2. LITERATURE REVIEW

Navigation routes have long played an important role in the development of the maritime transportation industry. Since the twentieth century, there has not been much change in the major global routes although globalisation has increased the intensity of the flow of merchandise (Verny and Grigentin, Reference Verny and Grigentin2009). Meanwhile, the environmental problems resulting from globalisation should not be ignored either. In recent years, global warming has become the most important environmental change issue (Gilbert and Bows, Reference Gilbert and Bows2012). Global warming has worsened the greenhouse effect and impacted average temperatures around the world. With a global rise in average temperatures, the ice caps in the Arctic and Antarctic areas will start melting and cause the sea level to rise, resulting in extreme climates. Currently, due to global warming, the ice caps in the Arctic and Antarctic areas are already gradually melting. According to Polyak et al. (Reference Polyak, Alley, Andrews, Grette, Cronin, Darby, Dyke, Fitzpatrick, Funder, Holland, Jennings, Miller, O'Regan, Savelle, Serreze, John, White and Wolff2010), the sea ice in the Arctic area will be completely melted by 2040 or sooner, meaning that the sea surface in the Arctic area that has remained mostly frozen in cold weather would gradually melt due to global warming. Lasserre and Pelletier (Reference Lasserre and Pelletier2011) pointed out that summer ice melting in the Arctic is a hot topic at present, primarily because vessels can travel through the area during the melting season as most of the Arctic region is made of seawater instead of continental land masses. Furthermore, the Arctic is adjacent to the European, Asian and American continents that gives it transportation advantages (Lasserre and Pelletier, Reference Lasserre and Pelletier2011). Ho (Reference Ho2010) also mentioned that as global warming has intensified, opening up of the Northern Sea Route will be very much expected in the future.

Since summer ice melting in the Arctic has intensified, the topic of the Northern Sea Route has constantly been discussed (Ho, Reference Ho2011; Ragner, Reference Ragner2000). Compared with existing routes, the Northern Sea Route has advantages of a shorter distance and shorter travel time. In terms of navigation costs, travelling through the Northern Sea Route requires less fuel and can lower the increasing fuel costs. With a shorter distance and less fuel needed, vessels will also emit significantly less carbon dioxide (Schøyen and Bråthen Reference Schoyen and Brathen2011). Compared with existing sea routes, the Northern Sea Route clearly has a competitive advantage in multiple areas. Yet, currently there are not many vessels travelling through the Northern Sea Route, primarily because of seasonal limitations—attention needs to be paid to the changing seasons when navigating. Besides, vessels travelling along the Northern Sea Route need to meet the specifications of the Ice class to avoid damage from hitting the floating ice and icebergs on the sea surface. Due to the various restrictions and the risk of uncertainty, the Northern Sea Route is currently not suitable for container vessels. Schøyen and Bråthen (Reference Schoyen and Brathen2011) used bulk carriers as an example to compare between the navigation costs travelling through the Northern Sea Route and the European Sea Route and suggested that bulk carriers are currently a more suitable type of carrier to travel in the Northern Sea Route. Because of the risk of uncertainty in the Northern Sea Route, operating a regular ship service can be difficult, as regular container ship services rely on a fixed schedule (Van Riet et al., Reference Van Riet, Tresfon, Pollen and Valstar1983; Schøyen and Bråthen, Reference Schoyen and Brathen2011). In contrast, Verny and Grigentin (Reference Verny and Grigentin2009) believed that, with increases in cargo volume, it takes longer and costs more for container vessels to go through the European Sea Route and the Suez Canal. As a result, the Northern Sea Route has advantages of a shorter distance and shorter travel time and can save on increasing navigation costs (Verny and Grigentin Reference Verny and Grigentin2009).

With increasing globalisation in recent years, the cargo volume going through various major sea routes has gradually increased. As shown in Table 1, the cargo volume in million TEU on major global sea routes grew steadily from 2009 to 2012. The cargo volume shipped through the European Sea Route peaked in 2011 and dropped by 2·6% from 2011 to 2012 (United Nations Conference on Trade and Development, 2013). Overall, however, the cargo volume shipped through the major global sea routes all grew steadily; the increase in cargo volume was closely tied to the growth of all the countries in Asia. China plays an extremely important role in Asia. As the production centres and consumer markets have shifted, China has become an important world production centre (Verny and Grigentin, Reference Verny and Grigentin2009), which has also directly impacted the economic growth of countries such as Japan, Korea, Taiwan and Singapore and resulted in an increased cargo volume in these countries (Xu et al., Reference Xu, Yin, Jia, Jin and Ouyang2011).

