Alternative Sea Routes: What Effects on Maritime Trade?

This paper explores the consequences for trade associated with the adoption of alternative shipping routes, particularly focusing on the variation in maritime distance and the reduced risk of piracy that would result from adopting the Northern Sea or the Cape of Good Hope routes instead of the Suez Canal for transporting goods. I use an extended gravity equation to estimate the impact of piracy on the level of maritime trade between Europe and East Asia. I compare the Cape of Good Hope and the Suez Canal trade routes by considering their variations in maritime distance, and incidents of maritime piracy in the latter trade route. Finally, I examine the potentially safer and shorter trade route between Europe and Asia, the Northeast Passage, and estimate the dramatic change in volume of trade that could result if the Northern Sea Route becomes a viable option for seafarers in the future.