The Arctic Route: A New Shipping Lane Bringing Multiple Values to China

In the grand landscape of global trade, China is playing a significant and remarkable role in the development and utilization of the Arctic route, achieving many impressive results. In terms of the significant reduction in transportation costs, the Arctic route, especially the Northeast Passage, has a much shorter voyage compared to the traditional Suez Canal route, with a reduction of 30% to 50%. For example, the traditional route from Shanghai to Rotterdam is approximately 18,000 kilometers, while the Arctic route is only 16,000 kilometers. The fuel cost for a single trip can be saved by $3 million. According to the calculations of COSCO Shipping, it saves Chinese enterprises more than 1 billion yuan in tolls every year, and it can also reduce the single-passage toll by about $500,000 by bypassing the toll collection channels. Moreover, the shorter voyage has reduced fuel consumption by 30% to 40%. For instance, the fuel cost of the Shanghai-Rotterdam route has decreased from $1.8 million to $1.3 million. Since 2013, the cumulative reduction in fuel consumption through the Arctic route has reached 8,948 tons, with a reduction of 27,000 tons of carbon dioxide emissions, and the cost savings have exceeded 90 million yuan. Overall, the comprehensive cost of a single voyage on the Arctic route is about 26% lower than that of the traditional route. Taking COSCO SHIPPING Holdings as an example, the comprehensive revenue per standard container is $200 to $300 higher than that of the traditional route, and the transportation efficiency of fresh cold chain has been increased by 40%, indirectly reducing the cargo damage rate.

The time efficiency also creates huge value for business. The Arctic route has compressed the transportation time of the Asia-Europe route from the traditional 35 days to 23 to 28 days, a reduction of 30% to 40%. For example, the "Tian'en" of COSCO Shipping only takes 23 days from Shanghai to Rotterdam, 12 days faster than the traditional route, helping Yiwu small commodities to preempt the European Christmas market in advance, and reducing the fresh produce spoilage rate by 40%. For time-sensitive goods with high added value such as electronic products and automobiles, the turnover rate has increased by 15% to 20% through the Arctic route, and the marginal benefit can reach 20% of the freight. The Yamal LNG project in cooperation between China and Russia is transported via the Arctic route, saving 7 days per single voyage, which effectively guarantees the stability of the energy supply chain.

From the perspective of strategic cost optimization and risk diversification, the Arctic route is of great significance. It helps China reduce its energy dependence on the Strait of Malacca from 80% to 50%, diversifying geopolitical risks. During the Red Sea crisis in 2024, when the Suez Canal was congested, the Arctic route became a reliable alternative. At the same time, China imports resources such as liquefied natural gas and minerals from Russia and Nordic countries through the Arctic route, reducing its dependence on Middle Eastern energy. For example, the Yamal project transports an average of 16.5 million tons of liquefied natural gas to China every year through the Arctic route, saving 60% of the transportation cost. Northern ports such as Tianjin and Dalian have ushered in development opportunities due to their proximity to the Arctic route, and the status of Shanghai Port has been further consolidated due to its geographical advantages. The Arctic route has promoted the northward shift of the global trade center of gravity, forming an "Arctic Circle economic belt".

Of course, the development of the Arctic route also faces challenges. Economically, in the initial stage, it is necessary to bear the high cost of building icebreakers, with the cost of a single icebreaker being about $230 million. The insurance cost is twice as high as that of the traditional route, and the cost of converting high ice-class ships is about $8 million per ship, which requires large-scale operation to share. In terms of the game of international rules, Russia imposes mandatory pilotage fees and channel usage fees on the Arctic route. However, China and Russia have obtained a 15% rate reduction through energy cooperation. China has also promoted the Beidou Navigation Satellite System to achieve centimeter-level positioning in the Arctic, reducing its dependence on GPS.

The cost savings brought by the Arctic route to China are not only direct economic benefits, but also create long-term strategic value by shortening time, diversifying risks, and optimizing the trade structure. With the ice-free period expected to be extended to half a year (it is expected to be navigable for 6 months in 2030) and the breakthrough of nuclear-powered icebreaker technology, the Arctic route is likely to become a key fulcrum for China to participate in the reconstruction of global trade rules and play a more important role in the future global trade pattern.