Greenland, the game changer of Made in Italy exports

Greenland is at the center of debates and political clashes after the proposal launched by President Trump to integrate it into the US orbit.

Its role is strategic not only for the extraction of raw materials and for military installations. It is in the geographical center of the new mercantile sea routes that allowsignificantly reduce the delivery times and costs of goods from Europe to Asia, with significant advantages also for Made in Italy companies that export.

The phenomenon defined“global warming”, the origin of which scientists and politicians have been debating for years, is at the origin ofmelting of ice in the polar ice cap.This allows the expansion of the Arctic maritime area, which becomes larger and navigable.For about ten years, in the summer period, for cargo ships departing from Europethe possibility of crossing the Canadian archipelago was thus opened– west of Greenland –and reach the Chinese Asian ports at least a week in advance.The first voyage of a cargo ship not escorted by an icebreaker in the so-called Northwest Passage took place in 2014, with theNunavikwhich was carrying over 20 thousand tons of Canadian raw nickel. Last year there were around thirty voyages of merchant ships along the North-West routes and the number is destined to increase, especially if tensions in the Strait of Bab el-Mandeb persist due to Houthi attacks on Western convoys.

The polar route is on average shorter by around 2-3 thousand nautical mileswith respect to journeys that pass from East to West, and vice versa, through the Suez Canal or the Strait of Panama.The savings in time and money can be significant, up to 20-30%, even if the advantages are available for a limited period. The navigability of the Arctic Sea is currently only permitted betweenJuly and November, for a few weeks and not always continuously: the weather conditions are often extreme, with waves more than ten meters high, capable of slowing down progress and extending delivery times. To broaden the window of opportunity it is necessary to rely on icebreakers, of which the West has little. The United States, Canada, Sweden and Norway together have just over twenty, while Russia has over fifty and some units, for the moment, China. In particular, Russia boasts a dozen large nuclear-powered icebreakers, which are capable of crumbling ice floes up to three meters thick.

The challenge between the two worlds, Western and Eastern, also appears in the icy Nordic waters.Because if on the one hand a journey to the North-West of Greenland is envisaged, on the other hand a journey is being developed to the east of the island which has now become more geopolitically strategic than ever. From this perspective we understand how necessary it is to carefully observe both sides. On 11 September 2013 the container ship arrived at the port of RotterdamYongShenddeparted on 8 August from Dalian, in Northern China, after heading towards Japan and then entering the Bering Strait and crossing the North Pole in the open Russian sea up to the Norwegian coast and then reaching the Netherlands with an overall shorter route of around 3 thousand nautical miles. The mission of the ship from the Chinese group Cosco lasted 35 days, exactly 13 less than the standard 48 for a traditional transit operated through the Suez Canal.

The Northwest Passage and the Northeast Passage have common characteristicsand at the same timestrategic diversity.

Let's seecommon characteristics:

1) they both have onelimited duration of use;

2) allowtime and money savings of up to 20-30%;

3) have i as terminalscontinental ports of Rotterdam and Hamburg, which become even more strategic for European merchant traffic.

These are the onessubstantial differences:

1)the Northwest Passage is longer and more tortuousbecause it has to cross the Canadian archipelago, full of islands and rocks,while the North-East route is smoother, even if the North Pole Sea in the Russian area is more rough on some occasions;

2) theusability of the Northwest Passage is currently lower due to the scarcity of icebreakers, which are instead massively present in the other route;

3)between the United States and Canada there is an unresolved dispute regarding transit rights.Washington considers the Baffin Sea to be international waters, while Canada asserts sovereignty over it;

4)China prefers to develop the North-East path for better relations with Russia, recognizing Moscow's maritime rights as legitimate;

5)the United States has rejected the UN Convention on the Law of the Sea(Unclos) which establishes sovereignty within 200 nautical miles andthis decision creates some difficulties in relations with the allies themselves, for example with Canada, as we have seen,and with Denmark, because Greenland is an integral part of its territory.

As can be understood,for Italian companies that export, or that must ensure the supply chains of raw materials, neither of the two paths should be rejected.For at least a decade, until 2035, navigability is restricted in the period indicated, then it could also widen, due to the melting phenomena of the polar ice cap and the growth in the presence of icebreakers, which could ensure usability of navigation even in the queues at the beginning and end of the summer season, less safe due to the presence of ice floes, but not yet highly critical.

How to intervene in this complex and articulated picture?For Italian institutions and companies, the place dedicated to strategic discussions and negotiations is the Arctic Council, the garrison of the countries that with territories and waters are present in the North Pole: United States, Canada, Russia, Sweden, Norway, Denmark, Finland, Iceland. In addition to the representatives of these eight member countries, qualified officials from a dozen countries defined as "permanent observers" also participate in the work of the Arctic Council, including China, India, the European Union and the main nations of the Old Continent, including Italy, which have sensitive interests in maritime commercial traffic, and more. China has invested 90 billion dollars to build infrastructure in Greenland and to support research and exploration in the Arctic area while respecting the environment: all this allows it to be able to advance participation rights, if not pre-emption rights, in the extraction of energy and metalliferous raw materials and, at the same time, the right to navigate along the polar routes. Beijing has called this mission the “Polar Silk Road”.

The audience of Arctic Council observers, moreover,is expanding in recent yearsto numerous other countries,witnessing that around the North Pole, but above all to Greenland,considerable expectations and ambitions are moving.

Integrated logistics companies that offer supply chain solutions for the management of cargo and shipments such as Maersk have opened a specific division for the analysis and study of Arctic opportunities. The strategic aspects of the two Passages, the North-West and the North-East, have become central topics of discussion in the courses of the Rotterdam School of Management, demonstrating that the Dutch ruling class is aiming for its port excellence to be present with its availability on both opportunities, in the North-West and North-East directions. MSC is also present in Rotterdam, with a dedicated headquarters and offices, with its own logistics services.

It is obvious to assume that Italian companies must take into consideration the emerging opportunities in the Arctic area for maritime merchant traffic, even if for periods limited to the summer. According to a report by the Royal United Service Institute, perhaps too optimistic, in 2050 the Northwest Passage could become the second most used sea route to and from Europe.The "Sixth Continent", as we can define the North Pole, is a place of flows, a transit node between land, ice and sea, which can constitute an addition, or an alternative, to the traditional Made in Italy routes.

For further information we recommend the article “The Arctic: climate change's great economic opportunity” published in the Economist on 23 January 2025.