Economic and environmental competitiveness of container shipping on alternative maritime routes in the Asia-Europe trade flow

Abstract

Most share of the Asia-Europe containerized traffic passes through the Suez Canal. The changing fundamental market forces and the influence of climate change initiated the necessity to analyze the alternative passages' commercial viability. Technical specifics of routes contribute to the overall attractiveness and cost competitiveness. This paper verifies the economic and environmental feasibility of a container loop Vladivostok-Bremerhaven along three shipping routes, including the traditional Suez Canal transit and the alternative voyages via the Northern Sea Route and Cape of Good Hope. By applying mathematic modeling, the shipping and external cost components were quantified based on the most reliable data sources and ship operational data to determine the profitability of a singular container route. Despite having high potential, especially in the shorter route length context, the Northern Sea Route was less competitive than the conventional Suez transit. The results show higher profitability for the voyage through the Suez Canal concerning alternative shipping routes besides the lower fuel price case when the Cape of Good Hope route becomes viable. In addition, the research findings highlight the impact of sustainability with external costs involved in cost calculation and the importance of implementing mechanisms to reduce environmental damage in shipping. © 2022