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On the cost of ice: estimating the premium of Ice Class container vessels

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  • Tomi Solakivi

    (University of Turku)

  • Tuomas Kiiski

    (University of Turku)

  • Lauri Ojala

    (University of Turku)

Abstract

Cargo vessels navigating ice-infested waters have to comply with additional requirements including a strengthened hull and additional engine power, modifications that affect their operational economics. This paper analyses the additional cost of ice imposed on container vessels conforming to the most commonly used Finnish-Swedish Ice Class Rules. Cost estimations are based on descriptive statistics and regression analysis. The aim is to assess the reportedly higher costs of IA and IA Super Ice Class vessels compared with lower-classed or conventional vessels. Our analysis reveals that Ice Classed vessels incur significantly higher fuel and capital costs. This increases the shipping costs of Ice Classed vessels in open water by 9% (1 USD/TEU/day) compared with the other vessels under review. In wintertime, Ice Classed vessels unit costs could be up to 4 USD/TEU/day higher than for vessels in the reference group in open water. Our findings contribute to the discussion on the economics of shipping in winter conditions, and on the imposition of environmental regulations in the industry when operating in ice-infested waters. These themes have been scantly covered in extant literature, but are important for countries with trade depending on winter navigation.

Suggested Citation

  • Tomi Solakivi & Tuomas Kiiski & Lauri Ojala, 2019. "On the cost of ice: estimating the premium of Ice Class container vessels," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 21(2), pages 207-222, June.
    • Handle: RePEc:pal:marecl:v:21:y:2019:i:2:d:10.1057_s41278-017-0077-5
    DOI: 10.1057/s41278-017-0077-5
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    References listed on IDEAS

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    Cited by:

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    2. Pierre Cariou & Ali Cheaitou & Olivier Faury & Sadeque Hamdan, 2021. "The feasibility of Arctic container shipping: the economic and environmental impacts of ice thickness," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 23(4), pages 615-631, December.

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