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Evaluating the impact of Northern Sea Route fuel costs on bilateral trade between China and the EU

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Maritime Economics & Logistics Aims and scope

Abstract

The accelerated melting of the Arctic ice leads to the navigation of the Northern Sea Route (NSR) linking Asia and Europe, shortening transport channel between China and the European Union (EU). This has a significant impact on the China-EU bilateral trade which is analyzed in the present study. We present a framework based on a general equilibrium model for analyzing the impact of the NSR on the trade and the economies of China and the EU. Different fuel cost scenarios, consisting of fuel prices and sailing speeds on ice, are also considered. Specifically, we measure the changes in shipping costs between China and the EU, brought about by NSR navigation. These are used as a basis to quantify changes in transport technology. The Global Trade Analysis Project (GTAP) model is used to predict the trade and economic impacts. The results show that the NSR can save 0.98% in shipping costs and generate an increase in the exports of China and the EU in the order of 14,986 and 8,228 million US dollars, respectively. Among these exports, the mining industry shows the fastest growth, while the electronics industry experiences the largest increase in trade volume. Our findings reveal the potential of the NSR as an alternative route and its positive impact on bilateral trade between China and the EU. The results can provide a basis for shipping companies and governments to make decisions regarding the use of Arctic routes.

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Source: Authors, based on Eurostat data

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Acknowledgements

We would like to express our sincere gratitude to the editors and reviewers of MEL for their valuable assessment of our study and their useful suggestions to improve the quality of the paper. They have played a key role in refining our work. The authors gratefully acknowledge the financial support from the National Social Science Fund (21BGJ073).

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Authors and Affiliations

  1. School of Transportation Engineering, Dalian Maritime University, No1, Linghai Road, Dalian, China

    Ran Zhang & Zhuo Sun

  2. Department of Technology, Management and Economics, Technical University of Denmark, Kongens Lyngby, Denmark

    Jasmine Siu Lee Lam

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  1. Ran Zhang
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  2. Jasmine Siu Lee Lam
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  3. Zhuo Sun
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Correspondence to Zhuo Sun.

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Appendix A

Appendix A

 

Rotterdam

Antwerp

Hamburg

Piraeus

Le Havre

Distance via SCR

Ningbo-Zhoushan

10,561

10,546

10,851

7811

10,357

Qingdao

10,937

10,922

11,227

8187

10,733

Shanghai

10,641

10,626

10,930

7890

10,436

Rizhao

10,945

10,930

11,234

8194

10,740

Tangshan

11,161

11,146

11,451

8411

10,957

Tianjin

11,206

11,191

11,495

8455

11,001

Shenzhen

9855

9840

10,145

7105

9651

Dalian

11,050

11,035

11,340

8300

10,846

Guangzhou

9867

9852

10,156

7177

9663

Yantai

11,024

11,009

11,314

8274

10,820

Distance via NSR

Ningbo-Zhoushan

8314

8390

8236

11,063

8485

Qingdao

8288

8364

8210

11,037

8459

Shanghai

8265

8341

8188

11,015

8437

Rizhao

8324

8400

8247

11,050

8472

Tangshan

8485

8561

8408

11,211

8633

Tianjin

8530

8606

8452

11,256

8678

Shenzhen

9087

9163

9009

11,836

9258

Dalian

8372

8448

8295

11,098

8520

Guangzhou

9141

9217

9063

11,890

9312

Yantai

8349

8425

8271

11,075

8497

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Zhang, R., Lam, J.S.L. & Sun, Z. Evaluating the impact of Northern Sea Route fuel costs on bilateral trade between China and the EU. Marit Econ Logist (2024). https://doi.org/10.1057/s41278-024-00285-1

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