STUDY ON ECONOMIC EVALUATION OF NORTHERN SEA ROUTE: TAKING VOYAGE OF YONG SHENG AS AN EXAMPLE

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1 0 STUDY ON ECONOMIC EVALUATION OF NORTHERN SEA ROUTE: TAKING VOYAGE OF YONG SHENG AS AN EXAMPLE Hui Zhao Department of Transportation, Shipping and Logistics School of Naval Architecture, Ocean and Civil Engineering Shanghai Jiao Tong University 00 Dongchuan Road, Shanghai, P.R. China Tel: - Fax: -; zhaohuimtfy@.com Hao Hu, Corresponding Author Professor and Head of the Department of Transportation, Shipping and Logistics School of Naval Architecture, Ocean and Civil Engineering Shanghai Jiao Tong University 00 Dongchuan Road, Shanghai, P.R. China Tel: -0 Fax: -; hhu@sjtu.edu.cn Word count:, words text + tables/figures x 0 words (each) =, words Submitted to the Transportation Research Board rd Annual Meeting for Presentation and Publication Submission date: November,

2 Zhao, Hu ABSTRACT Global warming and retreat of ice cover in the Arctic region have made it possible to navigate via Northern Sea Route (NSR) which will be a new passage in international shipping network and bring changes to the maritime industry. However, the number of vessels choosing the NSR remains extremely limited due to the variability of ice conditions and uncertainty of the economic feasibility of the route. In order to evaluate the potential and feasibility of NSR, this paper presents the real voyage of YONG SHENG which passed through the NSR in. The navigation conditions, administration and icebreaker escorting service of the route are firstly analyzed. The voyage of YONG SHENG is then evaluated and compared with the conventional Suez Canal Route (SCR) in terms of cost and environmental benefit. It is concluded that the total cost of a voyage is saved and the carbon emission is also reduced by using NSR. Although the limited navigable time and uncertain conditions may undermine the advantage of NSR, it is reasonable to consider NSR as an alternative route to save time and cost, which makes the new route important to the competitiveness shipping companies. The primary conclusion of this paper can assist ship owners or operators to make strategies on NSR service. Keywords: Northern Sea Route, Economic Evaluation, YONG SHENG, Ice Conditions, Icebreaker Escorting

3 Zhao, Hu. INTRODUCTION The Arctic Sea Route (ASR) is a route across the Arctic Ocean which connects the main trading markets of Asia, Europe and North America. This route consists of two paths: the Northern Sea Route (NSR) and the Northwest Passage (NWP). Compared to Panama Cannal, Suez Canal Route (SCR) or Cape of Good Hope, shipping through the Arctic Sea could obviously reduce distance and avoid some piracy-prone areas, e.g., Somalia and Gulf of Aden. For ports at high or medium latitude, the advantage of saving distance is significant. For example, the voyage from Shanghai to Rotterdam via NSR is approximately nautical miles in comparison with the SCR at 0 nautical miles (FIGURE ). These advantages of NSR contribute to a safer and more flexible maritime network (). FIGURE Suez Canal Route and Northern Sea Route. Since 0s the increasing ice-free season and the development of ice-strengthened ships and Arctic seaports has promoted the NSR transit transport. NSR may become the new lane in international shipping network with the highest commercial potential in the near future (). Some studies have looked into the ASR from perspective of economic evaluation and feasibility. As Lasserre summarized in his study in, there were about articles studied on the economic simulation of ASR from to, most of which were about container shipping and transit transport (). Verny and Grigentin firstly created a ship schedule for liner shipping via NSR and compared unit cost of the container transportation links between China and Europe. They concluded that the golden route through Suez Canal was still by far the least expensive option and Northern Sea Route was one of the second-tier alternatives. Instead of comparing cost, Liu and Kronbak evaluated the profit of shipping through ASR and conducted sensitivity analysis on

