Korea has started shipping cargo via the Northern Sea Route instead of Suez, despite the sanctions. Who wins and who loses

Brief content:

• The flight of the South Korean container ship PanStar Acro has shown that the Northern Sea Route is able to significantly reduce the delivery time of goods between Northeast Asia and Europe. The ship reached Rotterdam from Busan in 22 days, about 10 days faster than the estimated route through Suez. For carriers, the economic effect consists of reducing fuel costs and ship operation, saving on time charter and accelerating capital turnover. Therefore, the NSR is most interesting for expensive and time—sensitive goods such as electronics, automotive components, equipment and other high-value-added products.
• Russia is becoming the main potential beneficiary of the route's development, but the main source of income is not the passage of foreign vessels themselves. Icebreaking and navigation services, ports, transshipment, storage, supply, repairs and other infrastructure can bring money. However, so far the total cargo flow of the NSR is about 38 million tons, while international transit is only 3.2 million tons. Therefore, the financial result for Russia will depend on whether the country can turn individual foreign flights into regular cargo traffic.
• Potentially, the Suez Canal and the southern logistics hubs, which earn money from transit, bunkering and ship maintenance, may lose part of their income. However, it is too early to talk about a large-scale redistribution of cargo flows: PanStar was sailing in a favorable season, without direct icebreaking and with incomplete commercial loading. The Arctic route remains seasonal and requires additional costs for ice class, insurance, navigation and safety. Therefore, the Korean flight confirmed the technical capability and time advantage of the NSR, but the economics of a regular fully loaded container line have yet to be proven.

An experimental flight of the South Korean PanStar Acro through the Northern Sea Route has shown that the Arctic is already able to reduce the delivery time of goods from Asia to Europe by about 10 days compared to the route through Suez. Against the background of the crisis in the Red Sea, this turns the NSR from a predominantly Russian raw material highway into a potential competitor to the southern trade corridors. If regular container lines appear behind single passages, Asian exporters and the Russian Arctic infrastructure can benefit, while Suez and the traditional logistics hubs of the South risk losing part of their income. But the main question remains open: PanStar has proved the advantage of the NSR in time — now the Arctic will have to prove it in money.

The PanStar Acro Precedent

The South Korean ice-class container ship PanStar Acro successfully completed a test transit along the Northern Sea Route (NSR) in mid-September. The ship reached Rotterdam in about 22 days. Then the container ship continued its voyage through European ports and arrived in Gdansk, Poland. This is the first passage of a Korean container ship through the Arctic in 10 years. The entire passage took 22 days, of which 6.5 days along the Northern Sea Route. The vessel cut about 7,000 km compared to the traditional route through the Suez Canal and saved more than 11,000 km compared to the forced detour around the Cape of Good Hope (this is required due to the risks of navigation through Suez amid the war in the Middle East). The time gain ranges from 10 to 18 days, respectively.

The flight of the Korean PanStar Acro is a geopolitical precedent. The flight took place in a difficult sanctions environment: the organizers consulted in advance on compliance with international restrictions, and the use of paid Russian services, including icebreaking, was considered a potential source of additional sanctions risks. Nevertheless, the shipowner paid the infrastructure tariffs and complied with all the regulations of the Russian NSR administration. Due to the favorable ice conditions, the vessel did not have to request direct icebreaking.

The flight of the Korean vessel is a green light for the largest economies of the Asian region, which previously took a cautious position regarding the NSR.

First of all, we are talking about China. Beijing has been testing the Arctic route for more than 10 years: since 2013, Chinese shipping companies have begun conducting trial voyages along the NSR, and in recent years container traffic between China and Russian ports has become noticeably more active. In 2024, Chinese ships transported cars and automotive components, building materials, clothing and chemical products along the northern route, and timber, pulp, polyethylene and cardboard in the opposite direction. So far, we are not talking about a full-fledged year-round line like the traditional routes through Suez, but about a growing series of seasonal flights, which allows China to accumulate practical experience in Arctic logistics and test the economics of the route on different types of cargo.

The successful passage of the Korean PanStar Acro gives Chinese businesses a trump card — an independent confirmation of the route's operability for direct delivery of goods to the EU, while the trade turnover between China and the European Union exceeds $700 billion per year.

