The world’s shipping routes have long been established. To send goods from Asia to Europe, the conventional path involves traversing the South China Sea and the Strait of Malacca, entering the Indian Ocean, passing through the Red Sea and the Suez Canal, and finally reaching the Mediterranean. A significant portion of global maritime trade relies on this route. The United States has maintained a formidable naval presence in the Indo-Pacific and the Middle East, partly to ensure the safety of this maritime corridor.
However, cracks are beginning to appear in this order. 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 lengthens transport times and increases 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 vessel, PanStar Acro, departed from Busan Port, marking the first instance of a South Korean shipping company operating a container ship along this route. The PanStar Acro is expected to enter Arctic waters around August 30 and pass through the route by September 7. It will then visit Felixstowe in the UK, Rotterdam in the Netherlands, and Gdansk in Poland before returning to Busan New Port around October 5. This route is anticipated 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 tasks for establishing a regular route by 2030.
Why Look North Now?
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 physical conditions that allow 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 number from just two to three years ago, with 43 transits 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 surrounding the Strait of Hormuz, the global shipping industry is acutely aware of the risks of a structure where “if one route is blocked, the entire system is shaken.” A few days of delay can halt production lines in automotive parts factories. In this environment, companies prioritize not the cheapest freight rates but rather a “second route” that can be quickly accessed in times of crisis.
China is Already One Step Ahead
Sealegend Shipping in China plans to operate seven container ships for eight voyages from August 15 to October 3. The transport time is expected to be 20 to 22 days, about 15 days shorter than the Suez route. The cargo includes high-value products such as electric vehicles, lithium batteries, and solar-related items that China exports in large quantities to Europe. Given that the predictability of delivery times is more critical than freight rates for these goods, China is testing the Northern Sea Route as a full-fledged container logistics network rather than merely a transport route for raw materials.
In 2018, China defined itself as a “near-Arctic state” through its Arctic policy, declaring its intention 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 and the Suez Canal, strengthening energy cooperation with Russia amid the West’s distancing 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, it is actively participating in the process of creating it.
South Korea's Dilemma: Cooperation with Russia is Essential
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 and obtain the necessary permits for navigation. According to a report by Reuters, this requirement raises the possibility of friction with Western allies. 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 during the voyage, South Korea may need to request assistance from Russia, which could trigger complications regarding sanctions against Russia. 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, including the United States, while entering 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” on 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 challenge posed by this voyage.
Why Aren't Global Shipping Giants Taking Action?
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 for insurance, reinsurance, and financial transactions. Major shipping companies, which are intertwined with financial institutions, shippers, and insurers worldwide, are likely to be more 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. The claim that the route can be traversed in 20 days does not necessarily mean it is cost-effective. If vessel sizes are limited, unit transport 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 transport costs for the Northern Sea Route may actually rise. Choi also pointed out that the Northern Sea Route is not a year-round route but rather a seasonal route where container ships can only navigate for about three months during the summer when the ice melts.
South Korea's First Step: What Needs Testing?
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 develop Busan into a global shipping hub and establish 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 costs, insurance and reinsurance premiums, navigation-related fees paid to Russia, and port waiting times must all be considered to determine the true cost. The second focus will be 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 will be on 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. This necessitates expanding cargo networks to Russia, Northern Europe, and Central Asia to create bidirectional traffic.
Making Busan a Hub for the Northern Sea Route
South Korea cannot narrow the gap by merely following China. While China is already creating a network involving ships, ports, energy, and capital, South Korea is still at the stage of confirming the commercial viability with just one vessel. If the Northern Sea Route, the shortest maritime path connecting Asia and Europe, becomes active, Busan Port, located along this route, is expected to gain attention as a new center for maritime logistics. Therefore, building 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 a foothold in 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.
Optimism and Skepticism
South Korea faces variables that China and European countries do not. The vessel departing from Busan must pass through the East Sea, and rising 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 instead of passing through the East Sea, the distance reduction 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 Northern Sea Route is opening, and the skepticism that ice and sanctions render it impractical. What South Korea needs is neither exaggerated rosy forecasts 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 for the Northern Sea Route.
Lee Soo-wan's Major Credentials
- Reporter for The Korea Times
- Senior Correspondent for Reuters
- Editor at Reuters
- President of the Seoul Foreign Correspondents' Club
- Global Head of Ajou Economic News
- Editorial Writer for Ajou Economic News
* This article has been translated by AI.
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