 71 21 42 97; fax: +47 71 21 41 00.
tres away (Kitagawa, 2008; Ragner, 2000b; Ho, 2009).
The decline of the Arctic sea ice and the changes in the political
environment enable the possible opening and commercialization
of the NSR for transits. From 1979 to 2006 the length of the ice-free
season in all seas and straits in the Russian Arctic increased in
average from 84 to 129 days (Rodrigues, 2008). Near real-time
sea ice monitoring and operational forecasting is available (Johann-
essen et al., 1996). Verny and Grigentin (2009) impart predictions
of a navigable Arctic Ocean all year-round in year 2015, including
the Russian Arctic coast.
Establishing the NSR as an alternative shipping route (see Sec-
tion 3) to Suez and Cape of Good Hope could contribute to more
flexible, agile and adaptable supply chains, because more route
choices will result in a higher capacity, and may reduce chances
for disruption and congestion.
Reduced fuel consumption for ship propulsion by sailing via the
shorter NSR route could emerge as a driver to improve energy effi-
ciency. This paper explores whether benefits achievable through
energy efficiency improvements due to a shorter route (the NSR)
might offset the disadvantages caused by uncertainty linked to
both the NSR and the route via the Suez Canal. The explorative ap-
proach is from the ship operator’s perspective, and includes possi-
ble consequences to other members in the supply chain. This study
focuses on bulk shipping (tramp) and not liner shipping. The main
reason for this choice is that in liner shipping, schedule reliability is
crucial (Notteboom, 2006). High schedule reliability can at present
not be achieved via the NSR, and this will be further elaborated in
Section 3.1.
The research questions are:

0966-6923/$ - see front matter Ó 2011 Elsevier Ltd. All rights reserved.
doi:10.1016/j.jtrangeo.2011.03.003
978 H. Schøyen, S. Bråthen / Journal of Transport Geography 19 (2011) 977–983

of which, we claim, are linked to route choice. There are two cate-
gories of services in shipping: tramp and liner trade (Ragner,
2000a). In a commercial and logistics perspective, liner shipping
business is very different from bulk shipping with respect to ser-
vice attributes. In our opinion, this affects the NSR’s potential for
each type of shipping in the short term, as long as the NSR service
level for the commercial shipping is not clear.

2.1. Supply chain uncertainty and risk categories

Knemeyer et al. (2009) claim that at present there is less ‘‘slack’’