Table 1. Changes of Cargo Volume in Major Global Sea Routes (2009–2012).

Source: Review of Maritime Transport 2013.

Today, the Eurasian Sea Route is the busiest route in the world and is an important route that connects Asia and Europe (Marlow and Nair, Reference Marlow and Nair2006; Nair, Reference Nair2016). Cargoes from Asia are usually transported to Europe via the Suez Canal (Notteboom, Reference Notteboom2012). However, with global warming and an increase in summer ice melting in the Arctic, the opening of the Northern Sea Route has potential for significant impact on countries in Asia. Yokohama, Busan, Shanghai, Kaohsiung, Hong Kong and Singapore are currently the major ports in their respective countries in Asia. Once the Northern Sea Route is opened, the positive and negative impact brought by the opening to these ports will directly affect future global route configurations. Hence, determining the navigation efficiency of various sea routes appears to be important. Liu and Kronbak (Reference Liu and Kronbak2010) used the route between Yokohama and Rotterdam as an example to analyse the feasibility of the Northern Sea Route. They also pointed out that the opening of the Northern Sea Route will significantly impact the cargo volume shipping through the Suez Canal and bring about a change in the impact on the environment, that is, a shorter distance going through the Northern Sea Route will reduce carbon dioxide emissions and in turn have the potential to lower the impact of global warming.

Global warming has become increasingly serious. Carbon dioxide emissions from vessels is one of the culprits behind global warming (Eyring et al., Reference Eyring, Isaksen, Berntsen, Collins, Corbett, Endresen, Grainger, Moldanova, Schlager and Stevenson2010), as carbon dioxide is a by-product of burning fuel during transportation. The marine engine is an important factor in fuel consumption. Fuel consumption and carbon dioxide emissions can be calculated by establishing an engine emission model using the fuel conversion factor of the marine engine and fuel usage. Thus, this study explored the issues of fuel consumption and carbon dioxide emissions using the Northern Sea Route and the European Sea Route as a comparison basis to calculate fuel consumption and carbon dioxide emissions of vessels travelling from major ports in Asia and Rotterdam in Europe via the Northern Sea Route and the European Sea Route. Results were then analysed to generate the navigation efficiency via the Northern Sea Route and related strategies are proposed.

3. RESEARCH METHODS

Holding other factors constant, this study does not consider the following: the frozen Arctic route in the winter, the transit fee shipping through the Northern Sea Route, the transit fee shipping through the Suez Canal, the wait time at the Canal, the cost of building Ice class vessels, the carbon tax issue and other related risks and costs. This study primarily focuses on calculating the fuel consumption and carbon dioxide emissions of vessels travelling through the Northern Sea Route and the European Sea Route to derive the respective navigation efficiencies of shipping from various ports in Asia and propose related response strategies at the end.

The calculation formula is as follows:

(1) $$\hbox{B}_{i} = \hbox{H} \cdot \hbox{C}_{1} \cdot 24 \cdot \hbox{T} \cdot (\hbox{AS/MS})$$

(2) $$\hbox{E} = \hbox{B}_{i} \cdot \hbox{C}_{2}$$

where B _i is the fuel consumption per voyage, H is the maximum power of the engine, C₁ is the fuel conversion factor of the engine (in this paper, it is value 171), T is the travel time of the ship, AS is the average speed of the ship, MS is the maximum speed of the ship, E is the carbon dioxide emission per voyage and C₂ is the carbon dioxide emission factor.

In Equations (1) and (2), ‘ _i ’ indicates the different routes; ‘1’ refers to the Northern Sea Route and ‘2’ refers to the European Sea Route. The fuel consumption per voyage, ‘B’, is measured in tonnes. The maximum power, ‘H’, is measured in kW. The value of the engine fuel conversion factor is C₁ at 171. The number of hours for a day is 24. The travel time, ‘T’, is measured in days, calculated as follows: (travel distance/speed of the ship)/24. The average speed of the ship, ‘AS’, is based on the transit fee schedule of the Northern Sea Route provided by Lasserre (Reference Lasserre2014). The maximum speed of the ship, ‘MS’, is measured in nautical miles per hour (or knots). The carbon dioxide emission per voyage, ‘CO₂·E’, is measured in tonnes. For the carbon dioxide emission factor, ‘C₂’, based on the Emissions Factor Table for various types of fuel compiled by the Bureau of Energy of the Ministry of Economic Affairs, the emission factor of diesel fuel suggested in the table at 74,100 kgCO₂/TJ was used as the basis to calculate the carbon dioxide emission but was converted to 74·1 tCO₂/TJ to be consistent with the unit used in calculation for convenience.

