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Investment Cycles in the Newbuilding Market of Ice-Strengthened Oil Tankers

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  • Matti-Mikael Koskinen

    (Department of Marketing, Turku School of Economics and Business Administration, Finland.)

  • Olli-Pekka Hilmola

    (Department of Marketing, Turku School of Economics and Business Administration, Finland.)

Abstract

Investment cycles and their modelling have been under the interest of system dynamics since long ago. Most often these cycles are caused by the uncertain profitability expectations involved in long-term capital investments, as well as the long manufacturing processes of the needed buildings, machines and/or equipment. This paper concentrates on the investment decisions of class I A ice-strengthened oil tankers. In the European oil transport market, these tankers are required only in the Baltic Sea region, and especially in the oil terminals of the Gulf of Finland. The demand for these special class tankers can be derived from the handling capacity available in the most important Russian oil export terminal, Primorsk. However, in the near future, planned capacity enlargements in Primorsk will create additional dynamics. Based on the simulation results, we argue that terminal capacity could not be used in full scale in the near future, if the use of appropriate ice-strengthened tanker capacity is favoured. However, if oil exports are aimed to be completed with I A class vessels, this class of tankers will face a newbuilding boom, which is expected to last at least for the next 10 years. Maritime Economics & Logistics (2005) 7, 173–188. doi:10.1057/palgrave.mel.9100128

Suggested Citation

  • Matti-Mikael Koskinen & Olli-Pekka Hilmola, 2005. "Investment Cycles in the Newbuilding Market of Ice-Strengthened Oil Tankers," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 7(2), pages 173-188, June.
    • Handle: RePEc:pal:marecl:v:7:y:2005:i:2:p:173-188
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    Citations

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    Cited by:

    1. Lin, Arthur J. & Chang, Hai Yen & Hsiao, Jung Lieh, 2019. "Does the Baltic Dry Index drive volatility spillovers in the commodities, currency, or stock markets?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 127(C), pages 265-283.
    2. Tuomas Kiiski & Tomi Solakivi & Juuso Töyli & Lauri Ojala, 2018. "Long-term dynamics of shipping and icebreaker capacity along the Northern Sea Route," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 20(3), pages 375-399, September.
    3. Lauri Lättilä & Olli-Pekka Hilmola, 2012. "Forecasting long-term demand of largest Finnish sea ports," International Journal of Applied Management Science, Inderscience Enterprises Ltd, vol. 4(1), pages 52-79.
    4. Arthur J. Lin & Hai-Yen Chang, 2020. "Volatility Transmission from Equity, Bulk Shipping, and Commodity Markets to Oil ETF and Energy Fund—A GARCH-MIDAS Model," Mathematics, MDPI, vol. 8(9), pages 1-21, September.
    5. Tsan‐Sheng Ng & Shao‐Wei Lam, 2011. "Dynamic maritime systems inquiry: The DIVER approach," Systems Engineering, John Wiley & Sons, vol. 14(3), pages 239-254, September.
    6. Tiwari, Aviral Kumar & Aikins Abakah, Emmanuel Joel & Trabelsi, Nader & Wohar, Mark, 2024. "Do shipping freight markets impact commodity markets?," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 986-1014.
    7. 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.
    8. Arthur Jin Lin, 2023. "Volatility Contagion from Bulk Shipping and Petrochemical Industries to Oil Futures Market during the Economic Uncertainty," Mathematics, MDPI, vol. 11(17), pages 1-19, August.

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