available in supply chains to deal with catastrophic events. Chopra
and Sodhi (2004) list the supply chain risk categories disruptions,
delays, systems, forecasts, intellectual property, procurement,
receivables, inventory and capacity. Each of these nine categories
has corresponding conditions and events, which are caused by
states of environmental and behavioral uncertainty. In this study
we focus on the first two categories, i.e. disruptions and delays.
Three kinds of freight transport delays related to carriers were
identified by Fowkes et al. (2004): (i) delay resulting from an in-
creased journey time with fixed departure time, (ii) an increase
in the spread in arrival times for a fixed departure time and (iii)
schedule delay, where the departure time is behind schedule.
Byrne (2007) suggests dividing risk into uncontrollable risk,
Fig. 1. Overview on the Northern Sea Route and the Suez Route. Adapted from:
(Ragner, 2000b). somewhat controllable risk and controllable risk. He claims that
controllable events are often the source of most disruptions, and
the risks with the largest impact tend to be the most controllable
ones. Wilson (2007) identified the impact of transportation disrup-
Table 1
tions on supply chain performance. Transport disruptions on the
Ocean route alternatives between Northwest Europe and Far East, with respective
approximate navigation distances, in nautical miles (nm). 1 nm = 1.852 km. Adapted whole have received less attention than supply chain disruptions.
from: (Ragner, 2000a; Christensen, 2009). By definition, transport disruptions affect the flow of goods, and
can be caused by a natural disaster, labor dispute, dependence on
Route Panama North Northern Suez Cape
canal West Sea Canal of a single supplier, bankruptcy, terrorism, war and political instabil-
Passage Route Good ity. The results can be such as long lead-times, stock-outs, inability
Hope to meet customer demand and increased costs. There is a lack of
North West Europe 12,580 8600 7200 11,400 14,750 preparedness in most companies to handle crisis or disruptions
(London) to Far East (Wu et al., 2007). Lee and Whang (2005) claim the ocean segment
(Yokohama) of a supply chain to be most vulnerable to security threats (for con-
Relative distance 175% 119% 100% 158% 205%
tainerized goods), and they describe how Total Quality Manage-
ment (TQM) can be used to assure supply chain security.
(1) Which players in a global supply chain may gain from a The challenge entailed by disruption and delay risk assessment
shorter transport route? of commercial shipping on the NSR is threefold.
(2) What are the potential gains with respect to costs and Firstly, the scarce availability of data, making it more difficult to
potential CO2 emissions savings? both identify and quantify risks compared to the alternative ship-
(3) Does the NSR, as a possible complementary route to Suez, ping routes.
represent an opportunity to improve agility and adaptability Secondly, the identification of supply chain risk distribution is
in supply chains? challenging due to the globalization process, resulting in increased
complexity in supply chain management (Rodrigue et al., 2006).
Two exploratory cases from tramp shipping of raw materials in The attitude to risk among the supply chain partners may be differ-
bulk are presented here, where the potential gains in vessel fuel ent, e.g. it can be rooted in culture.
consumption and CO2 emissions are illustrated. Thirdly, the broad range and widespread nature of environmen-
The methodology used to collect the data throughout this study tal and behavioral uncertainties for both the NSR and Suez routes
consists of literature reviews, interviews, and e-mail and telephone makes the risk issue complex. For NSR, ice-season variations and
communication with shipping professionals. The next section is a future Russian policy to NSR infrastructure developments and for-
literature review focusing on supply chain (SC) uncertainty, risk eign vessel transits currently appear as decisive uncertainties.
distribution among members, corporate social responsibility Many of the coast states neighboring the Suez route are developing
(CSR) and energy use. The exploratory cases are presented in Sec- nations, and the Middle East is a politically tense area. Little re-
tion 3. Conclusions and suggestions for future research are pre- search has been done on the forecasting on Suez Canal throughput
sented in Section 4. of vessels and queuing delays (Griffiths, 1995; Mostafa, 2004).