4 Zhao, Hu 0 0 the fuel cost, ice-free season and ice-breaking fee (). Unlike the studies that did not specify any shipping mode (liner shipping or voyage charter), Xu et al. assumed container liner shipping via Northern Sea Route with fixed ship number and indicated that the cost a conventional container ship can save on Asia-Europe service via NSR (). Schøyen and Bråthen studied about bulk cargo transportation instead of container shipping and firstly discussed how the ASR makes supply chain more efficient (). Furuichi and Otsuka established a NSR/SCR-combined route and compared the cost, capacity, transit time and emission of the two routes on a common platform. It was concluded in this study that NSR/SCR-combined shipping may be economically feasible if ice-free season is long (). Zhao et al. evaluated the economic benefit of NSR in a context of network designing and proposed the optimized combination of ports on NSR liner service (). Pierre and Olivier studied NSR from the aspect of spot freight rate to fuel ratio and discussed its impact on the decision of shipping route for bulk carriers. It is also found in the study that the internalizing NSR environmental benefits marginally improved the attractiveness of the NSR (). These literature promoted the study on feasibility of ASR and provided constructive comments on the future of ASR shipping. However, most of the existing studies are about assumed voyages and draw long-term conclusions which may have limited values for shipping companies to make short-term strategies. Besides, almost no literature study on real examples of NSR navigation which is important for operation of maritime ervices via NSR. Instead, this paper evaluates NSR based on a real voyage and provides straight information of navigation on NSR, which is more practical and useful for ship owners and operators to make decisions by looking into a real world example. The paper is organized as follows. The first section introduces background of this paper and summarized the recent conditions on NSR. Then the basic information of a real voyage via NSR is reviewed. Based on the information, the economic and environmental benefits of the voyage is estimated and discussed. Finally, concluding remarks are presented..voyage ON NSR NSR can be entered from west through the Straits Yugorskiy Shar and Karskiye Vorota, or by passing North of Ostrova Novaya Zemlya around Mys Zhelaniya, and from East through the Bering Strait. The NSR extends for about 000 miles, but the factual length of the route in each particular case depends on ice conditions and on the choice of passage. The key elements for navigation via NSR are briefly summarized.. Ice conditions The main factor that influences navigation via NSR is presence of ice (). Annual and seasonal variability of ice conditions is typical for all areas along the NSR. However, in the last two decades, the thaw of sea ice is accelerated by global warming and the changing patterns of wind caused by exceptional air pressure (). The icecap in September is predicted to be under million km in 0 by the Intergovernmental Panel on Climate Change Fourth Assessment Report (IPCC AR). The melting icecap has provided a navigable route for commercial ships in summer and a feasible route in winter time with escorting from icebreakers. Conventional navigation season for transit passages starts approximately at the beginning of July and lasts through to the second half of November. It can be seen from FIGURE that most zones along the route are ice-free (the blue zones) in late July.

5 Zhao, Hu FIGURE Ice Conditions of NSR in late July. (Source: NSRA). Administration of NSR Since the ice conditions allow most ice-strenthened vessels navigate via NSR duiring summer time, the route opened for international transit shipping from under a series of laws and regulations. In, the Regulations for Shipping on the Northern Sea Route, approved by the Department of Navigation and Oceanography of Russia, was adopted and made great contribution to commercial use of NSR. The regulations were amended in 0 to a new version which added tariffs of icebreaker service and authorized Marine Operations Headquarters (MOHQs) to arrange the transport along NSR. Thus, before passing through NSR, official permission must be obtained by submitting the request information to the Northern Sea Route Administration (NSRA). The administrative procedure of entering NSR is more complex than passing the Suez Canal. Additionally, ships must be inspected for ice worthiness, which is paid by the ship owners. Shipping along NSR is actually controlled and supervised by Russia authorities whose manage scope includes scheduling, route planning, navigational support and pilotage assignment.. Icebreaker escorting To prevent accidents and pollution, Russian icebreaker escorting in some zones of NSR is mandatory, even for the ice class ships that can independently navigate in ice water. The Federal Service For Tariffs Order signed in prescribes that the tariff is charged based on characteristics of the ship and navigation plan. This tariff now is at a quite high level in comparison with Suez Canal Toll, but was lower in the golden time of NSR in late 0s and

