Commentary: A reality check is needed on Arctic shipping

Richard Milne of the Financial Times has warned against getting too excited about the commercial potential of Arctic shipping. In the Arctic, there's a lot of talk about how new shipping routes will reshape global trade, but Milne says it will take a long time before these routes become more than a niche activity. This region is rich in natural resources, with about a third of the world's undiscovered gas and an eighth of its oil located there.

Additionally, abundant hydropower and geothermal energy make it an ideal place for data centers and other electricity-intensive industries. However, the pace of change in the polar region is often slow, despite being the fastest-warming region in the world. For example, despite decades of exploration, no oil or minerals have been exploited in Greenland, as pointed out by Milne.

The latest development in Arctic shipping is the launch of a regular service by Sea Legend, a Chinese container shipping company. This service will run a vessel between Ningbo in China and Felixstowe on the UK's east coast, utilizing the Northern Sea Route over the top of Russia. This comes after a record number of full transits through the Northern Sea Route last year, which can halve journey times from Asia to Europe.

Vincent Clerc, CEO of Danish shipping giant Maersk, told Milne that the commercial aspect of Arctic shipping is not there yet, suggesting it could be decades before it becomes a viable business proposition for most trade volumes. Even Maersk acknowledges that the Northern Sea Route has not met Russia's expectations, partly due to sanctions following the invasion of Ukraine, which have limited foreign ships to transporting Russia's own petroleum and mineral resources.

While China sees potential in the route as it looks for alternatives to trade routes that could be controlled by the US or its allies, the route's lack of reliability and high costs remain concerns.