2. Maritime transport routes and their impact on supply chain
management
Stopford (2009) identifies parcel size, price, speed, reliability
and security as factors for product differentiation in shipping; all
2.2. Lead times impacts on route choice
As shown in Table 1, the difference in navigational distance
from North West Europe (London) to the Far East (Yokohama) is
4200 nm, which at 15 knots sustained speed computes a difference
 H. Schøyen, S. Bråthen / Journal of Transport Geography 19 (2011) 977–983
Table 2
Comparing days at sea and vessel speeds.
North West Europe Equal speeds Days at sea
(London) to Far Corresponding Corresponding speeds
East (Yokohama) days at sea
via Suez 11,400 32 days 32 days
15 knots 15 knots
via NSR 7200 18 days 32 days
15 knots 9 knots
in time at sea of about 12 days, all other factors being identical for
the two routes.
A shorter distance via the NSR may result in either reduction of
the number of days at sea or in reduced speed, as shown in Table 2,
or a combination of both.
Table 2 shows that if the sustained speed for the Suez route is
15 knots, this voyage’s duration will be 32 days steaming, plus pos-
sible waiting time and time in port. Thirty two days steaming via
the NSR will only require 9 knots sustained speed.
Fuel consumption for propulsion per day is directly proportional
to the cube of the speed; the fuel consumption per distance unit is
directly proportional to the squares of the speed (Dykstra, 2005).
CO2 emissions are directly proportional to the amount of fuel con-
sumed (IMO, 2009). This entails that the daily fuel consumption at
9 knots is theoretically 22% of the consumption at 15 knots. The sav-
ings in consumptions can be relatively higher than the distance
reduction, while at the same time the days at sea would be as many
as via Suez. An identical number of days at sea entails that several
logistics attributes will be identical for the two route choices, making
conceptual exploration easier to conduct:
 As transit times for deep sea steaming are identical, cargo
inventory costs may also be assumed to be identical.
 Ship fuel consumption other than for propulsion is more or less
the same.
 Port loading and discharging time are the same, for the same
vessel type and size.
 Vessel positioning and timing for possible back haul cargo is
similar.
In the cases in Section 3, the differences in fuel consumption for
propulsion for the two routes will be explored, and the approach
explained above will be applied in the single leg calculations. Pos-
sible differences in voluntary and involuntary speed losses due to
for example wind, current, seaway, ice, congestion, waiting etc.
are neither discussed nor taken into account in the cases.
2.3. Corporate social responsibility (CSR) in the supply chain. GHG-
emissions and the impact on route choice
CSR is increasingly viewed as a necessity rather than an option
in corporate strategy. Logistics has a more prominent role in the
execution than in the formulation of CSR policies (Murphy and Po-
ist, 2002). Sustainability in the supply chain management context
is defined as the management of supply chains where all the three
dimensions of sustainability (economic, social and environmental)
are taken care of (Ciliberti et al., 2008; Kovács, 2008; Aronsson
et al., 2008). Companies face environmental demands, and have
also the means to require environmental responsibility from their
suppliers. The environmental demand varies, and may be dis-
rupted somewhere in the chain, mainly because lack of alignment
among SC members. Closer investigations on these environmental
demands (Kovács, 2008) found that disruptions arise at the inter-
face of different industries. Environmental demand spillover from
other industries means that customers may force suppliers to ac-
979
cept and enforce requirements, legislation and standards not tar-
geted on them.
Hargett and Williams (2009) explored the depth of integration
of CSR in a deep sea shipping company where social responsibility
and contribution to sustainable development is explicitly defined
in the company policy. They identified a tangible awareness of
environmental and corporate social responsibility, which was
translated into initiative and practice of some crucial elements.
For example, the company’s ocean fleet of ships were fuelled on
bunker oil with a maximum content of 1.5% sulfur, while the inter-
national shipping regulations (year 2007) allowed for a maximum
of 4.5%, except for some coastal areas (Emission Control Areas).
This 1.5% limit was set by the company itself at that time, which
entailed an added expenditure of about USD 10.5 million annually
(Wilhelmsen, 2007). Measuring CSR are however challenging
(Hargett and Williams, 2009).
CO2 emissions from commercial shipping are unregulated (Psa-
raftis and Kontovas, 2009). According to Eyring et al. (2009), the
most effective way to reduce fuel consumption and greenhouse
gas emissions from shipping is to reduce and optimize vessel speed
and to adjust ship routes. The meaning of ‘‘optimizing vessel
speed’’ is not clearly defined and may be different in a port-to-port
approach and in a supply chain context. In the latter there are more
actors involved, with possible conflicting interests, thus making it
difficult to establish the criteria required to conduct an optimiza-
tion. Speed reduces both the inventory costs for cargo in transit
and the required level of safety stock. The cases in Section 3 com-
pare the NSR and the Suez Canal route with the same number of
days at sea.
One leading professional in a deep sea shipping company (the
same company as in Hargett and Williams (2009) has stated that
the costs for burning fuel will reach 1000 $/mt (mt = metric ton-
nes) in a not too distant future. At present, the fuel price for Rotter-
dam deliveries is USD 469/mt for heavy fuel oil and USD 716/mt for
marine gas oils (Bunkerworld, 2010). Included in the USD 1000/mt
cost is the possible enforcement or policy to run on distillates, the
costs for technical installations on board, such as investments and
running expenses for exhaust scrubbers and catalysts, as well as
prospective Emissions Trading Scheme (ETS) or other taxation on
emissions. Hence, the fuel cost of USD1000/mt can be seen as com-
prehensive of ‘‘CSR surcharge’’ external costs (from global and local
environmental impacts), and will be the amount used in calcula-
tions in the cases in Section 3.
If the NSR is to be a feasible route in a CSR context, the global
benefits of reduced CO2 emissions from shipping and potential
other environmental benefits should compensate for the added
external costs caused by operating on the NSR. Examples of such
external costs in the Arctic sea are effects from increased air pollu-
tion (e.g. soot), deposition of various materials, and ship incidents
and accidents with oil spill in highly vulnerable areas. Ships fuelled
with LNG, a proven propulsion technology, might reduce the envi-
ronmental costs on the NSR.
Based on the research questions and the literature review we
formulate the following proposition.
Minor dry bulk is the shipping segment that will benefit most
from the NSR in the short term, due to suitable parcel sizes and less
time-sensitive commodities.
3. Minor and major bulks trade: identifying commodities, flows
and potential gains via the NSR
3.1. Background
The case in Section 3.2 is from the minor bulks trade (nitrogen
fertilizers). The company Yara International ASA (hereafter called
980 H. Schøyen, S. Bråthen / Journal of Transport Geography 19 (2011) 977–983

