Russia and China have signed a landmark agreement to develop and commercialise the Northern Sea Route (NSR), after Beijing tested the route last month, that could slash Europe-Asia cargo transit times and challenge the primacy of the Suez Canal.

The first ever Chinese cargo vessel departed from the massive Ningbo-Zhoushan port on September 22 bound for Felixstowe in the UK via Russia’s frozen Northern Route, in an experiment that could have a major impact on Sino-European trade.

“This is a game-changer for Arctic trade,” said one official familiar with the agreement. “Both countries will collaborate on shipbuilding, logistics optimisation, crew training, and innovative technologies to ensure year-round sustainability.”

The deal, finalised in Moscow this week and made public on October 18, will intensify Sino-Russian cooperation in the Arctic and provide both nations with a strategic corridor that bypasses choke points in the Middle East and Europe. According to Chinese and Russian sources, the pact reduces shipping distances by 7,000 to 10,000 kilometres, cutting fuel costs by over 20% and transit times by nearly 40%.

Bypassing global chokepoints

The Northern Sea Route, which traces Russia’s northern coastline from the Bering Strait to the Barents Sea, offers an increasingly viable alternative to traditional shipping lanes as Arctic ice continues to recede due to climate change.

While the route was once navigable only in the summer months, advances in icebreaker technology and warming temperatures have extended the navigable window dramatically offering a major alternative to the multiplying global chokepoints for international trade.

“This pact hands Moscow and Beijing a fortified backdoor for energy flows that laughs off Houthi disruptions and Baltic bottlenecks,” noted one analyst. “Arctic transit hit a record 400,000 tonnes this year; next stop, rerouting half of Eurasia's trade.”

Last year alone, Arctic freight volumes surged by 46%, according to Russian Ministry of Transport figures. The Russian government aims to boost traffic along the NSR to 200mn tonnes annually by 2030, up from less than 35mn tonnes in 2023.

The agreement builds on recent Russo-China joint military exercises in the Sea of Japan, signalling deeper strategic ties. The deal comes in the context of a with a 40% surge in East-West bilateral trade between China and Russia in the last few years that is now more than $200bn a year – about two thirds of the trade that Russia used to have with Europe prewar.

Strategic ambition and long-term plans

The NSR agreement comes as part of a wider strategic realignment between Moscow and Beijing, who are investing heavily into a land-based Eurasia-based alternative trade ecosystem that is not exposed to the US dominance of the world’s sea lanes. Numerous trade routes are being developed with the Middle Corridor amongst the most developed. Rail links across Central Asia and connected China to Europe are also proliferating.

Russia’s President Vladimir Putin and Chinese President Xi Jinping have framed the Arctic corridor as a pillar of a new multipolar trade order. The NSR could not only enhance energy and goods exports, but also strengthen regional influence in the Arctic, where the melting ice is opening access to untapped reserves of oil, gas, and rare minerals.

In a separate but related initiative, Russia has revived a longstanding proposal for a “Putin-Trump” tunnel beneath the Bering Strait, linking eastern Russia to Alaska. The 70-mile undersea rail and cargo tunnel would, if built, represent the most ambitious infrastructure project since the Panama Canal. The project would only go ahead if a peace deal with Ukraine can be signed, but for Putin, the tunnel could cement better relations with the US and diversify his growing dependence on Beijing. Moscow has suggested it could become part of a “Trans-Eurasian Belt,” creating a land-based transport route stretching from Shanghai to New York via rail, roads, and sub-sea links.

“We hope the Americans go for it,” said one Russian official involved in feasibility studies according to local reports. “This is not just about trade—this is about vision.”

Europe watches cautiously

In Europe, the move is likely to spark renewed anxiety over Arctic militarisation and the shifting geopolitical map of global trade. The European Commission has previously warned that Arctic commercialisation must proceed under a regime of environmental protection and multilateral governance.

The Kremlin has ignored those calls and is moving ahead regardless, with plans to deploy dozens of nuclear-powered and LNG-fuelled icebreakers to keep the NSR open year-round. China, for its part, has declared itself a “near-Arctic state” and has already launched its second icebreaker, the Xuelong 2, with more in development.

For China, the NSR offers not only a shorter route to Europe but a way to diversify shipping away from the increasingly vulnerable Strait of Malacca and the congested Suez Canal. For Russia, it is a lifeline for energy exports to Asia, a source of regional development, and a geopolitical counterweight to Western sanctions.

Despite the bold ambitions, environmental groups warn that the increased industrialisation of the Arctic poses serious ecological risks. Greenpeace has cautioned that Arctic development—especially fossil fuel extraction—could accelerate climate change and threaten fragile ecosystems already under stress.

Technically, too, the NSR remains challenging. Ice conditions are unpredictable, insurance costs remain high, and ports along Russia’s northern coast are underdeveloped.

While the full economic impact of the NSR pact remains to be seen, Washington and Brussels continue to focus on sanctions and containment of Moscow and Beijing. If fully realised, the NSR could shift the gravitational centre of global trade further north—and further east.