With so much happening in the world with regard to shipping routes one still needs to keep a watch on the Northern Sea Route because one of these days it could be the main trade corridor. I would not bet against Russia and China making this route work and my money would be more on these two countries making it work because of China.
Usually there is a lot of propaganda around the Northern Sea Route as this is Putin's baby. There is very little information and one would think this is closed due to winter and the ice conditions. This is where we are wrong as shipments are still being delivered and have been right through winter maybe not directly to Europe, but LNG exports to China have not stopped.
Two vessels went through the Straits of Hormuz yesterday under naval escort, but the risks are too high right now so everyone is waiting it out. Tonight a tug boat was struck off the coast of Oman from a projectile which presumably is a rocket.
The Suez Canal is open, but the Straits of Hormuz is the big problem with many shipping companies not willing to take the risk as this area is controlled by Iran and a cargo vessel would be an easy target. There are roughly 175 container ships anchored up in the area which represents 450 000 TEU 20ft containers or 10% of total trade volumes. The problem is now being able to maneuver out safely in a confined space due to the number of ships anchored close to each other.
On average since 2023 2.327m deadweight tons of crude tanker capacity has passed the Straights of Hormuz from East to West and for 3 days there has been zero movement.
Maersk, CMA CGM, Hapag-Lloyd’s and MSC shipping companies have decided to head around the Cape Of Good Hope which has seen a spike of around 85% in increased traffic. No berthing just bypassing as apparently the SA Ports have a bunkering fuel issue which is kind of typical, but still early days and maybe there will be benefits the longer this situation continues as no one expects this to be resolved within weeks.
What is important here is comparing the various shipping routes and why the Northern Sea Route stands out. NSR Yokohama to Rotterdam 9,000 km [16 days], Suez same route 21 000km [30 days] and the Cape Of Good Hope [37 days] 26 750 km. The trade route now being used is now nearly 3 times further and 3 weeks longer in time and is realistically the only safe alternative.
These days there is no news or very little coming out of Russia with the NSR due to it being a block of ice with the route frozen over yet the ships are still sailing between Russia and China. Due to sanctions and the shadow fleet being hunted down LNG tankers are still moving albeit very slowly at 3 knots due to the ice when the average speed is roughly 16 knots. The route is still open for those prepared to risk it even if it takes a few days longer due to thicker ice so Russia and China will continue to persevere to make this route work.
In 2024 the NSR trade route saw a 2.5% decline in tonnage 37 million metric tons shipped and 2025 saw an additional 1 million metric tons shipped to 38 which is way off the 80 million metric ton target. The shipping that is happening now during the winter months is something new not seen before and there are 2 brand LNG tankers in the shadow fleet that have been working since January. The joke is the captains have new vessels and are being over cautious, but last year one vessel was trapped in ice and had to be rescued so the threats are very real.
Chinas New New Shipping Line and that is not a typo (NNSL) has already announced it will be using the NSR this spring/summer. South Korea is ready to start with dialogue exploring the use of the NSR and says it will discuss the opportunities without risking any backlashes due to Russian sanctions and possibly upsetting trade partners. Why would you not be looking at this route as the viable option due to the speed to market?
We know the Russians and Chinese are crazy enough to risk this route testing this out during the middle of winter so how long before the Chinese government offer subsidies for those shipping this route? The Chinese subsidies everything from manufacturing and now vehicles so why not force their exporters to use the NSR because this will happen once they have made the route safer. The risks is what is holding everyone back now along with is the route morally right for man to destroy another region of the planet that in many ways has remained untouched. The eco system is finally balanced here and guaranteed it will be screwed over soon enough so the large shipping companies avoiding it will be fighting for survival and will not have a choice.
This is not an if and is more of a when this happens because this will be the trade route within the next decade. China just needs more ice grade ships along with enough nuclear ice breakers which they will build to guarantee their trade uses this route. The other major shipping companies are going to be fighting for existence soon enough even if it takes 10 or 20 years to monopolize.