How will the opening of the Northern Sea Route influence the Suez Canal Route? An empirical analysis with discrete choice models

The Arctic ice has been observed to be decreasing both in terms of extent and thickness since the 1950s in all seasons due to global warming. The retreat of the Arctic sea ice creates unprecedented opportunities to maritime shipping industry and opens the door for exploring new navigable shipping routes across the Arctic Ocean. The Northern Sea Route is of particular interest as it has the most favorable ice conditions among all transarctic routes and the Russia government has been actively encouraging international use of the sea route. This paper aims to quantitatively assess the impact of opening of the Northern Sea Route on the Suez Canal Route by means of discrete choice model. Industrial preferences and choices under different situations are gathered by a state preference survey. Logit models are then built based on choice data from the survey. Based on modeling results, scenario analyses are conducted to predict company's choices under difference cases and thus some policy insights are put forward.