6 Zhao, Hu early 0s, during which time the traffic volume via NSR reached the top of. million tons a year. In those two decades, the ice-breaking charge was below USD per ton but is quite enough for the expenditure of operating a icebreaker fleet (). Since 0s, cargo volume on NSR declined, thus the ice-breaking charge was increased to maintain the icebreaker fleet. Hence, the history of low icebreaker fee implies that the tariff could be reduced again if the revenue of icebreaker is increased by raising traffic volume on NSR or by subsidies from government, which will be a good news for shipping companies. In summary, after the issuing of laws and the establishing of NSRA in, the procedures of entering NSR and icebreaker escorting service is well managed by the Russian government which has contributed to the safety of ships and protection of the Arctic ecosystem.. However, the accessibilibty of NSR is still uncertain due to the variability of ice conditions, unstable political environment and poor marine infrastructure..voyage OF VESSEL YONG SHENG ON NSR YONG SHENG, owned by China Ocean Shipping Company (COSCO), is a multipurpose vessel with deadweight at tons, length at.m, width at.m, draught at.m and design speed at knots. The vessel was built in 0 at ice class ARC (A). YONG SHENG conducted her first navigation from Taicang to Rotterdam via NSR during August th to September th in, which is the first attempt for COSCO to use NSR and provide a good example for NSR navigation. The ship loaded. tons of rolled steel (delivered to Anshan Iron and Steel Group Corporation in Rotterdam) on August th,, at Dalian Port and added extra. tons as well as pieces of large facility in Taicang. As depicted in FIGURE, this voyage via NSR passed through Bering Strait, Chukchi Sea, De Long Strait, East Siberian Sea, North New Siberian Islands, Laptevykh Sea, Vilkitskogo Strait, Kara Sea, North Novaya Zemlya and Barents Sea.

7 Zhao, Hu FIGURE Voyage of M/V YONG SHENG. The ice conditions of NSR in August is better than other moths of a year, thus most of the commercial ships entered NSR in August. The ice of most seas along NSR in August is easy for navigation except for the East Siberian Sea with medium ice condition (FIGURE ). Though easy ice means the zones are navigablet, the water areas allowed for independent navigation is limited. The conventional zones allowed for independent and escorted navigation of ARC (A) ships are shown in TABLE, but this scope may be changed according real ice conditions. During the leg in high ice conditions, YONG SHENG was escorted by the icebreaker 0 LET POBEDY which is a Russian Arktika-class nuclear-powered icebreaker and also the largest nuclear-powered icebreaker in the world. The icebreaker is designed to break through ice up to meters (. feet) thick, which can provide a smooth channel for ships passing through NSR. According to the rules of navigation in the water area of the Northern Sea Route, which is approved by the Ministry of Transport of Russia, YONG SHENG was allowed to conduct independent navigation in water areas except for East Siberian Sea. Thus the icebreaker service started on August th before entering East Siberian Sea, crossed the Laptev Sea and ended on September nd when the ship arrived at approximately the middle of Kara Sea and headed for Novaya Zemlya (FIGURE ). In addition to the icebreaker service, ice pilotage of vessels is also provided to ensure safe navigation and prevent accidents at sea, as well as to protect the marine

8 Zhao, Hu environment in the NSR water area. YONG SHENG had two pilots from 0 LET POBEDY to lead her navigation through ice areas when she transited the NSR following 0 LET POBEDY. However, if the captain of a ship has no experience of navigation on ice waters, ice pilotage is compulsive and necessary. FIGURE Ice conditions of NSR in August. (Source: NSRA) TABLE Allowed Navigation Zones of ARC Ships in Context of Different Ice Conditions (Source: NSR Information Office) Zone Independent navigation Navigation with Icebreaker The Kara Sea, west M,L H,M,L The Kara Sea, east M,L H,M,L The Laptev Sea, west L M,L The Laptev Sea, east L M,L The East Siberian Sea, west L M,L The East Siberian Sea, east L M,L The Chukchi Sea M,L M,L L - Light ice condition. M - Medium ice condition. H - Heavy ice condition The speed of ship and the escorting of icebreaker is largely influenced by the ice conditions. When YONG SHENG entered water areas east to Siberian Islands, the ice condition was about / to /, in which the YONG SHENG ship can maintain a speed at knots to knots even without the escorting of icebreaker. But when the ship reached Kara Sea, the ice condition was at / to / with about 0.-. meters thick (some reached meters) and the speed declined to knots. If the ice condition is at / or /, the ship was requested to maintain a distance about 0. nautical miles after the 0 LET POBEDY and navigate in the wake of the icebreaker, while the distance was reduced to 0 meters when the ice condition was up to / because the floating ice will fill the channel if the ship is far from the icebreaker. But there

