Northern Sea Route: Effect on Modal Shift and Modal Choice

Since the beginning of shipping, the world’s commercial routes have not changed very much. For most ships the main route which connects Europe and Asia, is the one through the Suez Canal. Climate Change has had a great effect on North Pole. The ice-covered areas are decreasing year by year, enabling sailing in North Pole for commercial purposes. Northern Sea Route connects north Europe to Far East in a distance sorter by 40% compared to the royal route via Suez. Shorter distance is not equal with a decrease in cost by the same factor and probably does not mean decrease at all. For a regular usage a of northern sea route many improvements need to be made such as ports, terminals, and a complete network to provide services like navigation and meteorological forecasts. For this paper, a multinomial logit function used to estimate the percentage of transported cargo among via ship through Suez Canal, via Trans-Siberia Railway and via ship through Northern Sea Route during the summer period. The extra costs for ice-breaking, navigation and other required services, needed for safe sailing, increase the operational cost and make NSR not a competitive solution. If NSR is going to be a trade revenue, all the above services will be offered at lower rates and generalized cost will fall. In the second part the multinomial logit function is used so as to estimate the rates of extra costs that make sailing via NSR a cost effective solution.