Agencies are unwilling to insure arctic shipping ventures

As a result of global warming, bulk carrier ships traveling to and from the arctic are enjoying the advantage of wider sea lanes. These newly created passageways have opened up opportunities for shipping companies to explore new, faster routes that can cut back on travel time and expenses. 

Last year, the ship Nordic Orion made a pioneering voyage from Vancouver to Finland through the Northwest Passage, a trip that turned out to be a week shorter than it would have had the ship gone through the Panama Canal. This new route saved the operator about $80,000 in tolls and fuel costs, and has inspired a number of other shipping companies to make use of the opening oceans when sailing to the arctic. 

However, insurance firms are concerned about these untested routes, which may only add to the already-significant risks of arctic journeys. 

Marsh USA, a risk advisor, recently released a report on the matter. Marsh points out that traveling in the arctic introduces a number of dangerous factors: cold damage to the ship engines, erratic GPS coverage, inaccurate charts and compasses, unreliable weather reports, thick fog that can limit visibility, and ice and storms that can damage vessels.

The report also notes that since there is little previous experience with the traveled routes, insurance companies will not know how to establish their rates. Additionally, there isn't any infrastructure yet developed around the new routes, meaning that if there was a problem a ship may not receive any mechanical support. The inaccessibility of repair stations is further compounded by the difficulty of making repairs in dark, arctic conditions. 

There is no doubt that the new routes could save massive amounts of fuel and money, but insurers are understandably reluctant to underwrite such ventures. There are always a number of factors to consider in issues of shipping and delivery, and the complexity of the arctic environment means concerns for all parties.