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Best maritime transportation option for the Arctic crude oil: A profit decision model

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  • Faury, Olivier
  • Cheaitou, Ali
  • Givry, Philippe

Abstract

Navigation via the Northern Sea Route (NSR) requires specific vessels in comparison with the Suez Canal Route (SCR). We develop a profit decision model that defines the best option mixing the shipping lane (NSR or SCR) and the ice-class of the vessel (1A, 1AS, and Open Water (OW)) for oil producers operating in the Russian Arctic zone. The effects of the Brent barrel price, bunker cost and ice-thickness are analyzed. The best option depends in fact on the strategy implemented by the shipper. For instance, the solutions of a profit focused strategy or of a cost-oriented strategy are different.

Suggested Citation

  • Faury, Olivier & Cheaitou, Ali & Givry, Philippe, 2020. "Best maritime transportation option for the Arctic crude oil: A profit decision model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 136(C).
    • Handle: RePEc:eee:transe:v:136:y:2020:i:c:s1366554518311256
    DOI: 10.1016/j.tre.2020.101865
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    References listed on IDEAS

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    1. Laurent Fedi & Olivier Faury & Daria Gritsenko, 2018. "The impact of the Polar Code on risk mitigation in Arctic waters: a “toolbox” for underwriters?," Maritime Policy & Management, Taylor & Francis Journals, vol. 45(4), pages 478-494, May.
    2. Ryuichi Shibasaki & Takashi Usami & Masahiko Furuichi & Hiroyuki Teranishi & Hironori Kato, 2018. "How do the new shipping routes affect Asian liquefied natural gas markets and economy? Case of the Northern Sea Route and Panama Canal expansion," Maritime Policy & Management, Taylor & Francis Journals, vol. 45(4), pages 543-566, May.
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    4. Laurent Fedi & Olivier Faury & Daria Gritsenko, 2018. "The impact of the Polar Code on risk mitigation in Arctic waters: a ‘Toolbox’ for underwriters?," Post-Print hal-02065910, HAL.
    5. Ali Cheaitou & Pierre Cariou, 2012. "Liner shipping service optimisation with reefer containers capacity: an application to northern Europe--South America trade," Maritime Policy & Management, Taylor & Francis Journals, vol. 39(6), pages 589-602, November.
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    7. Olivier Faury & Pierre Cariou, 2016. "The Northern Sea Route competitiveness for oil tankers," Post-Print hal-02072732, HAL.
    8. Liu, Miaojia & Kronbak, Jacob, 2010. "The potential economic viability of using the Northern Sea Route (NSR) as an alternative route between Asia and Europe," Journal of Transport Geography, Elsevier, vol. 18(3), pages 434-444.
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    Cited by:

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    2. Wang, Shuang & Jia, Haiying & Lu, Jing & Yang, Dong, 2023. "Crude oil transportation route choices: A connectivity reliability-based approach," Reliability Engineering and System Safety, Elsevier, vol. 235(C).
    3. Benz, Lukas & Münch, Christopher & Hartmann, Evi, 2021. "Development of a search and rescue framework for maritime freight shipping in the Arctic," Transportation Research Part A: Policy and Practice, Elsevier, vol. 152(C), pages 54-69.
    4. Koçak, Saim Turgut & Yercan, Funda, 2021. "Comparative cost-effectiveness analysis of Arctic and international shipping routes: A Fuzzy Analytic Hierarchy Process," Transport Policy, Elsevier, vol. 114(C), pages 147-164.
    5. Xu, Hua & Yin, Zhifang, 2021. "The optimal icebreaking tariffs and the economic performance of tramp shipping on the Northern Sea Route," Transportation Research Part A: Policy and Practice, Elsevier, vol. 149(C), pages 76-97.
    6. Benz, Lukas & Münch, Christopher & Hartmann, Evi, 2021. "Fuzzy-based decision analysis on Arctic transportation: A guidance for freight shipping companies," Chapters from the Proceedings of the Hamburg International Conference of Logistics (HICL), in: Jahn, Carlos & Kersten, Wolfgang & Ringle, Christian M. (ed.), Adapting to the Future: Maritime and City Logistics in the Context of Digitalization and Sustainability. Proceedings of the Hamburg International Conf, volume 32, pages 375-400, Hamburg University of Technology (TUHH), Institute of Business Logistics and General Management.
    7. Rigot-Müller, Patrick & Cheaitou, Ali & Etienne, Laurent & Faury, Olivier & Fedi, Laurent, 2022. "The role of polarseaworthiness in shipping planning for infrastructure projects in the Arctic: The case of Yamal LNG plant," Transportation Research Part A: Policy and Practice, Elsevier, vol. 155(C), pages 330-353.
    8. Theocharis, Dimitrios & Rodrigues, Vasco Sanchez & Pettit, Stephen & Haider, Jane, 2021. "Feasibility of the Northern Sea Route for seasonal transit navigation: The role of ship speed on ice and alternative fuel types for the oil product tanker market," Transportation Research Part A: Policy and Practice, Elsevier, vol. 151(C), pages 259-283.
    9. Dai, Lei & Jing, Danyue & Hu, Hao & Wang, Zhaojing, 2021. "An environmental and techno-economic analysis of transporting LNG via Arctic route," Transportation Research Part A: Policy and Practice, Elsevier, vol. 146(C), pages 56-71.
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