9 Zhao, Hu 0 0 is no worry about tailgating because the icebreaker can increase the speed in about seconds and avoid collision when ship reach too close. As described by many literature, meteorological and hydrologic data of NSR is limited, which makes the voyage of YONG SHENG an exploratory and challenging one. According to our interview with senior officers of COSCO, the relevant information for navigation is provided by the State Oceanic Administration of China before the trip and supplemented by the detailed and real-time data from NSRA and the icebreaker, which YONG SHENG referred to estimate the ice and weather conditions..evaluation OF THE VOYAGE ALONG NSR. Shipping Cost Estimation Model Much literature has estimated the costs of shipping lines via NSR based on assumed cases, which is prospective and valuable. But the cost of real shipping cases via NSR may be much more complicated than their assumption in terms of ice-breaking tariff, fuel cost and operational cost. This paper utilize a Shipping Cost Estimation Model (SCEM), including estimation of depreciation cost, voyage cost and operational cost, to estimate the cost of YONG SHENG s voyage. To show the difference between NSR and SCR, we assume a parallel voyage of YONG SHENG through SCR with same port and cargoes, thus the cost of two voyages via two routes can be compared on the same platform. The port-related and cargo-related cost of the two routes are same, e.g. port tariff and handling cost, thus these kinds of costs are excluded from the model and we only calculate the costs that distinguish NSR and SCR including depreciation cost, voyage cost and operational cost.. Depreciation Cost Straight-line depreciation and declining balance are two methods that are commonly used to calculate depreciation cost of ships. In this paper, we assume to use the straight-line method which is easy and practical without decrease the accuracy of the results. According to COSCO s regulations of depreciation for fixed assets, the economic lifetime for ship is years with scrap value equal to the price of steel after ship scrapping. The price of steel scrap in is about 0 USD per Light Displacement Ton (LDT) in Chinese ship scraping market (). As the LDT of YONG SHENG is 0 ton, the scrap value is estimated to be. million USD (). This value may be changed with scraping market but have little influence on the result of comparision.. Operational Cost Operational costs are ongoing expenses relative to the day-to-day running of the vessel, accounting for about % of the total costs (). The principal components of operating cost are: OC= M MN I AD () where M is manning cost, MN represents routine repair and maintenance, I is insurance and AD is administration. The operating cost on NSR and SCR is quite different because of some special requirements for navigating on NSR e.g. recuiting specially trained crew, unavoidable damage of ship hull from ice and high premium in ice water. According to our interview with some senior officers of COSCO, we estimate the operational cost of YONG SHENG based on a year-round shipping via SCR and a seasonal shipping via NSR respectively (TABLE ).

