Investigating the effect of Arctic sea routes on the global maritime container transport system via a generalized Nash equilibrium model

Abstract

This paper proposes a generalized Nash equilibrium model to investigate if Arctic routes can be used as a “relief valve” for current intercontinental sea routes. This model is presented as a Stackelberg form, where the shipping companies correspond to the leaders and the customers correspond to the followers. The competition among shipping companies (leaders), which seek to maximize their profits, can be represented as a generalized Nash equilibrium and solved by the alternating direction method of multipliers algorithm, based on penalization. On the basis of the competition results, the customers (followers) choose the optimal shipping companies; this results in the allocation of container volumes on different sailing routes, which can be described by a logit-type multi-path assignment model. Different scenarios in our modelling show that as shipping speeds decrease through the use of Arctic sea routes, company profits increase. In particular, as navigable days on the Northern Sea Route (NSR) increase, the container trade will increasingly tilt towards this route and shipping companies using it will gain more profits than they did before the opening of this route. At the same time, the proportion of container volume through the Suez Canal will be reduced because it will be less profitable.