A concise overview of this study is described in this introductory chapter. First, there is the context to the topic selected. After that, we present the research purpose and research questions. Finally, there is a presentation of the structure of this thesis.
1.1 Motivation of the study
Globalization of production is inextricably linked to the globalization of trade since one cannot exist without the other. According to Rodrigue et al. (2013), international trade has significantly expanded in scope during the last 600 years, allowing it to play an even more active part in countries' economic lives. Admittedly, the significant commercial dynamism in recent decades is partially clarified by the relatively well-organized distribution networks, facilities, and transport (Krugman, 1991). International trade is a significant driver for the mutual collaboration between national economies and is one of the world's most critical economic practices. With increased spatial interdependencies between global economic elements and their integration level, the extent of globalization is indicated through international trade. Technological advancements in the transportation industry have accelerated this tendency. It has reached the stage where longer distances can be exchanged for a shorter time and various cost scales.
Nowadays, freight transportation is an essential activity, supporting economic activities of increasing world trade globalization. Sea transportation is the dominant player in terms of international freight transportation. Sea transport is the cornerstone of globalized commerce and the supply chain, with more than four-fifths of the world's merchandise trade being shipped by sea by volume (UNCTAD, 2019). This is due to several advantages, including a relatively low price and high throughput, even though sea transportation takes longer and depends significantly on weather conditions.
Recently, the sustainable development of the supply chain of freight transportation has become more and more popular. Sustainability aims at adapting to current needs without affecting future generations' ability to satisfy their needs. The sustainability framework is composed of three aspects: economic, environmental, and social, which are often referred to commonly as profits, the planet, and people. One of the most critical global sustainability players is the international maritime sector (Yuen, Thai, Wong & Wang, 2018). Sustainable
development depends not only on the behavior of different actors, including international shipping companies but also on global regulation and domestic regulation. Most previous research focuses on economic, environmental aspects (Kontovas & Psaraftis, 2011; Cheng, Lai, Venus Lun & Wong, 2013; Dong, Christiansen, Fagerholt & Chandra, 2020) and often neglect the social aspect. It is not clear how marine freight transportation can be seen in all three aspects.
The increase of trading ties between Europe and Asia leads to the growth in freight flows between East and West. The Suez Canal, or the so-called Royal Route, is the primary route between these locations. Since 1975, the Suez Canal has served as the primary commercial route. It is the route with the most extensive container shipping routes between Asia and Europe, in 2019 at 507,406,000 tons ("SCA - Navigation Statistics'', 2019). The reduction of the arctic ice covering provides a new maritime opportunity for freight transportation between Northern Asian and North-Western European markets. The North Sea Route (NSR) can be further developed as a potential alternative beyond the Suez Canal.
The Russian legal regulations defined the NSR as a shipping lane from the Novaya Zemlya to the Bering Strait. NSR is a part of the North-East Passage (NEP). Historically the motivation to navigate the NSR has been initially economic. The NSR is critical for the social, economic, cultural growth of remote Arctic regions and international trade in the Arctic transportation system (Hong, 2012). About ten years ago, the Russian regulation on sailing along the NSR was changed to make it more favorable for the users of the NSR.
Simultaneously, there is still a lack of understanding of the NSR feasibility for increasing freight transportation and making it more sustainable in the Arctic harsh conditions (Tsvetkova, 2020).
1.2 Research Purpose
Overall, the master’s thesis aims to explore how sustainable development is shaped within the Northern Sea Route freight transportation. The master thesis implies a qualitative case-study approach. Our empirical case provides insights into the challenges and nuances of freight transportation along the NSR. Arctic seas are characterized by many challenges for the development of freight transportation, such as extreme weather conditions, seasonality of the route, cargo unavailability, etc. Many actors are involved in this process, and there is a conflict of interest between them (Tsvetkova, 2020). So, this fact may restrict the
development of NSR freight transportation and make it more sustainable. To reach the overall purpose, we have decided to divide it into four research questions (RQs) to make the case presentation more understandable.
The establishment of frequent lines on the NSR poses a real opportunity in the immediate future. In the last 20 years, many papers on NSR shipping problems seem to have emerged and had their sole targets and focuses. A variety of studies have explored NSR transport’s viability, revealing both benefits and difficulties (Ho, 2010; Hong, 2012; Buixadé Farré et al., 2014). With the increasing transit between Europe and Asia in mind, the development of NSR is quite essential. That poses the first question:
RQ1: How has NSR maritime freight transportation developed for the last decade?
Sea shipping is the cheapest transportation way and can carry a tremendous amount of cargo on a vessel. During more extended periods, the ice melting in the Arctic will create new paths for faster shipping. Transport economists have always been interested in economic and freight transport development (McKinnon, 2007; Tapio, 2005; Moschovou, 2017).
Economic activity has a strong positive association with freight growth at the stage of industrial development (Alises, Vassallo & Guzmán, 2014). It also raises the following question:
RQ2: How does the development of NSR maritime freight transportation contribute to the economic aspect of sustainability?
The Arctic is so vulnerable to any changes to environmental impact. NSR reflects a decrease of around one-third of total shipping distances and transport days for the Suez Canal currently in operation, which could effectively result in improvements in global supply chains between Europe and East Asia (Bekkers, Francois & Rojas‐Romagosa, 2017).
However, sea transport relies strongly on fossil fuels (Wan, el Makhloufi, Chen & Tang, 2018). With rising NSR shipping traffic, the possibility of environmental impacts rises. As a result, the next question arises:
RQ3: How does the development of NSR maritime freight transportation affect the environmental aspect of sustainability?
Indigenous and local people living in very distant regions like the rest of the world, living elsewhere, desire and need the assurance that people live in a healthy environment, where
they may feel safe and secure now and in the future. However, not all social interests are linked directly to the climate and environment. Connectivity needs are steadily increasing in communities that live in Arctic areas. There is not much research or information on the lives of local people living in remote Arctic places, nor how they connect with the world in such remote areas. As a critical maritime transport system, the NSR played a significant role in socio-economic growth (Andreeva, 1998). The development of NSR, which will undoubtedly affect Arctic society, leads to the question:
RQ4: How does NSR maritime freight transportation development affect and contribute to the social aspect of sustainability?
Different kinds of qualitative tools and techniques, including statistics, have been used to find an answer to each of our research questions.
1.3 Organization of the thesis
This master thesis is divided into six chapters. The thesis is structured as follows:
- Chapter 1 presents the study’s motivation, research purpose, and outline of the master's thesis. The chapter provides an overview of the objectives of the research.
- Chapter 2 contains the literature review that is relevant to the research topic.
- Chapter 3 describes the research methodology and research approach applied in the dissertations and the arguments or justifications for the choices.
- Chapter 4 indicates the empirical findings of the research. The results are the information from the researchers' interviews, which form the foundation of the research's primary data and knowledge from other secondary sources.
- Chapter 5 is the discussion chapter of the thesis that also explains the researchers’
findings.
- Chapter 6 is the concluding chapter of the study and comprises the conclusion and implication, including implications for theory, implications for practice, limitations, and suggestions for future research.