Exploring the Northern Sea Route: A Shortcut or a Risky Venture?

The world’s maritime routes have long been established. To send goods from Asia to Europe, the conventional path involves navigating through the South China Sea and the Strait of Malacca into the Indian Ocean, then passing through the Red Sea and the Suez Canal to reach the Mediterranean. A significant portion of global maritime trade relies on this route. The United States has maintained a strong naval presence in the Indo-Pacific and the Middle East, partly to ensure the safety of this maritime corridor.

However, this order is now facing cracks. Attacks on vessels by Houthi rebels in the Red Sea and rising military tensions in the Middle East, particularly around the Strait of Hormuz, are undermining the safety of existing routes. Some shipping companies are opting to bypass the Suez Canal by sailing around Africa’s Cape of Good Hope. This detour increases transportation times and raises fuel and insurance costs, making it difficult to predict when shipments will arrive.

In this context, China is taking the lead in developing the Northern Sea Route. Last year alone, it made 23 voyages along this path. The Northern Sea Route, specifically the Northeast Passage, aims to become a new logistics axis for shipping goods from Europe along Russia’s northern coast. This month, Sealegend Shipping has already launched the world’s first weekly regular container service between China and Europe, moving beyond trial voyages.

South Korea is also venturing into the Northern Sea Route. On the night of August 22, the 2,758 TEU container ship 'PanStar Acro' departed from Busan Port, marking the first instance of a South Korean shipping company operating a container vessel along this route. The PanStar Acro is expected to enter Arctic waters around August 30 and pass through by September 7. It will then visit Felixstowe in the UK, Rotterdam in the Netherlands, and Gdansk in Poland before returning to Busan around October 5. This route is estimated to be about 7,000 kilometers shorter than the traditional Suez Canal route, potentially reducing travel time to Europe by approximately 10 days.

The Ministry of Oceans and Fisheries plans to gather data from this voyage to assess whether the Northern Sea Route can offer the economic viability and safety needed to replace existing routes. They will analyze cargo acquisition, punctuality, and insurance and financial costs to outline the necessary steps for establishing a regular service by 2030.

The Northern Sea Route has not garnered much interest in the shipping industry until recently. The primary reason has been the presence of sea ice, which makes navigation difficult without icebreakers. Additionally, the decline in international oil prices has diminished the fuel savings associated with shorter distances. However, interest in the Northern Sea Route has surged due to two converging factors. One is climate change; global warming is rapidly reducing Arctic sea ice, creating conditions for large vessels to pass during the summer months. According to the Centre for High North Logistics in Norway, 88 vessels passed through the Northeast Passage last year, with 103 transits recorded. This is more than double the figures from just two to three years ago, which were 43 in 2022 and 97 in 2024.

The other factor is geopolitical instability. Attacks on vessels by Houthi rebels in the Red Sea have led major shipping companies to choose the longer route around Africa’s Cape of Good Hope instead of the Suez Canal. Coupled with military tensions in the Middle East surrounding the Strait of Hormuz, the global shipping industry is acutely aware of the risks of a structure where one blockage can disrupt the entire system. A few days' delay in shipping can halt production lines in automotive parts factories. In this environment, companies prioritize not the cheapest rates but rather a 'second route' that can be accessed immediately in times of crisis.

Sealegend Shipping in China plans to operate seven container ships for eight voyages from August 15 to October 3. The transportation time is expected to be reduced by about 15 days compared to the Suez route, taking 20 to 22 days. The cargo includes high-value items such as electric vehicles, lithium batteries, and solar-related products that China exports in large quantities to Europe. This indicates that China is testing the Northern Sea Route not merely as a transport route for raw materials but as a full-fledged container logistics network.

In 2018, China declared itself a 'near-Arctic state' through its Arctic policy, committing to participate in the economic, scientific, and navigational development of the Arctic. China has three strategic calculations: diversifying its logistics network to reduce dependence on bottlenecks like the Strait of Malacca, enhancing energy cooperation with Russia amid Western estrangement following the Ukraine war, and strategically positioning itself by accumulating operational experience, port expertise, and icebreaker technology before the route fully opens. China is sending not only container ships but also icebreakers and research vessels to the Arctic, expanding its connections with ports like Murmansk in the Russian Arctic. Rather than waiting for the route to open, China is actively participating in the process of its development.

However, South Korea faces a challenge that China does not. Most of the Northeast Passage falls under Russian jurisdiction, meaning South Korea must seek cooperation from Russia to obtain the necessary permits for the PanStar Acro to pass through the Arctic route. This situation raises the potential for conflict with Western allies regarding sanctions against Russia. According to a Reuters report, a European diplomat noted that the West is trying to isolate Russia due to its war in Ukraine and is reluctant to engage with it. These concerns have reportedly been communicated to the South Korean government through diplomatic channels.

