An Expected Consequence Approach to Route Choice in the Maritime Transportation of Crude Oil

• Published in: Risk analysis Vol. 33; no. 11; pp. 2041 - 2055
• Main Authors: Siddiqui, Atiq, Verma, Manish
• Format: Journal Article
• Language: English
• Published: Hoboken, NJ Blackwell Publishing Ltd 01-11-2013; Wiley
• Subjects: Accidents; Applied sciences; Cleanup cost; Clubs; Corporations, Nonprofit; Cost analysis; Crude oil; crude oil shipments; Disasters; Exact sciences and technology; Export-import trade; Ground, air and sea transportation, marine construction; Insurance; intercontinental transportation; International maritime organization; International trade; Linear models; Links; Marine and water way transportation and traffic; Maritime; Maritime industry; Maritime law; Negotiation; Non-linear models; Oil; Oil spills; Petroleum industry; Risk; Risk analysis; risk assessment; Risk management; Risk theory; Sea transport; Studies; Tankers; Transport economics; Transportation; Canada; insurance; Costs; Choice; Cleanup cost; Risk analysis; intercontinental transportation; Risk evaluation; Crude oil; Risk assessment; Tanker; Economic aspect; Maritime transportation; Cost analysis; Route; crude oil shipments; risk assessment
• ISSN: 0272-4332; 1539-6924
• DOI: 10.1111/risa.12049

Maritime transportation is the major conduit of international trade, and the primary link for global crude oil movement. Given the volume of oil transported on international maritime links, it is not surprising that oil spills of both minor and major types result, although most of the risk‐related work has been confined to the local settings. We propose an expected consequence approach for assessing oil‐spill risk from intercontinental transportation of crude oil that not only adheres to the safety guidelines specified by the International Maritime Organization but also outlines a novel technique that makes use of coarse global data to estimate accident probabilities. The proposed estimation technique, together with four of the most popular cost‐of‐spill models from the literature, were applied to study and analyze a realistic size problem instance. Numerical analyses showed that: a shorter route may not necessarily be less risky; an understanding of the inherent oil‐spill risk of different routes could potentially facilitate tanker routing decisions; and the associated negotiations over insurance premium between the transport company and the not‐for‐profit prevention and indemnity clubs. Finally, we note that only the linear model should be used with one of the three nonlinear cost‐of‐spill models for evaluating tanker routes.