10 Zhao, Hu 0 0 TABLE Estimated Operational Cost of YONG SHENG via NSR and SCR Item NSR SCR Remarks Crew million USD/Year Maintenance million USD/Year Insurance million USD/Year Management million USD/Year. Voyage Cost Voyage cost, which is the variable cost incurred in undertaking a particular voyage, consists of fuel cost, port cost, cargo handling cost and disbursement for canal or other service and accounts for about 0% of the total costs (). In this paper, only the fuel cost and icebreaker escorting tariff or Suez Canal Toll are estimated, which distinguish the cost saved by NSR. () Fuel Cost Fuel cost occupies large part of voyage cost (; ). The fuel consumption per trip is derived from the fuel consumption rate (deduced from fuel consumption rate of unit power of a main engine, the number of engines a ship has and ship speed) and the transit time per trip. Fuel price is assumed at 0 USD per ton based on fuel price of China in the first half of (). The power of the main engine of YONG SHENG is 0kw/HP with rotational speed at rpm. Based on the data of engine, the average fuel consumption for the voyage from Taicang to Rotterdam via SCR and NSR is about 0 tons and 0 tons respectively. () Suez Canal Toll The Suez Canal Toll is charged based on ship s type, status, draft, beam, Suez Canal Net Tonnage (SCNT) and Suez Canal Gross Tonnage (SCGT). The toll for YONG SHENG in this paper is calculated using the official Toll Calculator published by the Suez Canal Authority (). () Ice-breaking Fee In accordance with the rules of navigation on NSR, approved by the Ministry of Transport of Russian, tariffs is applied to pay for the ice-breaking service rendered by icebreakers, which depends on the ship s capacity, ice class, distance of escorting and navigation period. The NSR is divided into zones to calculate the distance of escorting service of icebreaker, which determines the rate of the tariff. The sections of the NSR are south-western part of the Kara Sea (Kara Strait, Novaya Zemlya, meridian ' E in the west and meridian 00' E in the east), north-eastern part of the Kara Sea (meridian 00' E in the west and meridian 00' E in the east), western part of the Laptev Sea (meridian 00' E in the west and meridian 00' E in the east), eastern part of the Laptev Sea (meridian 00' E in the west and meridian 0 00' E in the east), south-western part of the East Siberian Sea (meridian 0 00' E in the west and meridian 0 00' E in the east), south-western part of the East Siberian Sea (meridian 0 00' E in the west and meridian 0 00' E in the east) and Chukchi Sea (meridian 0 00' E in the west and meridian ' W in the east). In addition to zones, two time periods are applied to the tariff rate: summer-autumn period of navigation ( July to 0 November) and winter-spring period of navigation ( December to 0 June). The main areas and zones and the tariff rate list applied for YONG SHENG (ARC with Gross Tonnage at )

11 Zhao, Hu are shown in FIGURE. A tariff rate at. USD per Unit of vessel s gross tonnage was for YONG SHENG which navigated through zones in the summer-autumn period (FIGURE ). Number of zones passed zone zones zones zones zones zones zones Tariffs Rate (USD/Ton) * 0.0 USD/RUB exchange rate in July. FIGURE Division of Zones and Tariffs Rate for ARC Ship (Gross Tonnage from 00 Up To 000) In Summer-Autumn Navigation Period. (Source: NSRA, Federal Service on Tariffs of Russia). Emissions The emissions are estimated according to 0 Intergovernmental Panel on Climate Change (IPCC) Guidelines for National Greenhouse Gas Inventories, which proposes a method to estimate the emission as a function of fuel type and fuel consumption. Three greenhouse gases namely carbon dioxide, methane and nitrogen monoxide are included in the calculation, the emission factors of which are 00 kg/tj, kg/tj and kg/tj respectively in accordance with IPCC. The emission of greenhouse gases of NSR and SCR are calculated based on the fuel consumption and the emission factors.. Results and Discussions The cost of YONG SHENG via NSR and SCR is compared in TABLE. It can be seen from TABLE that the advantage of NSR on saving cost and time is obvious. The navigation time of NSR is days which is more than days shorter than that of SCR because the NSR save about 0 nautical miles of navigation distance. The short voyage time means low fuel