The issue extends beyond mere discomfort. Experts in Arctic shipping warn that if unexpected situations arise, such as becoming trapped in ice, South Korea may need to request assistance from Russia, which could trigger complications regarding sanctions. This means that the choice of a single vessel's route could escalate into a diplomatic and security issue.

South Korea's challenge lies in balancing its relationships with Western allies while navigating a route that cannot be accessed without Russian cooperation. This situation contrasts sharply with China's ability to leverage its close ties with Russia without significant constraints. A PanStar official told Reuters that China is trying to secure a 'first-mover advantage' in this route, making South Korea's operations even more urgent. However, how the South Korean government balances this urgency with concerns about friction with the West remains a significant question raised by this voyage.

This raises a natural question: if the Northern Sea Route is so attractive, why aren’t major global shipping companies like Maersk, CMA CGM, and Hapag-Lloyd actively participating? The answer stems from the same roots as South Korea's dilemma. First is the Russian risk. A significant portion of the Northern Sea Route runs along the Russian coast, requiring permits from Russian authorities and assistance from icebreakers. However, Russia is under Western sanctions. While using the route itself cannot be simplified as a violation of sanctions, the process of engaging with Russian entities poses risks that could affect insurance, reinsurance, and financial transactions. Major shipping companies, which are intertwined with financial institutions, shippers, and insurers worldwide, are particularly sensitive to these risks.

Second is environmental and safety concerns. The Arctic Ocean is characterized by shifting ice and rapidly changing weather, making rescue operations difficult in the event of an accident. GPS and communication can become unstable, and there is insufficient infrastructure for ports or repair and rescue facilities. Third is economic viability. While the route may allow for a 20-day journey, that does not necessarily mean it is cost-effective. If vessel sizes are limited, unit transportation costs increase, and when factoring in icebreaker support and insurance premiums, the financial burden grows. A study by former naval officer Choi Hye-won published in the journal 'Ocean Policy Research' found that the unit transportation costs for the Northern Sea Route may actually increase. Choi also pointed out that the Northern Sea Route is not a year-round route but rather a seasonal route for container ships that is only navigable during the three summer months when the ice melts.

Under these conditions, South Korea is just beginning its journey. PanStar, selected as the trial voyage operator through a government-supported bidding process, has acquired a container ship from HMM and modified it for polar navigation, crewed by 20 South Koreans and Indonesians. The Lee Jae-myung administration aims to use this trial voyage as a stepping stone to establish Busan as a global shipping hub and to create a regular commercial route along the Northern Sea Route by 2030.

The primary focus of this trial voyage will be to verify actual economic viability. Just because the distance is shorter does not mean costs will decrease. Fuel costs, icebreaker support fees, insurance and reinsurance costs, payments to Russia for navigation-related expenses, and port waiting times must all be considered to determine the true cost. The second focus is punctuality. If schedules are delayed by three or four days due to ice and weather conditions, the actual arrival time becomes far more critical to shippers than the stated '20 days.' The third focus is return cargo. While there may be sufficient cargo to fill the ship when heading to Europe, a lack of return cargo will inevitably reduce profitability as a regular route. Expanding cargo networks to include Russia, Northern Europe, and Central Asia is essential for creating two-way traffic.

South Korea cannot simply close the gap by following in China's footsteps. While China is already building a network involving ships, ports, energy, and capital, South Korea is still at the stage of confirming the commercial viability of a single vessel. If the Northern Sea Route, the shortest maritime path connecting Asia and Europe, becomes active, Busan Port, located along this route, is likely to gain recognition as a new center for maritime logistics. Therefore, establishing a logistics ecosystem centered around Busan should serve as the starting point for the government's goal of becoming a 'global maritime power' by securing the Northern Sea Route. The relocation of the Ministry of Oceans and Fisheries to Busan in December last year, the first year of the current administration, was a strategic move to realize this national agenda.

South Korea faces variables that China and European countries do not, particularly the Korean Peninsula. For a ship departing from Busan to enter the Northern Sea Route, it must pass through the East Sea. Heightened military tensions around the Korean Peninsula could jeopardize the safety of this segment. If the threat from North Korea necessitates a detour outside the Japanese archipelago, the distance-saving benefits of the Northern Sea Route would diminish. Thus, South Korea's strategy for the Northern Sea Route cannot be completed solely through maritime and fisheries policies. The interplay of relations with the West, negotiations with Russia, and the North Korean variable necessitates a coordinated approach across diplomatic, security, industrial, and energy policies.

The debate surrounding the Northern Sea Route features two extremes: the optimism that the era of the Suez Canal is ending and the skepticism that ice and sanctions render it impractical. What South Korea needs is neither exaggerated rosy projections nor hasty pessimism regarding the Northern Sea Route. The trial voyage should serve as a sober experiment to verify costs, risks, punctuality, cargo, sanctions, and security issues, ultimately linking these findings to a national logistics strategy.

Whoever can transform the new maritime route into a sustainable industry and national logistics network will be at the forefront of the competition over the Northern Sea Route.

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