Case input data Route input data Trip costs for single leg

Commodity Distance Vessel charter rate

Port of departure and Speed Fuel costs

arrival

Per route alternative

Shipping unit costs

Fig. 2. Conceptual model for calculation of costs and ranking of energy efficiency. Adapted from (Hjelle, 2010).

Yara) is the world largest supplier of nitrogen fertilizers, and the cases. This ship will operate on the NSR only a part of the year,
case explores shipping costs between two ports where they have when NSR is free of ice, and in other trading areas worldwide the
operations. rest of the year, at any speed within its design interval (about 8–
The case in Section 3.3 is from the major bulk trades (iron ore). 15 knots). If the Arctic Ocean is navigable all year round the ship
The company Luossavaara–Kiirunavaara AB (LKAB) is a producer of may operate here continuously. The ship sailing via Suez is a stan-
upgraded iron ore products for the steel industry. The case explores dard design bulker, as given in e.g. Stopford (2009). Voyage calcu-
shipping costs for the transport via the export port in Norway to lations for one single leg fully loaded are done. All shipping and
China. cost calculations are based on free available information from the
For both cases ocean shipping appears to be the only practical data compilation performed as stated in earlier sections and done
transport mode choice alternative. by the authors. The calculations do not necessarily reflect Yara’s or
Fig. 2 illustrates the conceptual model that has been applied for LKAB’s actual or planned operations or costs.
the calculations in the cases. The model is based on the content in Possible backhaul cargo may be taken via any shipping route. It
Sections 2 and (Stopford, 2009). will affect both revenue and costs, and may improve profitability.
The assumptions for the calculations in the cases in Sections 3.2 Round trip voyages may be between the same two ports or for
and 3.3 are as follows: example in triangular trade. The NSR type bulk carrier is flexible
The vessel draught constraint for operating on the NSR on a reg- to deploy in any route choice, and will only trade on the NSR when
ular basis is 12.5 m. The vessel beam constraint to follow behind ice conditions and potential other navigation obstacles endanger
ice-breakers is 30 m (Ragner, 2000b). The NSR type bulk carrier safety or make this route choice unfeasible.
modified is an ice-classed special purpose new ship, capable of Knowledge about recent commercial navigation along the Sibe-
actually operating at slow steam speeds as stated in each of the rian coastline has been sparse. According to our knowledge, the Be-
luga Shipping transits yield the most updated available
Table 3a
information on commercial NSR operations and lead time varia-
Mineral fertilizer. Distances and sailing time for a single leg voyage via Suez and via
the NSR. Adapted from: (Ragner, 2000a; Christensen, 2009; UK Hydrographic Office, tions (Schøyen and Bråthen, 2010). In September and October
1980). 2009, two heavy lift project carriers belonging to the German ship-
ping company Beluga Shipping GmbH made a transit voyage
Porsgrunn–Shekou Distance Transit time Corresponding
(nm) (days) speed (knots) through NSR, demonstrating that such Arctic navigation is possible
for non-Russian shipping. The purpose of the voyage was to deliver
via Suez 10,320 30 14.4
via NSR 8280 30 11.5
heavy lift modules manufactured in South Korea to a power plant
Difference 2040 in Siberia. The voyage commenced in South Korea in July and
ended with exiting the NSR in September. The Beluga Shipping
2009 transit is considered by many as a pioneer voyage, as it is be-
lieved to be the first non-Russian commercial transit voyage ever.
Table 3b According to Verny and Grigentin (2009) and Ragner (2000a), the
Mineral fertilizer. Comparison of vessels particulars via Suez and via the NSR.
Russian Administration of NSR (ANSR) is ruling the access to
via Suez via NSR NSR. The initial step towards organising a vessel passage through
Ship type Handymax NSR type bulk the NSR is to obtain official permission at least 4 months in ad-
carrier modified vance, according to Liu and Kronbak (2009). However, according
(Stopford, (Ragner, 2000a) to Beluga (2009) as referred to in (Schøyen and Bråthen, 2010), ac-
