Arctic Shipping and the City of London

The question of whether ships might one day regularly cross the Arctic Ocean has interested scientists, explorers and merchants since the fifteenth century. Then, as now, three possible routes attracted attention: a Northwest Passage (NWP) running through the North American archipelago; a Northeast Passage (NEP) following the northern coastline of the Eurasian landmass; and a Trans-Polar Route (TPR) straight across the Arctic Ocean. Such routes (the fastest being the NWP and NEP) offer potential cost savings due to the possibility of reduced fuel consumption, avoided tariffs, and increased trip frequency. Using these routes might also help reduce carbon emissions from global shipping.  

In September 2016, as the Arctic sea-ice retreated to the second-lowest summer minimum on record, scientists from the University of Reading published a paper about the potential for these routes to become navigable on a regular basis in the 21st Century.  

The routes explored were for uninterrupted sailing between Yokohama (representing East Asian ports) to Rotterdam (representing European ports) and New York (representing North American ports). Predictions were offered for three scenarios: a business-as-usual pathway consistent with a high carbon emissions pathway; a low-emissions pathway consistent with emissions reductions targets agreed by the UN in Paris in 2015); and a mid-emissions pathway. Moreover, predictions were made for two types of vessels: open water (OW) with no ice strengthening and polar class 6 (PC6) capable of operating in first-year ice.  

The researchers found that between 2015 and 2029, OW transits are likely to be possible for at least 30% of Septembers. PC6 vessels have a transit potential of 90%. The latter can also exploit shorter routes not available to OW vessels. By mid-century, the September OW transit potential is projected to double across all scenarios. The TPR becomes available for the first-time, particularly to PC6 vessels for almost all Septembers, while the diversity of routes also increases. By late century, September OW transits are virtually guaranteed under the high-emissions scenario, while even under the low-emissions scenario, sea routes are expected to be open 68% of the time in September (see Appendix A for further details). The simulation also suggested that the Arctic shipping season would likely begin earlier and end later as the century progresses, although peak conditions are likely to vary for each route
(with peak access in mid-September for the NWP, late-September for the NSR and October for the TSR).  

Simulations such as these are useful for making predictions about when and where sea-ice conditions in the Arctic Ocean are likely to be easier to navigate. However, this does not mean that a 21st Century boom in Arctic shipping is inevitable. Accurate data about actual (as opposed to simulated) sea-ice conditions is needed by shippers well in advance, particularly if they need to charter an ice-strengthened vessel. Moreover, the simulation carried out by the scientists at the University of Reading does not factor in other important variables such as the exact route taken, the hydrography of the region (which has implications for what size vessels can use a given route), the availability of port and other support infrastructure (to assist with navigation, communications, ice forecasting, safe harbour and search and rescue), or the availability of crews with experience of operating in icy waters. All of these variables will matter in the final determination of whether shipping in the Arctic is to become feasible on a consistent basis.

Ensuring safe Arctic shipping

The “Polar Code” recently negotiated at the UN International Maritime Organisation (IMO), which is headquartered in London, attempts to address some of these other variables by introducing mandatory guidelines for ships operating in polar waters. To avoid potential issues over ratification, it is being introduced through a series of amendments to three existing Conventions: The International Convention for the Prevention of Pollution from Ships (MARPOL), The Safety of Life at Sea Convention (SOLAS) and The International Convention on Standards of Training, Certification and Watchkeeping for Seafarers. As the names of these conventions suggest, the “Polar Code” (which enters into force in January 2017) has been designed to reduce the risks to both human life and the environment when ships operate in polar waters.  

The key element of the “Polar Code” is the requirement for any ship operating in polar waters to have a Polar Waters Operational Manual which sets out how the crew will respond in a worst-case scenario to conditions that may occur during a planned voyage, as well as any operations the ship may be involved in. However, initially, the problem with this requirement was that there was no obvious mechanism by which to determine whether a given ship could operate in the conditions it was likely to encounter once in polar waters.

The role of the London Insurance Industry

In the absence of an effective way to operationalise the “Polar Code” – i.e. to determine whether a ship was actually capable of operating in the conditions it was likely to face once in polar waters – the London Insurance Industry has become actively involved in developing an industry-led, bottom-up approach to create standards which will enable it to insure risk in polar waters. Led by Michael Kingston of the law firm DWF LLP (who is also the International Union of Marine Insurance’s representative at the IMO on Polar issues), Lloyd’s of London and Lloyd’s Register, and involving close cooperation with the Arctic Council (under the chairmanship of first Sweden, then Canada and latterly the United States), a single Arctic Ice Regime, supported by all the Arctic States, has been created to give guidance for a range of planned and possible situations that might emerge when operating a ship in polar waters (and to prevent a third party operator from skirting the requirements of the Polar Code and potentially causing a disaster that renders future shipping activity in the Arctic or Antarctic uninsurable at reasonable cost).

The Arctic Ice Regime, also called the Polar Operational Limit Assessment Risk Indexing System, or POLARIS, has now been included in the Polar Code Guidelines. It provides a standardised approach to evaluating the risks – in the form of a geography-based risk index – posed to a ship depending on its ice class and the ice conditions it can expect to encounter during its planned voyage. The outcome of the risk evaluation determines whether a ship can operate without speed limitation or under reduced speed. In high risk circumstances, there is also the possibility of a no-go. Operators must make reference to this system before obtaining their Polar Ship Certificate.  

The London Insurance Industry also requested that the Arctic Council establish an Arctic Shipping Best Practice Information Forum to help harness the most appropriate inputs for POLARIS. The Forum will complement the implementation of the Polar Code.

In 2016, the Arctic Council, in conjunction with the London Insurance Industry, drafted Terms of Reference for the Forum. In addition to continuing the development of POLARIS for the IMO, the Forum will help educate everyone (from Operators, to Flag States, insurers, financial institutions and Port State Control) about the Polar Code, and the tools needed to make it work (including best practice in crew training, hydrography, meteorology, communication and ice charting). It is envisaged that the Forum will be established at the handover of the US Arctic Council Chairmanship to Finland in April 2017, and that it will then meet annually in London. This will make London an even more important hub of knowledge and best practice regarding safe shipping in polar waters, while, commercially, the London Insurance Industry will continue to play a leading role in insuring polar risk.  

The APPG for Polar Regions would like to thank Professor Keith Haines (University of Reading) and Michael Kingston (DWF LLP) for their presentations.

This briefing paper was prepared by Dr Duncan Depledge for the All-Party Parliamentary Group for Polar Regions.

Please send any comments, queries or suggestions to info@appgpolarregions.uk

This is not an official publication of the House of Commons or the House of Lords.  
It has not been approved by either House or its committees, nor does it represent the views
of the All-Party Parliamentary Group for Polar Regions.

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