In addition to China, the Korean example may be followed by Japan, an export—oriented economy whose marginality critically depends on the speed of supply of high-tech components (Time to Market). The successful case of Seoul can be interpreted by Tokyo as a reason to review logistics strategies in order not to lose competition to its neighbors.

The NSR may turn out to be an alternative even for India. "" Although New Delhi is actively developing the North–South transport corridor (via Iran), however, the NSR is considered by Indian business as a strategically important and safe access to the energy markets and northern ports of Europe, bypassing the permanently "burning" Middle East.

For the "new factories of Asia" — Vietnam and Malaysia, whose economies are tied to the export of electronics, semiconductors and textiles to Europe, the crisis in the Red Sea was a direct blow to margins. The turnover of containers has been delayed, and freight has increased significantly. For them, the NSR opens up the possibility of feeder transportation: to deliver goods by small vessels to the nodal ports of China or Busan, South Korea, and from there to send them by express along the ice route.

Singapore stands apart as the main beneficiary and transshipment hub of the traditional southern route through the Strait of Malacca. Realizing the long-term threat of the monopoly of the southern corridors, Singapore has been granted permanent observer status in the Arctic Council since 2013.

The winning cargo carriers: how much can you save on Arctic logistics

For Asian exporters and shipping companies, the Northern Sea Route is interesting not because of geopolitics, but because of time. The more expensive the ship and the cargo on board, the more expensive every extra day at sea is. Therefore, the main product that the NSR sells is not kilometers, but a reduction in the turnover cycle.

On the route between Northeast Asia and Northern Europe, the gain may be several thousand nautical miles compared to the southern route. The advantage is becoming especially noticeable now, when a significant part of carriers avoid the Red Sea and instead of Suez circumnavigate Africa through the Cape of Good Hope. It is with respect to such an extended route that the Arctic economy looks the most attractive.

The first saving item is fuel. A medium- and large-class container ship, depending on its size, speed, and engine, can consume dozens or more than 100 tons of fuel per day. If the northern route allows you to remove the conditional 10-15 running days from the flight, we are potentially talking about hundreds of thousands of dollars in savings on the bunker. However, it cannot be considered linearly: in Arctic waters, the ship travels at a different speed, the flow rate depends on the ice conditions, and icebreaking and waiting can eat up part of the winnings.

The second item is the cost of the vessel itself. While the container ship is at sea, the shipowner pays for its operation or the charterer bears the costs of a time charter (daily rental of the vessel together with the crew). At a rate of tens of thousands of dollars per day, reducing turnover by even 10 days can free up several hundred thousand dollars more.

The third point is the cost of insurance. Due to the Houthi attacks, the war risk premium on the southern route is increasing, which significantly increases the premium for ship insurance. For a container ship priced at $100 million, one pass under the gun of drones costs $700,000 — $1 million in additional insurance fees. In the Arctic, the ice fee is comparable in price, but there are no typical risks of Houthi attacks in the Red Sea (although there are natural risks here).

Fourth, it is important to take into account the cost of capital — this is especially important for expensive goods. If there is $100 million worth of goods on board, two extra weeks of delivery means that the $100 million remains frozen in transit during this time. With a capital cost of 10% per annum, reducing the logistics cycle by 14 days gives the cargo owner about $380 thousand in economic benefits only by accelerating capital turnover. With a cargo worth $ 200 million, the effect is already approaching $ 770 thousand.

However, a short route does not mean a cheap one — the Arctic route has its own increased costs. The shipowner has to take into account the ice class of the vessel, possible icebreaking wiring, navigation support, special requirements for the crew, insurance, communications and more expensive rescue infrastructure. In addition, the time advantage exists only when the ship actually passes through the Arctic without a long wait and a serious decrease in speed.

However, the southern route now carries its own premium: the lengthening of the route around Africa, additional days of operation, increased insurance costs and the risk of another schedule violation. As a result, the shipowner no longer compares the "expensive Arctic with the normal Suez," but two different baskets of costs and risks.

Thus, it will still be more profitable to slowly transport cheap consumer goods or plastic toys across the southern oceans on giant slow-moving ships and save on scale. The NSR is becoming an artery for high-value-added goods, where the Time to Market factor is critical: industrial components, automotive components, batteries, telecommunications and server equipment, electronics, and equipment for enterprises.

