Arctic shipping insurance: towards a harmonisation of practices and costs?

Sarrabezoles, Aurélie; Lasserre, Frédéric; Hagouagn’rin, Zebret

doi:10.1017/s0032247414000552

Cited by 26 publications

(21 citation statements)

References 15 publications

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“…Insurance premiums can fluctuate ad hoc, depending on ship type, age, past record of compliance with international laws, current operational standards, operational zones, and even the ship owner's bargaining power with the insurance company. Better infrastructural and navigational conditions, combined with a well-formulated emergency response mechanism in Russia, could lead to a reduced premium rate [44]. Even a 10% cut in the premium rate could have a significant effect on the total profit that favors the NSR.…”

Section: Resultsmentioning

confidence: 99%

Energy-Saving Potential and an Economic Feasibility Analysis for an Arctic Route between Shanghai and Rotterdam: Case Study from China’s Largest Container Sea Freight Operator

Wan

Chen

2018

Sustainability

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Global warming has significantly reduced summer ice coverage in the Arctic region, providing long-awaited opportunities for the shipping industry to open new routes through a region known for its harsh navigational conditions. If a shortcut between Asia and Europe via the Northern Sea Route (NSR) is adopted, significant energy saving and pollution reduction are possible compared with conventional southern routes. However, opinions in literature differ regarding this shortcut's economic viability. We present an analysis from the perspective of COSCO, China's largest container sea freight operator. We perform a cost-benefit analysis under several scenarios considering the following current realities: (1) declining oil prices not seen for decades, even lower than the lowest prices assumed in previous studies; (2) declining Russian NSR tariff as an effort to attract shipping traffic; (3) possible emission control areas along a northern route may require much cleaner energy and thus impact costs not studied in previous models; and (4) the capital cost difference between a hired and a self-owned vessel. Classical case studies of shipping routes between Shanghai and Rotterdam are adopted for comparison. We explain how different factors impact the shipping costs and to what extent can the NSR be economically viable. Occasional usage of NSR (e.g., one time transit) is unlikely to be more profitable given the higher unit transportation cost, but the route could be economically competitive in terms of the total profits earned for continuous usage. A more aggressive scenario which requires ships on the NSR to switch to much cleaner fuel would erode this route's competitiveness, but extra environmental benefits should be taken into consideration if future carbon emission trading schemes include the shipping industry.

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Section: Resultsmentioning

confidence: 99%

Energy-Saving Potential and an Economic Feasibility Analysis for an Arctic Route between Shanghai and Rotterdam: Case Study from China’s Largest Container Sea Freight Operator

Wan

Chen

2018

Sustainability

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“…However, a common denominator is difficult to find since each voyage in Arctic waters is evaluated individually. According to a recent survey by Sarrabezoles et al (2016), most of the insurers stated that H&M premiums range between 25 and 50%, others estimated them between 0 and 25%, whereas only one assumed rates between 50 and 75%. As regards the P&I and cargo insurance premiums, these range from 0 to 25% most of the times whilst an almost equal number of respondents estimated cargo insurance premiums around 25-50%.…”

Section: Route Selectionmentioning

confidence: 99%

Arctic shipping: A systematic literature review of comparative studies

Theocharis

Pettit

Rodrigues

et al. 2018

Journal of Transport Geography

112

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Following the gradual decline of Arctic sea ice, shipping using Arctic routes increased from 2010. This led to an upsurge in the number of studies investigating the potential of Arctic maritime routes. A systematic literature review was conducted to assess the extant literature from 1980 to 2017 on comparative studies between Arctic and traditional routes. This review also aimed to provide an initial understanding on route choice decision-making factors and to contribute to the literature by providing suggestions for future research and methodological considerations. The competitiveness of Arctic routes is evaluated from both economic and environmental perspectives. Research themes and methodological characteristics are analysed in order to establish an evidence base in Arctic shipping literature. It is identified that analytical research methods and transport cost models are mainly employed. The results indicate that although Arctic routes can be more cost-effective and energy efficient compared to traditional ones, especially in the long-term, they can mainly serve as seasonal alternatives for bulk and specialised shipping in the short-term.

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“…This is also clearly indicated by the relatively high ranking attached to the 'Economic Factors' sub-criterion of 'insurance' (ranked 7 overall), because of the fact that premiums for insurance cover will certainly increase with greater exposure to the higher risks associated with Arctic shipping (UK P&I Club 2016) and the fact that the cost of H&M insurance will certainly increase relative to the cost of P&I insurance (Meng, Zhang, and Xu 2017). There is evidence to suggest, however, that the scale of additional insurance costs may pose more of a problem in perception rather than actuality, and that this might provide a perceptual deterrent to the expansion of Arctic shipping movements (Sarrabezoles, Lasserre, and Hagouagn'rin 2016).…”

Section: Discussionmentioning

confidence: 99%

Key criteria influencing the choice of Arctic shipping: a fuzzy analytic hierarchy process model

Tseng

Cullinane

2018

Maritime Policy & Management

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As Arctic sea ice shrinks due to global warming, the Northern Sea Route (NSR) and the Northwest Passage (NWP) offer a substantial reduction in shipping distance between Asia and the European and North American continents, respectively, when compared to conventional routes through the Suez and Panama Canals. However, Arctic shipping routes have many problems associated with their use. The main objective of this paper is to identify the key criteria that influence the decisions of shipping operators with respect to using Arctic shipping routes. A multi-criteria decisionmaking methodology, the Fuzzy Analytic Hierarchy Process, is applied to rank four potential categories of criteria ('economic', 'technical', 'political' and 'safety' factors) and their sub-criteria. The results of the analysis suggest that, on aggregate, 'economic' is the most important category of influential factors, followed by 'safety', 'technical' and 'political' factors. The paper concludes, however, that the most influential specific sub-criteria relate to risks that lie mainly within the 'safety' and 'political' domains and that, especially in combination, these overwhelm the importance which is attached to 'economic' factors such as reduced fuel use. Finally, the implications of these findings for the future development of Arctic shipping are addressed at a strategic level.

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Arctic shipping insurance: towards a harmonisation of practices and costs?

Cited by 26 publications

References 15 publications

Energy-Saving Potential and an Economic Feasibility Analysis for an Arctic Route between Shanghai and Rotterdam: Case Study from China’s Largest Container Sea Freight Operator

Energy-Saving Potential and an Economic Feasibility Analysis for an Arctic Route between Shanghai and Rotterdam: Case Study from China’s Largest Container Sea Freight Operator

Arctic shipping: A systematic literature review of comparative studies

Key criteria influencing the choice of Arctic shipping: a fuzzy analytic hierarchy process model

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