4. EMPIRICAL ANALYSIS

The research scope was to analyse the navigation efficiencies travelling through the Northern Sea Route from various ports in Asia. Fuel consumption and carbon dioxide emissions of marine engines in vessels transiting through the Northern and European sea routes were analysed using the distance and time travelled through both routes as the basis for calculation, focusing on the 10RTA96C engine type used by vessels of around 5,551 TEU.

Holding other conditions constant, the current study hypothesised the following solely for the calculation of fuel consumption and carbon dioxide emissions of vessels travelling through the Northern Sea Route and the European Sea Route: 10RTA96C engine used by vessels of 5,551 TEU, maximum power of 57,200 (kW), a diesel engine fuel conversion factor of 171 and a maximum speed of 25·9 knots of the vessel as shown in Table 2. As for the average speed of the vessel and the travel distance, the transit fee schedules for Shanghai–Rotterdam and for Yokohama–Rotterdam through the Northern Sea Route were used as reference (Lasserre, Reference Lasserre2014). Using the shipping route from Shanghai to Rotterdam as the basis, this study used the distances of various port pairs for international container shipping to calculate the distances from various major ports in Asia transiting through the Northern Sea Route and to calculate the travel time by dividing the travel distance by the speed of the vessel.

Table 2. Engine-Related Data.

Table 3 shows the estimates for various routes, including the travel distance (International Container Shipping, 2014), the travel time, the speed of the vessel and the fuel consumption from various ports in Asia transiting through the Northern Sea Route and the European Sea Route. Calculations were based on the shipping route from Busan to Rotterdam through the Northern Sea Route. Table 2 shows that the engine's maximum power is 57,200 (kW). If we calculate, using the maximum power, the fuel needed each day will be 57,200*171*24=234,748,800 (g), which is approximately 234 tonnes. The fuel needed for the entire voyage will then be 234,748,800*18·98=4,455,532,224 (g), which is approximately 4,455 tonnes. By dividing 4,455 by 5,551 (the current study used vessels of 5,551 TEU), the fuel consumption per TEU of approximately 0·8 tonnes can be derived. The same calculation can be applied to other port pairs.

Table 3. Estimates of Shipping Routes.

Note: ( ) represents tonnes.

Table 3 shows the fuel consumptions at the maximum engine power. However, vessels do not routinely travel at maximum engine power. Hence, we used a weighted factor for fuel consumption calculation in this study (average travel speed/maximum travel speed) to derive the actual fuel consumption. Using the shipping route from Busan to Rotterdam as an example (see Table 4), the fuel consumption at maximum travel speed is 4,455·53 tonnes. The vessel's maximum travel speed is 25·9 knots, and the average travel speed through the Northern Sea Route is 17·71 knots. Therefore, the actual fuel consumption will equal the maximum fuel consumption (4,455·53 tonnes) multiplied by the weighted factor (17·71/25·9), and the result is approximately 3,046 tonnes. This means that the fuel consumption per voyage between Busan and Rotterdam through the Northern Sea Route is 3,046 tonnes. The actual fuel consumption per TEU can then be derived by dividing the actual fuel consumption by the TEU of the vessel (5,551), and the result is approximately 0·55 tonnes. As for the emission factor used to calculate the carbon dioxide emissions, the Emissions Factor Table for various fuels as compiled by the Bureau of Energy of the Ministry of Economic Affairs (2015) was the primary source of reference used in this study. We primarily analysed the carbon dioxide emissions of the diesel engine. Based on the fuel type on the Emissions Factor Table, the carbon dioxide emission factor for the diesel fuel is 74,100 kg, which needs to be converted to 74·100 tonnes. By multiplying the actual fuel consumption by the carbon dioxide emission factor of 74·1, the carbon dioxide emission per voyage of 225,754·59 tonnes, which is approximately 225,754 tonnes, can be derived. By multiplying the fuel consumption per TEU of 40·67 by the carbon dioxide emission factor of 74·1, the value of carbon dioxide emission per TEU of approximately 0·55 tonnes can be derived. The same calculation can be applied to other port pairs.

Table 4. Estimates of Actual Fuel Consumption.

Note: ( ) represents tonnes.

