Development of a cost-benefit model for shipping in the Arctic

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Insinööritieteiden korkeakoulu | Master's thesis
Marine Technology
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Master’s Programme in Mechanical Engineering
77 + 7
This thesis project outlines the development of a Cost-Benefit Model (CBM) for shipping in the Arctic, considering the requirements outlined in the newly adopted Polar Code. The model is constructed to provide a live feasibility decision making tool for comparing vessels transit times, expenses, operational limitations and need for icebreaker escort; on either the Northwest Passage, Northern Sea Route, Suez Canal Route, or the Panama Canal Route. The model inputs ship parameters, ice conditions, and economic factors including: additional insurance premiums, canal tolls & transit tariffs, port fees, competent crew costs, bunker price, and unexpected maintenance costs due to ice damage. The model was developed using relevant information gathered from literature on both economic feasibility studies and ship-ice interactions, as well as from interviews with ship owners and operators with invested interests in Arctic shipping. The CBM is used to run a research simulation for two cases studies representing the highest and lowest cost differentials between the southern and northern routes. From these two case studies, it was found that fuel costs are the largest contributor to total voyage expense and that this cost is directly influenced by the ship speed in ice calculation routine. A Polar Class 4 and Finnish-Swedish 1A ice class ships were compared within the research simulation. The results show that either ship on the northern routes is a feasible option as the interpretation of the CBM results must be considered from both a time-saved and revenue earned perspectives. The CBM results are dependent on the ice data input, the accuracy of the voyage, operational and capital inputs as well as the market conditions according to which the results are to be analyzed and compared under.
Kujala, Pentti
Thesis advisor
Hedén, Anna
Polar Code, polaris, arctic shipping, Northern Sea route, northwest passage
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