The costs of icebreaking services: an estimation based on Swedish data

Abstract

In winter, the sea around Sweden and Finland as well as parts of the waters around Canada, Russia and the USA become ice covered, and ships may require assistance from icebreakers to proceed to their destinations. This paper accordingly analyses the cost structure and estimates the cost of icebreaking operations at sea, including the costs of external effects of the icebreakers' emissions, and analyses the consequences of different pricing schemes for financing icebreaking services. A regression analysis was carried out based on data from icebreaking services in Sweden over 14 winters from 2001/2002 to 2015/2016. The social marginal cost of an average assistance operation (which may involve more than one ship) is estimated at EUR 6476 and for each assisted ship EUR 5304. The same cost is EUR 907 per running hour for the icebreakers and EUR 1990 per hour a ship is assisted. Each additional nautical mile sailed by an icebreaker costs society EUR 141 and each assisted nautical mile EUR 234. The marginal cost is found not to be related to winter severity. Despite the significant social marginal costs, not including large fixed costs, icebreaking in Sweden and Finland is free of charge. The advantages and disadvantages of four pricing models that can be applied to cover at least parts of the costs to society are discussed. All models could create new distortions, but a price per assisted hour may be worth applying in practice.

Polar class ship accessibility to Arctic seas north of the Bering Strait in a decade of variable sea-ice conditions

“…The shipping industry might avoid these costs by hiring an icebreaker to provide escort service for a non-ice-strengthened ship, but such services can be costly and the availability of icebreakers is limited (Lindborg and Andersson, 2020). Managers therefore have a financial incentive to optimize ship design or to plan shipping operations that avoid the need for ice-capable ships when possible.…”