Arctic risk high because of salvage cost, human resource crunch

Discussing AGCS’s Safety And Shipping Review 2016, Captain Rahul Khanna, Global Head of Marine Risk Consulting at AGCS, said in a recent YouTube interview that salvage costs and human resource limitations were major factors in the cost of insuring marine risk in the Arctic sector.

“What we are looking at still is the risks involved in operating in such an extreme environment which is the Arctic or Antarctic. … One of the key risks is that if we have an accident within this region the salvaging is very difficult. We lack qualified people or experienced people to operate within these regions globally. If we do have an accident in these environmentally sensitive regions we could end up with a major loss because this could be a long-lasting salvage operation”, he said.”

Captain Khanna told AGCS’s Greg Dobie that the fall in ship transits through the northern sea route over the past couple of years was due mainly to the fall in oil prices.

The April report from AGCS shows that in the wider Arctic Circle waters the number of shipping incidents is at a 10-year high, with over 70 incidents having occurred in Arctic Circle waters in 2015 (up from 55 in 2014 and 50 in 2013, with the most significant increase being machinery damager or failure).

Captain Khanna said: “Shipping is an industry where human resources play a key role, and one of the key aspects is that the trained and skilled manpower to operate in these regions is limited. … As the number of vessels increases in this area we face a resource crunch pretty soon.”