In addition, the economy of the regular line consists of earnings on the route in both directions. The NSR has an unusual advantage here.: The route itself runs along the largest Russian raw material base. Theoretically, counter logistics to Asia can be formed here: petrochemicals, fertilizers, metals and other industrial goods. However, there is an important limitation here: tanker or bulk cargo cannot be automatically converted into a container ship's return load.

To visually calculate the savings, you can compare the cost of three routes for a Korean carrier.

The comparison is not a calculation of the full cost of the flight: PanStar sailed in favorable ice conditions and without direct icebreaking. However, if we compare in such conditions and based on open data, it turns out that the NSR provides about $450 thousand in ship time savings compared to Suez and about $765 thousand with the route around the Cape of Good Hope, not counting additional fuel savings. However, this is not a net profit: it is necessary to deduct the "Arctic premium" from it — icebreaking wiring, special insurance, ice navigation, crew training and communications. The exact amount of these costs has not been disclosed and depends on the ice class, season, and posting conditions. Therefore, for now it is more correct to say that the NSR has confirmed the advantage in time, but its advantage in the full cost of the flight has yet to be proved.

There is one more caveat: the PanStar Acro was an experimental flight, not a full-fledged linear flight. With a capacity of 2,758 TEU (Twenty-foot Equivalent Unit — one standard 20-foot container, the standard unit of measurement for container shipping), it left Busan with only 737 TEU of commercial cargo and 100 empty containers. Therefore, the experiment confirmed the speed of the route, but has not yet proved the economics of a fully loaded container ship.

Russia's Victory: Turn geography into rent

For Russia, the main benefit from the development of the NSR is to build an entire ship maintenance economy around the route. Such infrastructure facilities include icebreaking, navigation, hydrometeorology, communications, emergency rescue services, port transshipment, storage, supply, repairs and, in the future, bunkering.

Historically, the country has already monetized its position between Europe and Asia several times — from the path "from the Varangians to the Greeks" to the Trans-Siberian Railway. The NSR offers the same geographical logic in the 21st century.

The icebreaking fleet is the central asset here. At the NSR, the icebreaker becomes not just a government instrument of presence, but part of the commercial infrastructure. "Atomflot" is already officially providing icebreaking services, and the tariff depends on the gross tonnage and ice class of the vessel, the season and the number of wiring zones. The more international flights that arrive on the route, the greater the potential load on the infrastructure that Russia is already largely creating for its own Arctic projects.

In addition to the icebreaker, a commercial vessel needs an ice forecast, hydrometeorological information, communications, navigation support and the opportunity to receive assistance in case of an accident. In 2025, 1,521 voyages were completed along the NSR, and 74 vessels received information and navigation support services, which is 25% more than a year earlier. The state is simultaneously expanding the emergency rescue fleet: federal plans provide for 14 such vessels, four nuclear and four non-nuclear icebreakers for the NSR.

The next level is ports. If the NSR remains just a sea corridor, a significant part of the money will pass by Russia along with the ship. If the ships are reloaded here, replenished, repaired and receive other services, Russia will begin to earn on every additional action around the voyage. Therefore, economic importance is given not only to Murmansk and Arkhangelsk in the west, but also to Vladivostok and Petropavlovsk-Kamchatsky in the east. Russian transport documents explicitly consider the latter as a potential NSR hub for container cargo transit between Northeast Asia and Europe.

In terms of money, the potential of the NSR is much wider than the payment for icebreaking wiring. Today, about 38 million tons of cargo per year pass through the route, while the official target for 2030 is 109 million tons. But revenues will not grow in proportion to the number of flights: it is more profitable for Russia not just to take a ship through the Arctic, but to force it to use Russian infrastructure. For example, for a container ship similar in size to the PanStar Acro, one call to Arkhangelsk for only a few basic port charges would have given about 1.5 million rubles, even before paying for transshipment, storage, towing, supply and repair. If the NSR turns from a transit corridor into a system of Arctic hubs, each foreign flight will be able to leave money on several floors at once: icebreaker → navigation → port charges → transshipment → storage → supply and repair.

