Why Korea is suddenly talking about Arctic shipping route

Korea Herald

20-07-2025

Northern shortcut promises speed, savings — but can it deliver?
Amid intensifying climate shifts, geopolitical tensions and a scramble for new trade corridors, the Arctic shipping route is quickly emerging as a key term in South Korea's maritime strategy — touted as both a visionary opportunity and a logistical gamble.
President Lee Jae Myung and the ruling Democratic Party of Korea have championed the once-remote Arctic passage as a pillar of Korea's long-term logistics agenda, positioning Busan at the forefront of this northbound shift in global shipping.
Most recently, Oceans Minister nominee Chun Jae-soo cited the Arctic route as a key reason for relocating the Ministry of Oceans and Fisheries to Busan, part of a broader plan to decentralize Seoul-centric functions and build a new growth engine in the southern port city.
The Arctic route strategy involves positioning Busan as a key logistics hub for a northern shipping passage connecting East Asia to Europe via the Arctic Ocean, offering Korea's largest port city a potential breakthrough from industrial decline and population loss.
Once blocked by thick sea ice and harsh conditions, the route is drawing attention as climate change and technology advances are expected to make commercial navigation viable within five to 10 years.
Among several Arctic Ocean passages, Korea is primarily focusing on the Northern Sea Route. It runs along the Russian coastline from the Bering Strait in the North Pacific to the Barents Sea behind the Scandinavian Peninsula, bypassing traditional maritime choke points in Southeast Asia and the Suez Canal.
According to the vision, the Arctic route could reduce the distance between Busan and Rotterdam in the Netherlands by about 7,000 kilometers, bringing it down to approximately 15,000 kilometers.
In addition to bypassing geopolitical risks, piracy and congestion in major straits that have disrupted global logistics along traditional routes, it is expected to provide access to resource-rich development projects in Russia's Arctic region.
Busan: From port city to polar hub?
'Busan is located at the optimal starting point of the Arctic route to Europe,' said Yang Chang-ho, executive vice president of the Korea Shipowners' Association, during a press conference in June.
'Consolidating cargo from China, Japan and Southeast Asia in Busan and forwarding it through the Arctic route is one of the most economically viable scenarios.'
The idea is based on Busan's established status as the world's second-largest transshipment port, after Singapore, bolstered by its location at the crossroads of East Asia's industrial belt — South Korea, China and Japan.
In 2024, about 13.5 million twenty-foot equivalent units, representing 55 percent of Busan's total freight volume, were transshipped through the port, making it a gateway connecting East Asian ports with distant destinations in Europe and North America.
The port is also told to benefit from strong hinterland infrastructure, lying close to Korea's largest shipbuilding yards and petrochemical complexes.
'Despite concerns about Busan's limited bunker fuel storage capacity for long-haul routes, the city functions effectively due to its proximity to Ulsan's petrochemical complex,' said Choi Su-beom, secretary-general of the Korea Arctic Shipping Association.
'Ships already take on bunker fuel while unloading in Busan, so future eco-friendly fuel bases, such as those for ammonia, do not necessarily need to be located within the port itself.'
Route still stuck in ice
Currently, the route accounts for less than 1 percent of global maritime traffic, due in part to international sanctions imposed on Russia following the outbreak of its war in Ukraine in 2022.
Even before sanctions, however, major European shippers such as Mediterranean Shipping Co., CMA CGM, Maersk and Hapag-Lloyd publicly ruled out using the route, citing environmental concerns related to icebreaking and extreme weather.
Korean shippers also have shown limited interest. Hyundai Glovis and Pan Ocean tested the route in the 2010s, but activity stalled due to the high costs of ice-class vessels and the limited navigable seasons on the route.
Limited transshipment hubs and harsh climatic conditions, which require enhanced cargo protection, are also seen as factors undermining the route's profitability.
Han Jong-gil, a logistics professor at Sungkyul University, said, 'We must factor in costs for mandatory requirements under local regulations, such as icebreaker escorts and polar-certified pilots.'
He estimated that the new route could increase costs by 5 to 30 percent compared to the traditional route.
'Additionally, since Russia controls the entire route, what can we do if the country blocks the passage there?' Han added.
Polar race heating up
Despite the uncertainty, international competition for the Arctic shipping route is gaining momentum, largely driven by China, which promotes it as the 'Polar Silk Road.'
China's NewNew Shipping operates a container carrier service between Shanghai and Russia's northwestern city of Arkhangelsk, raising speculation that Shanghai aims to become a key hub for the northern route.
Chinese President Xi Jinping and Russian President Vladimir Putin issued a joint statement pledging to 'enhance mutually profitable cooperation on the Arctic shipping route," during Xi's visit to Moscow in May.
Japan has scaled back its involvement in the route since the start of Russia's war in Ukraine in 2022, but continues to hold stakes in Arctic resource development, aligning with Russia's interest in partnering with foreign companies to tap into its Arctic resources.
Earlier this month, a senior official from the Japanese government-backed Organization for Metals and Energy Security reaffirmed its intention to maintain a 10 percent stake in the Arctic LNG 2 project on Russia's Arctic coast, according to Russia's Tass news agency.
The stake is jointly held with Mitsui O.S.K. Lines, Japan's second-largest shipping company, despite years of sanctions on the project.
Experts stress that coordination with the Russian government, now stalled due to sanctions, is essential for accessing the route, as navigability depends heavily on Russian policies.
With such coordination difficult under current conditions, they also point to the need for Korea to nurture competitive shipping companies based in Busan that can secure sufficient cargo volume to sustain operations along the Northern Sea Route.
"In terms of total volume — including imports, exports and transshipment — Shanghai far surpasses Busan, handling more than twice the amount," Choi added.
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