NSR’s a logistical nightmare.

Cost savings are closely linked to the origin-destination pair. While a trip from Murmansk to Yokohama is significantly shorter (by 7 days) along the NSR, a trip to Shanghai is not (2 days).16) For some routes, e.g. from Rotterdam to Singapore or Hong Kong, it is actually shorter to sail through the Suez Canal.

As mentioned in Part 2, the world’s major container lines call on a number of ports and optimize their routes along ports that offer developed communication lines into the hinterlands, e.g. river transport and railroads, to distribute goods to customers and consumers. Since the NSR passes through mostly uninhabited territory no such stopovers are possible, strongly reducing the route’s attractiveness for regular liner service operators. In addition, more than 50 percent of trade between Europe and Far East passes through the port of Singapore, for which the NSR does not offer any time or distance savings.17) Hence, only goods that are shipped from point to point, e.g. crude oil, natural gas, and ore, and along certain routes pairs will benefit from shorter distances.

In addition, the costs of using the NSR are frequently understated or ignored. Besides the frequently cited costs for ice-breaker escorts shipping companies also incur significant indirect costs. In order to sail the NSR operators have to file for a permit with the Administration of the NSR four months in advance. Few operators are able or willing to plan that far in advance and deal with the bureaucracy of obtaining a permit. In comparison, the process of sailing through the Suez Canal only requires a 48-hour advance notice.

Vessels are only allowed to sail along the NSR after they have been inspected for ice worthiness by either the Murmansk Shipping Company or the Far Eastern Shipping Company. The operator bears the logistical costs associated with that inspection. Furthermore, during the inspection and during the actual transit of the NSR, operators often need to hire interpreters as pilots and ice-breaker crews seldom speak English.

Shipping operators also face significantly higher insurance premiums when sailing through the hostile Arctic environment. Navigating the NSR requires significant experience due to a dearth of accurate charts and the unavailability of the standard global positioning system (GPS) in high latitudes. In its place, a system called GLONASS, which is not compatible with some ships, is used along the NSR.

In sum these costs severely restrict the profit that can be materialized along the NSR. A recent study has shown that a 50 percent reduction in ice-breaker fees would be required to make liner service between Rotterdam and Yokohama profitable. Hence, profitability will for the foreseeable future be limited to a small number of specialized bulk carriers traveling along certain point-to-point routes.