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Will China’s New Shipping Route “Change the Face of World Trade?”

In what may turn out to be an historically significant voyage, Yong Sheng, a 19,000 ton cargo ship,  is scheduled to take a new Arctic route through the Bering Strait later this month. The ship belongs to COSCO, China’s largest shipper.

The world of business has taken notice because many believe the  previously untrodden route will dramatically reduce shipping times, slashing the costs of transportation and fuel consumption.

“The Arctic route can cut twelve to fifteen days from traditional routes so the maritime industry calls it the ‘Golden Waterway”,” said a COSCO spokesperson. Maritime Professor Qi Shaobin concurs, “It will change the market pattern of the global shipping industry because it will shorten the maritime distance significantly among the Chinese, European and North American markets.” Sam Chambers, editor of Sinoship magazine, also emphasized the possible historical significance: “It’s potentially going to change the face of world trade.”

The Yong Sheng will reach Rotterdam, a journey of approximately 3,380 miles, in just over 30 days. Normally, that same trip would take at least two weeks more. Chambers expects that this will become a preferred route for Chinese shippers. “The Chinese will use the Arctic route in a very big way. It’s all about having options, having alternatives in case of emergency.”

Others are more skeptical of the importance of the new shipping lane. According to Zhang Yonfeng from the Shanghai International Shipping Institute, “In the near term, the economic value for shipping is definitely not big. The navigable period of the passage is relatively short while the port and pier infrastructure along the route is incomplete.” Some analysts believe the development of that infrastructure will take a considerable amount of time.

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Others point out that the route is only navigable for four months out of the year, recently made available due to the polar ice melting that has resulted from global warming. Also, as China seeks to expand trade in Asia and Africa the route might gradually become less significant. Currently, it’s biggest export destination is Europe at $385 billion in goods. China’s total foreign trade volume reached $3.87 trillion last year.

Still, the route is a portent of China’s more aggressive involvement in Arctic affairs generally. According to Zhang, “The opening of the new shipping route indicates China is participating more in Arctic Ocean affairs.” Just three months ago, China won observer status in the Arctic Council, a conglomerate of nations interested in exploiting the region’s potentially rich mineral and energy resources. The council includes Canada, Finland, Iceland, Norway, Russia, Denmark, the United States and Sweden.

Some analysts forecast that as much as 15 percent of China’s international trade could pass through the Arctic route in as little as seven years.