China’s COSCO to Begin Regular Use of Northeast Arctic Route Claimed by Russia

On October 24, 2015, a spokeswoman for China’s largest shipping company, COSCO, announced that the company intends to begin regular use of the Northeast Arctic Route between China and Europe, which traverses waters claimed by Russia.  COSCO has yet to give a definite timeline as to when regular use of the Northeast Passage will begin, which is only ice free in the summer months.  This arctic route has only recently become attractive to the shipping industry for a variety of reasons, including melting ice and Russian efforts to administer its passage as well as investments being made in icebreakers, ports and other infrastructure.

This arctic route cuts the travel time and distance between Rotterdam and Shanghai by nine days and 2,800 nautical miles in comparison with the current route through the Suez Canal.  Potential savings on transit costs are massive.  COSCO has used the Northeast Passage only twice previously, according to public reports, once in 2013 and again this month (October 2015).

China has been looking into use of this route over the past few years, motivated, in part, by the European Union being its largest trading partner.  Its growing relationship with Russia is another likely factor, due to the important role that Russia plays in granting permissions and facilitating safe passage of this route (which it claims to control in its entirety, despite portions going through international waters).  Not surprisingly, Russia has been the primary user of arctic shipping routes, with a majority of the goods shipped to date involving oil products.  Over time, however, the economic and strategic value of the Northeast Passage and Russia’s claims on it are likely to become a significant lever in its relations with other countries.