Expert Risk Articles

Drop in Arctic shipping temporary, as safety challenges remain


Polar Star assists beset vessel. Source: United States Coast Guard, Wikimedia Commons

Lower oil prices have had an impact on the uptake of commercial sailing activity on the Arctic’s Northern Sea Route. With bunker prices virtually a third of the price they were two years ago, there is less incentive to find sailing routes which will burn less fuel. That said, evident pressures on operating margins means that operators are still interested in reduced sailing times that promise a saving of more than 10 days over a more traditional routing. There is also increased interest in cruises in sensitive Arctic water, and oil and gas exploration continues, albeit on a reduced level.

Captain Andrew Kinsey, Senior Marine Risk Consultant AGCS, believes a reduction in shipping activity in Arctic waters is temporary, as the need for passages through this route will intensify when oil prices recover. 

In December 2015 vice premier Dimitry Rogozin said “Russia has all the technological possibilities to make the Northern Sea Route operational round the year and in any season” in the future at an Arctic international forum[1]. Despite the adoption of the International Code for Ships Operating in Polar Waters (The Polar Code) by the IMO during 2015[2], tremendous challenges to operations in this area remain.


(Click on image to enlarge)
The analysis above shows there have been 415 reported shipping incidents in Arctic Circle waters over the past decade including 18 total losses. The number of incidents have increased for three years in a row with the 2015 casualty total the highest in a decade. Machinery damage/failure (169) was the cause of 41% of incidents. Wrecked/stranded (95) was the second top cause of incident. Almost a third of incidents involved fishing vessels (130), while 17% involved cargo vessels (71)

“When we look at the Arctic we really can’t wait until the last minute to ensure safe operations,” warns Kinsey. “These things need to be studied and developed in advance of wider use of the Northern Sea Route. We have to try and get away from the reactive mindset and get into the proactive mindset.”

The mandatory Polar Code is expected to enter into force on January 1, 2017 and it is anticipated that the code will need revision after implementation. As the Northern Sea Route is a seasonal shipping route, at the very minimum, problems encountered and best practices to employ should be outlined at the end of each season.

Captain Rahul Khanna, Global Head of Allianz Risk Consulting (ARC) Marine, welcomes the arrival of the Polar Code. “It has provided a framework that can be further developed and we now have a central code which everybody has to comply with when it comes into force in 2017.” However, he adds it should be a dynamic document which will need to be expanded as the industry in these sensitive waters develops “as we cannot learn from our mistakes in the Arctic.”

The Polar Code requires ships intending to operate in the defined waters of the Antarctic and Arctic to apply for a Polar Ship Certificate, which would classify the vessel as a Category A, B or C ship, dependent on the thickness of the ice that the ship will be allowed to operate in. The code also requires ships operating in these waters to carry a Polar Water Operational Manual. The purpose of the manual is to provide the owner, operator, master and crew with sufficient information regarding the ship’s operational capabilities and limitations in order to support their decision-making process in Polar water operations.

But while the Polar Code addresses many of the safety issues in these waters, unknowns remain. “There are still a great number of unanswered questions, particularly around crew training, suitability and potential clean-up,” says Kinsey.


(Click on image to enlarge)
The analysis above shows there were 71 reported shipping incidents in Arctic Circle waters during 2015, up 29% year-on-year. Machinery damage/failure (46) was the cause of 65% of these incidents, driven in part by the harsh conditions. Fishing vessels (27) accounted for 38% of incidents, doubling the total from a year earlier (13).