However, at the current stage, Russia is only incurring huge capital expenditures on icebreakers, ports, communications and rescue infrastructure, while international transit remains small. An economic victory will come when there is a regular schedule and the infrastructure starts to earn steadily on someone else's cargo flow.

Losers: Suez, Egypt and the southern hubs

If the NSR begins to gain momentum, the potential losers will primarily be the Suez Canal and Egypt, and in the longer term, part of the ports, bunkering and transshipment hubs of the southern route.

In the pre-crisis year of 2023, 26.4 thousand ships passed through Suez, and the revenue of the Suez Canal Authority reached a record $10.25 billion. After the outbreak of the crisis in the Red Sea, the picture changed dramatically: in 2024, the number of passages was halved to 13.2 thousand vessels, and revenue collapsed by 61% to $3.99 billion.

So far, shipping traffic is mainly flowing into a route bypassing Africa around the Cape of Good Hope, but potentially some of the cargo can be redirected through the NSR — no longer on a situational basis, but on a permanent basis. If part of the Asian-European container traffic once gets a foothold on the NSR, it will be more difficult to return it to Suez after the normalization of the Red Sea.

Even a small migration has a price. If, purely for scale, we take the record revenue of Suez in 2023 — $10.25 billion — then the loss of every 1% of the previous revenue base is equivalent to about $100 million per year. This is not a forecast or a linear relationship: tariffs vary by type and size of vessels. But the figure clearly shows the cost of each percent of the global flow for which competition begins.

The second potential loser is the traditional transshipment and bunkering hubs of the southern route: Jebel Ali in the UAE, the ports of Djibouti and, above all, Singapore. Their economy is based not only on the delivery of goods to the end user. Taking the long southern route, ships buy fuel, replenish supplies, change crews, reload containers, and use repair and logistics services.

The market scale is huge: Singapore sold a record 56.77 million tons of marine fuel in 2025 and processed 44.66 million TEU, while Jebel Ali handled 15.5 million TEU in 2024.

Another loser can be called an "extra kilometer." The NSR competes not so much with a specific country as with the entire economy of the long route.

If a container arrives from Asia to Europe 10 days earlier, someone does not receive 10 days of a time charter, someone sells less fuel, some transit channel does not receive a fee, and an intermediate port may not need a vessel call. If there is a regular schedule for experimental international passages along the NSR, it will no longer be a struggle of routes on the map, but a redistribution of infrastructure rents between the south and north of Eurasia.

Losers in Geopolitics: When Allies Start Counting Money

The PanStar Acro flight is interesting not only as a transport experiment, but also from the point of view of geopolitics, because South Korea is an ally of the United States and a participant in the sanctions pressure on Russia. The PanStar case demonstrates a subtle process: economic interest can exist in parallel with political constraints.

Moreover, the Koreans built the experiment carefully. PanStar Acro passed the Russian section of the NSR without direct icebreaking wiring. Korean experts explicitly pointed out that payment to the Russian side for icebreaking services could create additional sanctions risks. The favorable ice conditions allowed the vessel to overcome the section on its own in about 6.5 days. The paradox for Russia is that the more it can earn from foreign vessels, the more noticeable the sanctions exposure becomes for these vessels. If such flights become regular, there will be a conflict between the economic benefits of carriers and restrictions.

There is also a second layer — the legal one. Russia regulates navigation on the NSR through its own licensing system and justifies special powers, in particular, Article 234 of the UN Convention on the Law of the Sea, which allows, under certain conditions, to introduce special rules in ice-covered areas to prevent pollution. However, the scope of Russian powers and the relationship of these rules to freedom of navigation remain the subject of international legal disputes.

Therefore, the commercialization of the NSR creates an unusual asset for Moscow. Russia does not own the Arctic Ocean, but its coast, ports, icebreaking fleet, rescue infrastructure, and current administration system give it significant influence on the practical conditions of travel along the route.

Another dilemma is the climate. Shortening the route potentially means fewer running days and, with comparable ship technologies and sailing conditions, lower fuel consumption. But increased shipping in the Arctic carries its own environmental risks, from accidents and spills to black carbon emissions, which, settling on snow and ice, accelerates their heating and melting. Therefore, the environmental effect of the NSR is not limited to reducing the distance: the benefits of lower fuel consumption must be compared with the additional burden on the sensitive Arctic ecosystem.