2009)
cess to NSR was in 2009 somewhat more cumbersome, as the
Draft laden (m) 10.8 10.8 authorization was granted only after the Russian Ministry of Agri-
Cargo capacity (mt) 40,000 40,000
culture, the Russian Ministry of Defence, the Russian Secret Service
Speed in calm water (knots) 14.4 11.5
Daily fuel consumption for propulsion 31.3 15.9 and finally the Russian Government had approved the venture and
(mt/d) several hundred documents had been sealed.
According to
Section 3.1
Fuel consumption for propulsion, per 940 480 3.2. Shipping nitrogen fertilizer (NPK) from Porsgrunn (Southern
single leg trip (mt) Norway) to Shekou (Southern China)
CO2 emissions (mt) (IMO, 2009) 2928 1495
Relative energy efficiency ranking 51% 100%
Yara is a global company in terms of manufacturing and mar-
CO2 emissions saving via NSR is 1433 mt. keting, with operations in more than 50 countries. In the nitrogen
 H. Schøyen, S. Bråthen / Journal of Transport Geography 19 (2011) 977–983
Table 3c
Mineral fertilizer. Cost comparison for a single leg voyage via Suez and via the NSR.
via Suez via NSR
Vessel charter rate 600,000 $ 720,000 $
Fuel costs for propulsion 940,000 $ 480,000 $
Suez Canal charge 190,000 $
NSR charges 380,000 $
NSR added insurance premium 125,000 $
Sum costs 1,730,000 $ 1705,000 $
43.3 $/mt 42.6 $/mt
fertilizer value chain, 91% of the energy is consumed in production,
2% is for logistics and transport and 7% for application. Yara aims at
connecting its social responsibility to its core business (Yara, 2010).
An in-depth interview with the maritime logistics manager has
been carried out. Ocean freight of dry bulk is not considered to be a
core business; the company is not directly involved in ownership
or operations of dry bulk vessels. Dry bulk shipping is outsourced,
and they buy dry bulk freight capacity on Contract of Affreight-
ment (COA) terms, with a typical contract time horizon of one to
3 years. Yara does not define social responsibility as the main
determining factor when deciding its dry bulk shipping; this is
confirmed both by their webpage and by the interview.
Annually, Yara ships 300,000–500,000 mt of nitrogen fertilizer
(NKPs) in full shiploads from the production plant in Porsgrunn,
Southern Norway to Shekou in Southern China (close to Shenzen).
There is a vessel draft constraint of 10.8 m along the berth in Pors-
grunn, allowing for Handymax bulkers of approximate 40,000 mt
cargo load. For this particular trade, ocean freight in COA terms ac-
counts to 15–20% of the NKP cost and freight (CFR) value in South-
ern China.
NKPs may physically also be distributed in bulk inside contain-
ers, something which is done from Porsgrunn to markets in South
East Asia. The quantities of 300,000–500,000 mt to Southern China
are rather large compared to those bound for South East Asia. Be-
cause of the economy of scale effects, the maritime logistics
department has found that full Handymax shiploads outperform
containerized freight. The average cargo size for bulk shipments
of fertilizers in the spot market is 26,000 mt. Storage facility capac-
ities both at terminals for sending and receiving nitrogen fertilizers
are dimensioned for parcel size equal to a Handymax bulker. The
draught constraint for the berth in Porsgrunn and draught and
beam constraints on the NSR coastal route give the parcel size –
a large Handysize/small Handymax, whose hull and size character-
istics can be as those stated in Stopford (2009). The calculations re-
ported in Tables 3a–3c are done by the authors, and hence they do
not necessarily reflect Yara’s actual or planned operations or costs.
The following comments can be made about the table:
A cost difference of 25,000 $ (1.5%) is marginal.
Vessel charter rate: The average trip charter rate for Handymax
bulkers was for 2008 and 2009 in average about 20,000 $/day
(Platou, 2010), which for a 30 days trip gives 600,000 $.
Included in the vessel trip charter rate are capital costs and
operational expenses (opex). Voyage expenses, like fuel and
transit fees, are not included. The NSR type bulker is given the
rate of a Handymax, plus a surcharge for design and construc-
tion for ice-class, and for Arctic operations. Included in (Liu
