S Korea rivals China for Arctic route to Europe

 Seoul hopes sea highway wil lessen reliance on Hormuz strait and revive city of Busan

 Financial Times UK 5 Sep 2026 DANIEL TUDOR — BUSAN DEMETRI SEVASTOPULO — WASHINGTON Addi tional report ing by Richard Milne in Oslo 

The Pan Star Acro con tainer ship left the South Korean port of Busan last month for a 45-day round-trip voy age to Europe. But in a break from past jour neys, the ship sailed north, hug ging Rus sia’s Arc tic coast. The voy age, which will take the Pan Star Acro to Felix stowe, Rot ter dam and Gdańsk, is a first South Korean com mer cial test of the North ern Sea Route, an Arc tic ship ping high way that gov ern ments, ship ping lines and export ers hope will con nect Asian man u fac tur ers to European mar kets and reshape global trade as polar ice melts. Seoul says the NSR could cut sail ing time to Europe by about 10 days com pared with the Suez Canal. It could also open up an altern at ive to vul ner able choke points — which has become more press ing as the war in the Middle East has throttled trade flows through the Strait of Hor muz. “If you look at the map, geo graph ic ally, the NSR plan makes sense,” said Kim Saeme, a research fel low at the Asan Insti tute in Seoul. “It would shorten ship ping dis tances between Korea and Europe, poten tially reduce trans port a tion time and costs and strengthen Busan’s pos i tion as a logist ics and mari time hub con nect ing north east Asia with Europe.”

China is also racing ahead, oper at ing sea sonal con tainer ser vices through the Arc tic since 2023. In recent weeks, it has launched what it says is the first reg u lar NSR ser vice to Europe. For Korea, the route offers cheaper, more com pet it ive exports. It also fears China’s head start could allow it to seize mar ket share from Busan if the NSR proves viable. Busan is the world’s second-largest tran ship ment port, with regional cargo ship ments trans ferred to long-haul ser vices. Pan Star says it aims to “build a new logist ics plat form extend ing to Europe” based on its “exist ing net work con nect ing Korea, Japan and China”. It added that it has received enquir ies and book ings for Chinese and Japan ese cargo to be tran shipped through Busan. Rus sia has also pro moted the NSR, but has been sty mied by west ern sanc tions over its war in Ukraine. That con sti tutes another obstacle for Korea. The route is admin istered by Rus sia’s state-owned Ros atom and trans its require Moscow’s per mis sion. South Korea is not bound by US or EU sanc tions as with UN Secur ity Coun cil sanc tions. But com pan ies could face US sec ond ary sanc tions, and inter me di ar ies may be reluct ant to facil it ate Rus si are lated busi ness. “If insurers won’t take the risk or banks won’t pro cess the trans ac tion, there is no com mer cial ser vice,” said Moon Ye-chan at Yon sei Uni versity. South Korea’s voy age has also irked west ern coun tries, with sev eral Seoul based dip lo mats express ing dis ap point ment that a “like-minded” nation would be involved. One dip lo mat alleged that Seoul had paid a transit fee to Rus sia. South Korea’s Min istry of Oceans and Fish er ies denied the gov ern ment had paid “any costs to Rus sian agen cies in con nec tion with the trial oper a tion”. It added: “We have fully explained the pur pose and plan of this trial oper a tion to key rel ev ant coun tries and have also con duc ted con sulta tions to ensure com pli ance with inter na tional norms.” “Korea is a com mit ted part ner on the war in Ukraine and is also pur su ing a nar rower national interest on Arc tic energy and ship ping,” said Kim at the Asan Insti tute. “Europe finds [that] hard to recon cile.” The US appears to have offered tacit approval, agree ing not to pur sue sec ond ary sanc tions against Korea, accord ing to two people famil iar with the situ ation. But a

South Korean offi cial who reques ted anonym ity said Seoul had been warned that did not mean Wash ing ton would not take pun it ive action. There are also the prac tical chal lenges of nav ig at ing unpre dict able Arc tic waters, which are only pass able dur ing warmer months. Moon, at Yon sei Uni versity, said: “What mat ters in ship ping is not simply dis tance, but sched ule reli ab il ity, the abil ity to repeat voy ages, access to insur ance and fin ance, secur ing stable cargo and pre dict able transit fees and reg u la tions.” Hong Sung-won, dir ector of the Insti tute of Arc tic Logist ics at Young san Uni versity in Busan, said Korea’s trade-depend ent eco nomy — imports and exports con trib uted 85 per cent of GDP last year, accord ing to the World Bank — made it vul ner able to “sup ply-chain crises stem ming from the Strait of Hor muz situ ation and the instabil ity of Suez Canal ship ping”. But it was “diffi cult to defin it ively state that the Arc tic route is more eco nom ic ally viable”, he added. For poli cy makers, the NSR could serve another goal: resus cit at ing South Korea’s second city. Busan was once the main export hub but it has declined as higher-end man u fac tur ing moved closer to Seoul and to China. Patrick Han, head of global busi ness at SK Secur it ies, said Busan was well placed as a poten tial hub for Arc tic ship ping. He estim ated the NSR could con trib ute $10bn to $15bn annu ally to the eco nomy and cre ate hun dreds of thou sands of new jobs.