When the bulk carrier Nordic Orion arrived in Vancouver last month to take on a load of coal, plans called for the ship to sail through the Panama Canal to Finland. But, faced with a chance to catch the tail end of the Northwest Passage shipping season, the vessel’s owners decided to take that historic route instead.
There was one potential snag – getting insurance for the unprecedented voyage.
“Imagine you’re sitting in my shoes and someone comes to you and says, ‘Hey, we’re going to put a ship through the Northwest Passage,’” Andrew Teasdale, a marine surveyor with multinational insurer RSA Group, said Tuesday in an interview. “Your immediate response would be, ‘Well, that’s incredible – that’s never been done before – do I just reject it, or do I make some inquiries and see what I can do?’”
RSA wound up underwriting the voyage of the Nordic Orion, a 225-metre, ice-strengthened vessel that left Vancouver on Sept. 6 and arrived at its destination in Pori, Finland, on Sept. 29. It was the first commercial bulk carrier to sail through the passage.
Before reaching an agreement, RSA flew a Canadian ice pilot to Denmark to review the route with the ship’s owners, Nordic Bulk Carriers, and also sent Mr. Teasdale along to assess the company’s management and expertise. Talks covered such issues as expected ice coverage, whale breeding and migration grounds and whether channels were deep enough to prevent the ship from running aground.
RSA provided hull coverage, which insures the physical ship. Other companies provided protection and indemnity insurance, which is commonly referred to as P&I and covers liability in case the ship’s owner is sued in the event of, for example, a spill of fuel or cargo.
Mr. Teasdale would not discuss financial details, saying only that the price was in line with a nearly new, ice-strengthened ship worth an estimated $80-million and featured a premium.
Insurance brokers said it could cost $100,000 or more to insure a ship in the class and size of Nordic Orion, and that traveling through the Northwest Passage could involve an additional premium of up to 30 per cent. RSA insured the passage on an “unescorted” basis, although the Nordic Orion was accompanied by the Louis S. St. Laurent, a Coast Guard icebreaker.
Transport Canada monitored the sailing and required the ship to check in daily with Nordreg, a Coast Guard agency, while it was in the Northwest Passage. The ship sailed out of the passage on September 29 and is expected to arrive in Finland on October 7.
Nordic Bulk has said it was able to save about $80,000 in fuel costs by taking the passage instead of going through the Panama Canal. The route is about 1,000 nautical miles shorter and is about four or five days shorter; the ship was also able to carry about 25 per cent more coal than it would have been able to had it travelled through the more shallow Panama Canal.
RSA had safety concerns about the route, which has drawn attention as a potential commercial shipping route as ice cover decreased in recent years. But in investigating the route, RSA determined that there were spots for a ship to take shelter and that it was relatively accessible by helicopter, compared with, say, the open Pacific.
“It was something that really did concern us, but when you’re going to do something like this, your ship is of the highest standard and is chock-full of spares should anything go wrong,” Mr. Teasdale said.
RSA had previously insured Nordic Bulk vessels on the Northern Sea Route, which goes along the northern coast of Russia, so it knew the company had experience and expertise in Arctic routes.
But the biggest factor in the sailing might have been the timing of the Nordic Orion’s arrival in Vancouver. Had it been a week or two later, the passage might have had more ice on it and the short window might have closed.
“You had exactly the right point in the season and the right ship at the right time to let people push the ‘go’ button,” Mr. Teasdale said.
Editor's note: An earlier version of this story said the Nordic Orion arrived in Finland on September 29. In fact, the ship had exited the Northwest Passage by that date but is still on its way to Finland, where it is expected to arrive on October 7. This is the corrected version