The changing conditions in the Arctic region have become an increasing source of scientific interest – manifesting itself most visibly in the year-to-year increase in average seasonal temperatures, the loss of land-fast ice, and the melting of permafrost. Along with these changes, also comes the thinning of sea-ice – leaving longer windows of time during which the Arctic ocean and coastal sea-lanes are navigable. Though the changes to the Arctic environment have serious consequences for the functioning of Arctic ecosystems and important bio-geochemical processes – it has some positive implications for some kinds of human activities, like shipping. With less need for costly ice-breaking escorts, and the possibility of achieving faster speeds (and shorter routes) – the economics of shipping through the Arctic could become more appealing to commercial transporters as environmental change in the Arctic accelerates. For a decision-maker based in Europe (or the eastern coast of the US), the alternative southern routes (i.e. through the Suez or Panama canals) are ice-free year round, but entail travelling longer distances in order to reach Asian-based destinations.

In this work we employ an economic model of shipping that optimizes the costs of transport across alternative routes, by choosing the least-cost route to Asia – either through the Northern Sea Route, or through the Suez canal route – taking the ice-free Baltic ports (like Aarhus, Helsinki or St Petersburg) as the origin. We account for the commercial value of the goods being transported, in our shipping route choice decision-making, and account for how sea-ice thickness affects speed, fuel consumption, the need for costly escorts along the Arctic route.

Our work combines transportation modeling, and the underlying economics of choice, with the outputs from comprehensive Earth System modeling efforts which capture changes in sea-ice conditions over time. We account for other system-level feedbacks, such as the effects of changes in land-based, human settlement patterns and the potential changes in the cost of land-based transport (due to the deterioration of roads & pipelines as permafrost melts). These are important factors that affect the comparative economic costs and benefits of shipping, which capture in the decision problem of the transport agent.