12 Zhao, Hu 0 consumption, thus save the fuel cost by 0. million USD, which is a significant advantage if fuel price is high. The ice-breaking fee for YONG SHENG is at 0. million USD, which is higher than that of Suez Canal Toll at 0. million USD, but the gap is small to be covered by other cost saved. For the operational cost, the annual cost of NSR is higher than that of SCR, however, the average cost apportioned to a single voyage on NSR (0.0 million USD) is lower than the cost to voyage via SCR (0. million USD). Thus the total cost of NSR voyage is at 0. million USD and lower than the the cost of SCR at 0. million USD, which prove the potential of NSR in a single voyage. In addition to the economic efficiency, the voyage on NSR also contribute to the environmental benefit. The emission of greenhouse gases CO, CH and NO is decreased because of reduction on fuel consumption, which is beneficial to the sustainable development and mitigation of global warming. Furthermore, there is still appeal of carbon tax from ships, which will occupy a large amount in the shipping cost if come into effect. The decrease of carbon emission will benefit the shipping lines via NSR by saving the tax. This specific case of YONG SHENG is typical for transit transportation of bulk or general cargo via NSR in the past decades since the issue of the latest regulations. The record from NSRA shows that there are transit voyages via NSR in, and of them are general cargo ship while are tankers. of the commercial ships are between 000 to 0000 Gross Tonnage, similar to YONG SHENG. Some general conclusions may be draw from this specific real case. Firstly, sailing via NSR can save time and distance. However, SCR is still the best choice for ports at low latitude such as HongKong, Algeciras and Singapore which are located near Suez Canal. Secondly, the most important economic advantage of NSR is saving fuel cost, which consists more than half part of voyage cost (TABLE ). This is caused by short sailing distance and relatively low speed, which is general for nearly all kinds of ships. The emission of carbon will also decrese with the consumption of fuel. Thirdly, the tariff rate of ice-breaking in last decade is higher than Suez Canal Toll in the same time. But the extra charge may be covered by fuel cost saved, especially when the fuel price is high. Furthermore, the difference of the voyages via NSR and SCR is not significant in terms of operational cost and depreciation cost, but there may be an obvious difference of these costs if some charges, e.g.insurance and maitainance, changed significantly, which may be true because the there are uncertain risks for navigation via NSR. TABLE Estimated Cost and Emissions of YONG SHENG via NSR and SCR Item NSR SCR Remarks Navigation Time.0. day Navigation Distance 00 0 nautical mile CO Emission 0 Ton/Voyage CH Emission Kg/Voyage N O Emission Kg/Voyage Depreciation Cost million USD/Voyage Fuel Cost million USD/Voyage Suez Canal Toll million USD/Voyage Ice-breaking Fee million USD/Voyage Voyage Cost million USD/Voyage Operational Cost million USD/Voyage Total Cost million USD/Voyage

13 Zhao, Hu 0 0 NSR shows a primary advantage of saving cost for a single voyage, but the risks and variability of NSR still exists which may undermine the advantage of saving cost and time. Firstly, the cost may not be saved in winter times during which the icebreaker escorting tariff is high. Furthermore, the Russian regulations applied to NSR shipping is variable, which may make the procedures and charges on NSR uncertain. Secondly, there is also risks brought by uncertainty of navigation conditions, which may cause delay of ships and damage of cargoes. For example, if YONG SHENG was trapped by ice, it may take days for icebreaker to rescue her, which cause extra payment. The variable distribution of sea ice may force the ship to deviate and spend more time on her voyage, thus may cause delay of cargo delivery and related penalty. This kind of deviation may also lead to the increase of fuel consumption and fuel cost. Although these contingent costs may not occur, it is necessary to consider them and makes contingency plan against these uncertainty. Thirdly, the Polar Code will come into effect, which includes requirements for well-trained crew, special equipment, required certification of ships. The new stipulation may cause extra cost and uncertainty of NSR shipping service. Moreover, the draft of some channels and straits along NSR is not enough for large ships, which prevent the shipping company take advantage of economies of scale ()The variability of NSR has prevented the ship actors take actions to use the new route for regular service, which is one of the reasons for little cargo flow through NSR (). Thus, it is essential to improve the navigation environment and infrastructure on NSR to make the route accessible to all the shipping companies (). Firstly, the construction of ports along NSR should be promoted for ship bunkering or cargo distribution. The system for assistance and salvage at sea should also be promoted, thus guarantee the safety of the ships and cargoes. Secondly, it is important to maintain a stable political environment and normalize the procedures of NSR navigation to attract commercial transport. The recent regulations of NSR are issued by the Russian authorities and may include little requirement of international shipping actors about the use of NSR or the ice-breaking service, thus more negotiations and cooperation are needed to make the legislation about NSR an international one by considering the demand and appeal of maritime industry (). Although the NSR is rarely used by commercial shipping, it will have a large strategic influence on the shipping companie. Recently, NSR is not feasible for year-round commercial shipping due to the short navigable time and high uncertainty, but it is an important alternative line for ships, especially in summer time, to save time and cost, which will benefit the company in the long term. In the future, NSR may be a force that will drive the redistribution of international shipping network and change the layout of hub ports, which is the same as the open of Suez Canal in the history and deserve attention from the shipping industry (). For the short term, polar classed vessels remains the most important factor for Arctic navigation, thus shipping companies could make the plan of building ice-strengthened ships and training crews for preliminary preparation of NSR navigation.. CONCLUDING REMARKS Due to global warming, the accelerating Arctic sea ice retreat has made the shipping on NSR possible. The potential of distance-saving makes NSR a secret force to drive the changes in maritime industry, which has attracted many commercial vessels navigate through NSR. This paper evaluates the economic potential of NSR based on a real voyage of M/V YONG SHENG. Firstly, the details of the ship and her voyage is analyzed to show the navigation and administration condition of NSR. It is concluded from the real navigation data that NSR is navigable for the ACR class (or above) ice strengthened ships in summer period for most of the

