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Feb. 17, 2014

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GOVERNMENT WATCH 18 THE JOURNAL OF COMMERCE www.joc.com FEBRUARY 17.2014 By Bruce Barnard THE PATH TO safer shipping through Arctic and Antarctic waters took a step forward when officials at the International Mari- time Organization agreed on a draft text for a so-called Polar Code. The agreement in principle, reached at an IMO meeting in London last month, is rais- ing hopes that the long-awaited code will get final approval by the U.N.'s maritime agency by the end of 2014 and enter into force by 2017. The draft document, agreed to by the IMO's Ship Design and Construction Com- mittee, covers the design and construction standards for ships — such as ice-strength- ened hulls — safety equipment, training of seafarers, search and rescue and "the protection of the unique environment and eco-systems of the polar regions." The committee also agreed in principle to proposed draft amendments to the IMO's safety and pollution prevention treaties to make the code mandatory. It was agreed that all ships operating in polar waters should have a Polar Ship Certificate and a Polar Water Operational Manual. Officials also signed off on a defi- nition of different categories of ships to be covered by the code. The IMO's influential Maritime Safety Committee will take up the draft text at its meeting in London in May. The IMO has come under pressure to speed up moves to achieve a legally binding Polar Code to keep pace with the increase in Arctic shipping, especially in Russian waters, as summer sea ice shrinks. Sevent y-one ships t ra nsited Rus- sia's Northern Sea Route in 2013, up from 46 in 2012. Cargo volume rose marginally to 1.4 million metric tons from 1.3 million in 2012, but is forecast to reach 4 mil- lion metric tons in 2015 and surge to 65 million in 2020, mainly because of the rapid growth of oil and gas development in Russia. There is some skepticism about the pace of growth of traffic using the North- ern Sea Route, especially as an alternative to the Suez Canal for Asia-Europe voyages. Maersk Line, the world's largest container shipping company, doesn't think Arctic routes will be economically viable for some time. There are currently no international conventions that regulate Arctic shipping operations, "so in principle the same rules apply for sunny sailing in the Mediterranean as for the Arctic," said Sturla Henriksen, director general of the Norwegian Shipown- ers' Association. The Lloyds Market Association, which represents London insurance underwrit- ers, has warned that polar shipping faces "extreme" risks and expressed concern that the increased rate of shipping in Arctic waters is "outstripping policymakers' ability to create a legislative framework." Operators of ships sailing into the high Arctic — above 72 degrees north — currently must agree to separate insurance policies for each journey and each vessel. The Polar Code likely will become legally binding as an amendment to the Interna- tional Convention of Pollution for Ships and the Safety of Life at Sea Convention. JOC Contact Bruce Barnard at brucebarnard@hotmail.com. A POLAR CODE FOR SAFE PASSAGE Maritime officials draft standards for vessels operating in Arctic and Antarctic waters Northern Sea Route approx. 29 days Suez Canal Route approx. 39 days Source: ABS, CMA CGM Asia-Europe Shipping: Northern Sea Route vs. Suez Canal Route Yokohama Rotterdam

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