A Binary Probit Model to Analyze Shipper and Forwarding Company Perspectives for Container Shipping on the Northern Sea Route

This study explores shipper and forwarding company perspectives for container freight shipping using the Northern Sea Route (NSR). A stated preference survey of freight shippers and forwarding companies in East Asia and Europe was conducted to understand their perspectives towards the use of the NSR to ship cargo. A binary probit model is used to investigate the correlation between the operational and behavioral characteristics of freight shippers and forwarding companies and their attitudes towards maritime freight carriers operated through the NSR. The model estimation results indicate that carriers may experience a drop in demand if they start using the NSR, at least during the initial period of operation. Some perceptible differences in the responses of shippers and forwarding companies were observed, with forwarding companies more likely to change their current carriers if it starts using the NSR. Shippers and forwarding companies that have large volumes, have shipments from East Asian countries but not to them, and/or ship chemical commodities, were found to be more likely to change their current carrier. This indicates that the decision-makers of maritime freight carriers should incorporate potential demand loss into NSR feasibility and economic efficiency analyses. The study also finds that the potential demand reduction can be mitigated by offering lower shipping prices, shorter transit times, and sufficient reliability. To achieve this, maritime freight carriers need to communicate with related agencies and shipbuilding companies in order to resolve safety and operational issues associated with the NSR operation.