14 Zhao, Hu 0 0 water areas ( of the zones). Furthermore, if escorted by the icebreaker, ships can reach a speed at more than knots in ice condition of about / or / and no less than knots even in / or / sea ice. There is a normative process of applying icebreaker service and detailed information of ice conditions managed by the Russian authorities, which guarantees the safety and reliability of the voyage. Secondly, the cost and emissions of YONG SHENG s voyage is estimated and compared with that of the voyage via SCR on the same platform. It is indicated that NSR can save more than days of voyage and approximately tons of bunker oil on the voyage from Taicang to Rotterdam. The operational cost and depreciation cost per voyage are also decreased because of the short sailing time. Although the ice-breaking fee is higher than Suez Canal Toll, the total cost of NSR voyage is lower than that of SCR, which makes NSR a profitable alternative route especially in summer time. The emission of greenhouse gases CO, CH and NO is also reduced, which bring environmental benefit and may save the carbon tax cost in the future. In spite of the great potential, regular commercial shipping via NSR may be not possible due to the risks incurred by uncertainty of policy, weather, ice conditions and navigable time. But the navigation and political environment of NSR can be improved by promoting the infrastructure as well as enhance international cooperation on the administration of NSR. In this regard, the future of NSR is optimistic and will have a significant influence on the strategies of shipping companies, which indicates that it is time for marine logistics companies to consider building ice-strengthened ships as well as attempting to operate shipping lines via NSR. The M/V YONG SHENG started her second voyage via NSR on July,, from Jiangyin Port. According to the interview with officers of COSCO, the ship will conduct a twoway voyage this time to collect more data about navigation in ice waters under the guide of Guidances on Arctic Navigation in The Northeast Route which is issued by Maritime Bureau of China in. ACKNOWLEDGMENT We wish to acknowledge the help from China Ocean Shipping (Group) Company for providing the necessary data and information in this paper. This paper is supported by Shanghai Natural Science Foundation (ZR00) and Shanghai Jiao Tong University Foundation for Interdiscipline (JCZ0). REFERENCES [] Schøyen, H., and S. Bråthen. The Northern Sea Route versus the Suez Canal: cases from bulk shipping. Journal of transport geography, Vol., No.,, pp. -. [] Valsson, T., and G. Ulfarsson. Adaptation and Change with Global Warming: Emerging Spatial World Structure and Transportation Impacts. Transportation Research Record: Journal of the Transportation Research Board, No., 0, pp. -. [] Lasserre, F. Case studies of shipping along Arctic routes. Analysis and profitability perspectives for the container sector. Transportation Research Part A: Policy and Practice, Vol.,, pp. -. [] Liu, M., and J. Kronbak. The potential economic viability of using the Northern Sea Route (NSR) as an alternative route between Asia and Europe. Journal of transport geography, Vol., No.,, pp. -. [] Xu, H., Z. Yin, D. Jia, F. Jin, and H. Ouyang. The potential seasonal alternative of Asia Europe container service via Northern sea route under the Arctic sea ice retreat. Maritime Policy & Management, Vol., No.,, pp. -0. [] Furuichi, M., and N. Otsuka. Proposing a common platform of shipping cost analysis of the Northern Sea Route and the Suez Canal Route. Maritime Economics & Logistics,.

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