The fuel consumption ratios in Table 5 show the efficiencies for transiting through the Northern Sea Route. The ratio is derived by dividing the fuel consumption when transiting through the Northern Sea Route by the fuel consumption when transiting through the European Sea Route. The higher the ratio is, the lower the navigation efficiency is in transiting through the Northern Sea Route, the more fuel is consumed and the higher the travel cost is. In contrast, the lower the ratio is, the higher the navigation efficiency is in transiting through the Northern Sea Route, the less fuel is consumed and the lower the travel cost is.

Table 5. Estimates of Fuel Consumption Ratio.

Based the above calculations, the amount of fuel saved and the amount of carbon dioxide emissions reduced by transiting from the various ports through the Northern Sea Route are ranked in descending order as follows: Yokohama > Busan > Shanghai > Kaohsiung > Hong Kong > Singapore. The navigation efficiencies of the various ports are also ranked in the same descending order as the amount of fuel saved and the amount of carbon dioxide emissions reduces. The results of the calculation showed that travel distance impacts fuel consumption and carbon dioxide emissions when travelling through the Northern Sea Route, and the fuel consumption ratio indicated the navigation efficiency as well as the travel cost when vessels transit through the Northern Sea Route. Xu et al. (Reference Xu, Yin, Jia, Jin and Ouyang2011) also calculated the fuel cost of vessels navigating through the Northern Sea Route and demonstrated a fuel cost saving of ~ 3–5%, which translated into a saving of ~ $2,610,000–$8,140,000, which did not include the carbon tax to be imposed by the IMO in the future. Given the current condition of the Northern Sea Route, if we compare the 10,000 TEU vessel used in the study by Xu et al. (Reference Xu, Yin, Jia, Jin and Ouyang2011) with the vessel used in the current study, travelling through the Northern route using the vessel size in this study is quite feasible after considering today's conditions.

7. RECOMMENDATIONS

The current study excluded several limitations and factors, which, however, are key to the opening of the Northern Sea Route. Commercialising the Northern Sea Route in the future holds real promise for development, while potentially posing a competitive threat to the Suez Canal. Below are the recommendations:

• • Assuming the building cost of Ice class vessels remains constant; a lower transit fee through the Northern Sea Route will grant the route a significant competitive edge over the European Sea Route. If the cargo volume through the European sea route increases, the cost related to increase in wait time at the Suez Canal will also increase. As the travel time through the Suez Canal becomes longer, the time-related cost for shippers will rise significantly, which will further accentuate the advantage of the Northern Sea Route. This means that the Suez Canal needs to lower its transit fee to compete with the Northern Sea Route.

• • If a maritime carbon tax is enacted and the rate is raised in the future, the faster the vessel travels, the more carbon dioxide is emitted and the more the carbon tax is incurred. According to the results of the analysis, transiting from various ports in Asia (except for Singapore) through the Northern Sea Route could significantly reduce carbon dioxide emissions. While the speed of vessels transiting through the Northern Sea Route is relatively slower, the Northern route will then have an even more significant advantage over the European route.

• • If vessels can pass through the Northern Sea Route all year long, the cargo market will most certainly be split between the Northern route and the European route. In terms of the fixed container vessels presently running schedules, even though the number of days for vessels to pass through the Northern Sea Route has increased due to global warming, it remains as a seasonal route, that is, vessels will remain idle for several months, which in turn will drive up the cost. Furthermore, the uncertainty in the distribution and movement of sea ice negatively affects the planning for the time-sensitive container shipping operation, which is also the primary reason why very few container vessels have embarked on a trial voyage through the Northern Sea Route. If any technological breakthrough happens in the manufacturing of Ice class vessels, together with the carbon tax policies, the disadvantages of transiting through the Northern Sea Route could be offset, and its advantages over the European route will be accentuated very quickly.

• • Based on the results of analysis in this study, fuel consumption of a ship correlates positively with the speed of the ship and the travel distance. In this study, the navi-gation efficiencies of various ports in Asia are closely tied to their distance from the Northern Sea Route. For ports in the low-latitude region such as Singapore, the calculated ratio of fuel consumption is higher, and hence transiting through the Northern Sea Route is less beneficial for them. For ports in higher latitude regions such as Busan and Yokohama, the calculated ratio of fuel consumption is lower, and hence transiting through the Northern Sea Route is more beneficial for them.

• • The maximum speed parameters of the engine are provided by the manufacturer. Therefore, the present study has adopted the AS/MS correction factor in the research hypothesis in an attempt to enhance the completeness of the parameters. Although we acknowledged that AS/MS is non-linear, we aimed to conduct a preliminary study to calculate the fuel consumption ratio of the Northern Sea Route. We suggest that future researchers can adopt the parameters based on individual engine speed into their studies.