and Kronbak, 2009) are 20% extra building costs for ice-class,
and we have used this number to estimate the market price
for a trip charter rate as well. We assume 20% added operational
expenses (opex) for NSR operations, which totally gives an esti-
mated added 20% higher trip charter than for an ice-classed
Handymax, compared to a standard Handymax. A combined
20% extra on a Handymax gives a trip charter rate of 24,000 $/
day; for 30 days 720,000 $.
981
Fuel costs for propulsion: As discussed in Section 2.
Suez Canal charge: Calculated with the Suez Canal Authorities
toll calculator (SCA, 2010)
NSR charges: According to Verny and Grigentin (2009), for com-
parable ships, NSR charges are about twice as expensive as the
Suez Canal charges: The NSR charges include escort of ice-
breakers during parts of the NSR voyage, if required by the Rus-
sian authorities. The total amount depends on the season of
passage and the type of ice-class on the cargo ship.
NSR added insurance premium: One of the larger marine insur-
ance companies indicate an added H&M and P&I premium of
125,000 $ per trip, for a GL E3 ice-classed Handymax bulker.
An assumption is that the ship operator can demonstrate
acceptable plans, crew competences and risk management sys-
tems for the voyage. Discounts on this amount will be granted if
there are several voyages, several ships (fleet) and if the ship
operator over time manages to carry out successful Arctic oper-
ations. Cargo insurance is not included.
At present, the ship operators selling capacity to Yara are not
willing to pass the Gulf of Aden due to hijacking risks, preferring
instead the route via Cape of Good Hope. According to the Suez Ca-
nal Authority’s pricing policy, the expected cost per mt should not
be very different from the Suez route. The relative energy efficiency
ranking will change by 3350 nautical miles longer than via Suez, as
via Cape of Good Hope, as stated in Table 1. A similar cost calcula-
tion is made for this case, with the same assumptions as above (see
Tables 3d–3f).
It is worth noting that the NSR speed of 8.7 knots is lower than
the economic speed for this combination of trip charter rate and
fuel price, as the costs increased compared to the 11.5 knots situa-
tion used when compared NSR to Suez.
To summarize this case, the NSR route is about twice as energy
efficient as the one via Suez. The NSR route is four to five times as
energy efficient as the one via Cape of Good Hope. The cost calcu-
lation indicates that NSR is competitive, given the stated
assumptions.
3.3. Shipping iron ore from Narvik (North Norway) to Qingdao
(Northern China)
About 16 million mt of iron ore are shipped annually out from
Narvik, a port located in Northern Norway. The ore is sold on
FOB terms. The ore mines are located in Kiruna (Northern Sweden),
where the iron ore is transformed into pellets or fines before being
transported to Narvik by rail. The port of Narvik is the selected ex-
port port for iron ore, as it is always ice-free, unlike the Baltic Sea
which is blocked by ice in the winter. This amount is shipped in
200–250 Capesize or Panamax shiploads. Qingdao in Northern Chi-
na is one of the country’s largest iron ore import ports. Compared
with Case 1, economies of scale will play a role. Larger ships can be
used on the southerly routes if the NSR coastal routes draught and
ice-breaker beam apply as constraints.
Iron ore is a low value commodity, its market value being typ-
ically 35 $/mt (FOB). The ocean freight cost is on average 10–20 $/
mt. Therefore, the transport costs amount to about 1/3 of the CIF
value. The average cargo size for bulk shipments of iron ore in
the spot market is 147,804 mt. In Table 4b we have selected the
Panamax size and not the larger type Capesize. This choice is sup-
ported by Laulajainen (2009), which indicate very few Capesizers
trade between Northwest Europe and The Far East. According to
Stopford (2009), the cost savings by using a Capesize rather than
a Panamax on a 11,000 nm round voyage are 3.6 $/mt. Iron ore is
always carried in bulk. Containerization is not an option due to
the high density of the material. The distance via the NSR is 42%
shorter than the route via Suez (see Tables 4a and 4c).
982 H. Schøyen, S. Bråthen / Journal of Transport Geography 19 (2011) 977–983

