Marine insurers warn of Arctic route risks

Maritime insurers have warned of potential catastrophic risks facing cargo ships sailing Arctic routes owing to a lack of infrastructure in the area, as interest mounts in the Northern Sea Route as an option for vessels transporting cargo between Asia and Europe.

"You may sit in front of the computer calculating the returns from taking the Arctic routes, but it's not all about money when it comes to trading in the Arctic," Stein Are Hanson, the head of the loss prevention and emergency response department at Norwegian Hull Club, a marine insurer, said in Hong Kong yesterday on the sidelines of the annual International Union of Marine Insurance conference.

"It's an enormous area and I don't think many people understand how big and remote it is, and the potential consequences if something goes wrong."

About 1.3 million tonnes of cargo was carried on a total of 71 voyages through the Northern Sea Route last year, up 7 per cent from 2012, according to the Northern Sea Route Information Office. The use of such routes, typically open between July and November, could cut the time taken to sail between Asia and Europe by about a quarter. Sailing via the conventional Suez Canal route takes about 38 days.

However, Hanson warned of catastrophic consequences should anything go wrong in the Arctic - even something like engine failure - due to the dearth of search and rescue capacity.

There are four nuclear-powered and 10 diesel-powered search and rescue vessels deployed along the Arctic route, which runs through the Kara Strait, along Siberia to Alaska.