The Northern Sea Route, the Arctic sea route between the Strait of Bering and North Cape, cannot be considered a valid an economic alternative to the route connecting Asia with Europe through the Suez Canal, despite the NSR route is shorter and theoretically capable of saving money fuel and sailing time. This is what the two researchers argue Haemi Shin and Sungkuk Kim of South Korea's Mokpo National Maritime University in their study entitled "Probabilistic threshold conditions for Northern Sea Route cost competitiveness: a scenario-based comparison with the Suez Canal Route" published in the journal "Future Transportation".

Study assesses cost competitiveness of the two sea routes for a representative voyage Asia-Europe, using the Shanghai-Rotterdam route as a case of reference, and builds a statistical model based on Monte Carlo simulations to estimate the probability that a journey along the NSR is actually cheaper compared to the passage through Suez. The numerous cost variables that intervene in a trip maritime: fuel price, extra consumption due to the ice resistance, icebreaker service fees, insurance costs, operational delays and geopolitical risks.

Unlike previous analyses, which tended to treat the canal as a "stable" option and to concentrate all the uncertainty about the Arctic route, the researchers chose to model as random variables also the insurance costs of the route to Suez, today strongly conditioned by the crisis in the Red and the Houthi attacks on ships.

The model analyzes five distinct scenarios, and in none of them the Northern Sea Route manages to exceed the psychological threshold of 50% of probability of being cheaper. In particular, The first is based on a scenario prior to the crisis in the Red Sea region and indicates the probability of convenience of the NSR to just 1%. The second corresponds to the summer scenario with respect to which the probability rises to 16.6%, thanks mainly to the increase in insurance premiums linked to the risk of war in the Suez area. The third scenario is that winter, in which the probability of convenience of use of the Arctic route drops to 1.4%, the most low due to higher rates for the use of icebreakers needed as an aid for navigating the higher Arctic insurance premiums and higher fuel consumption due to ice. A scenario characterised by the easing of geopolitical crises, in which the NSR route reaches its maximum in the model, the 23.5%, but still far from parity with respect to to the route through Suez. Finally, in a scenario characterized by from a worsening geopolitical crisis, the probability for the NSR it drops to 12.3%.

The study highlights that, in particular, it is significant the gap between the "favorable" summer scenario and the winter, to underline that seasonality is the a factor that weighs most heavily on the competitiveness of the route much more than the geopolitical situation.

The paradox at the heart of the study is that the NSR route, although it is about 18% shorter than Suez, 8,600 nautical miles versus 10,500, effectively generates savings of fuel by about 7% in the base scenario. This advantage, however, it is entirely reabsorbed and nullified by the costs Arctic Route-Specific Supplements: Fees for assistance icebreakers (on average $450,000 per trip), prizes additional insurance for Arctic navigation (about 400,000 dollars), geopolitical risk estimated at $150,000 and the costs of delays for another 60,000 dollars. Taken together, these elements add about $1.06 million to the cost of the trip a burden that fuel savings alone cannot compensate. As for the route through Suez, the toll of the (estimated at $300,000) and the insurance premium for the war risk linked to the Red Sea crisis ($350,000) represent the additional cost items compared to the scenario pre-crisis, but still lower than the total of the largest additional costs of the Arctic route.

The analysis conducted by the South Korean researchers identifies the icebreaker rates and Arctic insurance premiums such as weight variables for the Arctic route and notes that the Decrease in icebreaker rates from 450,000 to 250,000 Dollars could increase the probability of convenience of the NSR up to 31.4%. But it is the risk of war on the route to produce the most marked overall effect: if the insurance premium rose from zero to $700,000, the Probability of convenience of the Arctic route could reach up to 44.9%, a high threshold but still below that of the 50% that could make you opt indifferently for a route or the other. Surprisingly, however, the price of fuel has a Limited impact: its variation shifts the probability of just five percentage points, because the advantage of the shorter distance and disadvantages due to ice tend to to cancel each other out.

One of the most interesting findings of the study concerns the analysis of the thresholds: no variables, taken individually and kept within a realistic range, it is sufficient to Bring the probability of NSR convenience to 50%. The insurance premium for war risk on Suez should more than doubling from $350,000 to about $765,000; The icebreaker rates are expected to fall by 86%; The award The Arctic insurance system should practically be zero. None of These scenarios appear plausible in the short term.

However, the authors showed that a combination of two more modest reductions could be enough to bring the NSR cost-effectiveness close to 50%: for example, lowering at the same time the rate of icebreakers to about 300,000 dollars (-33% compared to the basic level) and the insurance premium at around $150,000 (-62.5%), the probability of Affordability of the Arctic route is close to 50%. It can be deduced that the competitiveness of the NSR will depend more on a Coordinated improvement on several fronts - tariffs, market institutional conditions - which from a single isolated intervention.

The study also confirms that the increase in the risk of war in the Red Sea region has actually improved, in terms of the attractiveness of the Arctic route, with the probability of the NSR's convenience which has gone from 1% in the period pre-crisis at 16.6% of the current scenario. But also in the more extreme than the crisis analyzed by the researchers, the NSR It still fails to become the most affordable option in most cases. If the conflict in the Red Sea were to and insurance premiums return to pre-crisis levels, The current relative convenience of the Arctic route is would reduce further. Therefore, the Red Sea crisis must be read as a temporary benefit for the NSR, not as a breakthrough competitiveness between the two shipping routes.

The study suggests that the efforts of policymakers to make the Arctic route more competitive should focus on more directly controllable levers, such as tariff transparency, reliability of infrastructures development of the specialised insurance market and stability rather than hoping for favourable fluctuations in the fuel price or the geopolitical situation, both difficult to govern with sectoral policies.

In the conclusions, the authors of the study point out several limitations of their work, as the model focuses on a a single pair of ports (Shanghai and Rotterdam) and on a ship Panamax-type container ship, so the results are not automatically extendable to other routes or types of ships. In addition, several parameters, such as the Arctic insurance premium, Delay costs and geopolitical risk are calibrated estimates based on the available scientific literature rather than on market data directly observed, since the data on travel costs along the NSR remain largely unaffected also because the transport of containers on this Rotta is still in a pre-commercial phase. Finally, the Monte Carlo model assumes independence between inputs stochastic, although in practice several cost factors on the of the Arctic route can be positively correlated.