Table 3d Table 4a
Mineral fertilizer. Distances and sailing time for a single leg voyage. via Cape of Good Iron ore. Distances and sailing time for a single leg voyage. Adapted from: (Ragner,
Hope and via the NSR. Adapted from: (Ragner, 2000a; Christensen, 2009; UK 2000a; Christensen, 2009; UK Hydrographic Office, 1980).
Hydrographic Office, 1980).
Narvik–Quingdao Distance (nm) Equal transit time
Porsgrunn–Shekou Distance Equal transit time and corresponding speed
(nm) corresponding speed
via Suez 11,800 34 days, 14.4 knots
via Cape of Good Hope 13,670 40 days, 14.4 knots via NSR 6800 34 days, 8.3 knots
via NSR 8280 40 days, 8.7 knots Difference 5000
Difference 5390

Table 4b
Table 3e Iron ore. Comparison of vessels particulars.
Mineral fertilizer. Comparison of vessels particulars. via Cape of Good Hope and via
via Suez via NSR
the NSR.
Ship type Panamax bulk NSR type bulk
via Cape via NSR
carrier carrier
of Good
(Stopford, (Ragner, 2000a)
Hope
2009)
Ship type Handymax NSR type bulk Draft laden (m) 13.4 12.5
carrier modified Cargo Capacity (mt) 68,000 50,000
(Stopford, (Ragner, 2000a) Speed in open water (knots) 14.4 8.3
2009) Daily fuel consumption for propulsion 36.7 6.0
Draft laden (m) 10.8 10.8 (mt/d)
Cargo Capacity (mt) 40,000 40,000 According to
Speed in calm water (knots) 14.4 8.7 Section 3.1
Daily fuel consumption for 31.3 6.9 Fuel consumption for propulsion, per 1250 200
propulsion (mt/d) single leg trip (mt)
According to CO2 emissions (mt) (IMO, 2009) 3893 623
Section 3.1 Relative energy efficiency ranking 22% 100%
Fuel consumption for propulsion, per 1250 280
CO2 emissions saving via NSR is 3270 mt.
single leg trip (mt)
CO2 emissions (mt) (IMO, 2009) 3893 872
Relative energy efficiency ranking 22% 100%

CO2 emissions saving via NSR is 3021 mt. Table 4c

Iron ore. Cost comparison for a single leg voyage.

via Suez via NSR

Table 3f
Cost comparison for a single leg voyage. Vessel charter rate 1,224,000 $ 1156,000 $
Fuel costs for propulsion 1,250,000 $ 200,000 $
via Cape of via NSR Suez Canal charge 203,000 $
Good Hope NSR charges 380,000 $
Vessel charter rate 800,000 $ 960,000 $ NSR added insurance 125,000 $
Fuel costs for propulsion 1,250,000 $ 280,000 $ premiums
Suez Canal charge Sum costs 2,677,000 $ 1,861,000 $
NSR charges 380,000 $ 39 $/mt 37 $/mt
NSR added insurance 1,25,000 $
premium
Sum costs 2,050,000 $ 1,745,000 $ to explore the NSR for commercial transits, and not necessarily re-
51 $/mt 44 $/mt
duced lead time. Summer operations on the NSR may be profitable
already today, with reference to the costs per mt freight as shown
in cases 3.2 and 3.3. The NSR coastal route alternatives, with vessel
The cost calculation shows that NSR is competitive given the draught and beam limitation, are a hindrance for large vessels, and
stated assumptions. It should be noted that a larger vessel (e.g. a therefore achieve the same economies of scale in shipping as via
Capesize), via one of the southern routes will produce even stron- Suez.
ger economy of scale effects compared with a Panamax ship. This Environmental demands faced by the maritime shipping indus-
kind of vessel will probably also outperform the NSR type bulk car- try may emerge as one of the drivers for developing the NSR. In-
rier in terms of costs. Narvik and Qingdao allow for Capesize ves- creased knowledge about environmental benefits and costs for
sels. In terms of energy efficiency performance, Tables 4a - 4c both the NSR and Suez routes will probably be important factors
supports the view that the NSR with its 50,000 mt parcels will be in this respect.
competitive also with respect to Capesize carriers going via one It may be difficult to do assessments and quantifications of the
of the southern routes. relevant aspects of supply chain transport risks via both the NSR
and Suez. Combined with the fact that added shipping alternatives
4. Conclusions and future research gives more route alternatives and flexibility, the NSR option may
possibly increase supply chain agility and adaptability. Bulk ship-
Due to uncertainty in schedule reliability on the NSR in the ping on the NSR route may be a prosperous market segment for
short term, this route should first be of viable interest and explored niche shipping companies. For innovators and risk takers in ship
for bulk shipping (tramp), rather than for liner shipping. The gains operations and technology, the NSR appears as a possible market
from shipping operations on an ice-free NSR appear to be reduced niche and opportunity to gain market power.
number of days at sea and more than doubling of the vessel fuel effi- This paper has an empirical approach, where elements from
ciency. For the corporate players in bulk shipping of relative low logistics management theory related to supply chains are used to
value raw materials, cost savings for fuel may appear as a driver discuss how NSR can contribute to supply chain efficiency. The
 H. Schøyen, S. Bråthen / Journal of Transport Geography 19 (2011) 977–983
NSR has a potential for shortening lead times and reducing energy
consumption in the supply chain. The case studies shed light on
these issues, where the existing body of literature appears to be
scarce. For this reason the theoretical contributions are limited.
However, the paper combines findings in the literature about
transportation risk and uncertainty with theory related to CSR
and environmental demand at the company level. Furthermore, a
limitation of this paper is the confined extent of primary data col-
lection, exemplified by the fact that the Russian authorities have
not been approached other than via the Internet. As pointed out
by Yin (2009), generalizations of results from case studies could
be made to theory. We believe that this paper is a contribution
to gain knowledge about supply chains comprising deep sea bulk
shipping.
We suggest that future research in a supply chain management
context should be carried out along the following lines.
Firstly, further research is needed to assess weather and ice con-
ditions in the Arctic Ocean, the level of certainty and uncertainty,
and objective risks. Budget costs for H&M and P&I insurance pre-
miums are shown in the cases in Sections 3.2 and 3.3. However,
as these premiums only cover incidents and accidents caused by
the ship, only a limited extent of cost consequences rooted in the
nine categories of risk stated in Chopra and Sodhi (2004) are in-
cluded in the calculations. In future research the assessment of
all nine risk categories and possible available insurance premium
market prices should be explored.
Secondly, how does the organisation and the nature of relation-
ships (e.g. outsourcing, JIT and time-based distribution) between
manufacturing industry and the various bulk shipping segments
influence the demand for developing the NSR for transits? The out-
sourcing of transport, combined with the fact that energy effi-
ciency elsewhere in the supply chain (especially production) is
more influential to the overall energy efficiency, might influence
the cargo owner’s awareness, knowledge and incentives to target
green logistics, and this should be further explored. Environmental
demand from the shipping industry itself, due to e.g. shipping reg-
ulations (like ETS) or via spill over (ref. Section 2) from other indus-
tries, may influence the development of the shortest ocean
transport route.
Acknowledgements
The authors appreciate comments received on this paper from
two anonymous referees. All remaining errors are the authors’
alone.
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