{"id":9530,"date":"2016-11-03T23:03:25","date_gmt":"2016-11-04T03:03:25","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\/"},"modified":"2016-11-04T15:50:46","modified_gmt":"2016-11-04T19:50:46","slug":"the-melting-final-frontier-a-silver-lining-for-cargo-liners","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\/","title":{"rendered":"The Melting Final Frontier: A Silver-Lining for Cargo Liners"},"content":{"rendered":"

Climate change is transforming the shipping industry\u2019s competitive landscape, literally and figuratively, as the Arctic\u2019s sea ice melts at a staggering pace<\/a>. \u00a0The linear rate of decline averages 33,700 square miles per year or 13.3% per decade, and experts believe the Arctic will be ice free before mid-century. (i,ii) As the ice melts over the next several decades, shipping companies, like Eimskip, will be able to navigate previously inaccessible routes between the North Atlantic and Pacific, reducing shipping time by up to two weeks. (iii)<\/p>\n

Eimskip, the world\u2019s oldest Icelandic shipping company and a player in the North Atlantic shipping industry, is one of thousands of companies attempting to reduce its carbon footprint while adapting to the challenges of climate change, including new regulations and weather patterns. However, unlike many other companies, the devastating effects of climate change also present opportunities for Eimskip; it is the physical effects of the melting Arctic, not adaptation to regulation, that will drive the most significant change in Eimskip\u2019s operating model in years to come, and we will explore a few of these changes below.<\/p>\n

(iii)<\/figcaption><\/figure>\n

The widespread use of Arctic shipping lanes is still years away, so Eimskip\u2019s operating adjustments thus far are limited and subtle. \u00a0In 2013, though, Eimskip made its most dramatic move to date when it transferred its U.S. headquarters from Norfolk, VA to Portland, ME, noting that \u201cEimskip is observing various opportunities in the Arctic, which due to global warming, is rapidly opening up.\u201d (iv) \u00a0By relocating to Portland, Eimskip can use its forwarding service (instead of sailing time) to efficiently ship goods down the coast and leverage efficiencies from being closer to the Arctic routes.<\/p>\n

As Trans-Arctic routes become more accessible, Eimskip must adjust a fundamental aspect of its operating system \u2013 its shipping routes.\u00a0 Arctic routes will add new processes, require new capabilities\/tasks and introduce new information flows.\u00a0 For instance, if we look at the introduction of \u201cicebreaker escorts\u201d into their routes, we see how this slight change will affect Eimskip\u2019s broader operating system.\u00a0 Icebreaker escorts will help Eimskip navigate the hazardous environment, but current research shows that the travel time of ships \u201cvaries due to changes in the time spent waiting for icebreaker escorts.\u201d (iv) \u00a0 In addition to introducing a new process and potential bottleneck, icebreakers will require new information flows between Eimskip and its escort.\u00a0 Similarly, Eimskip will have new information flows with weather centers about ice conditions and the Coast Guard about safety conditions.<\/p>\n

\"routes\"<\/a>
(v)<\/figcaption><\/figure>\n

While these new routes may dramatically reduce the distance between North America and Asia, improve fuel savings, reduce carbon emissions and increase asset utilization, they boast a large amount of variability. \u00a0The uncertainty stems from \u201cshallow unmapped seas along the continental coasts, low Arctic temperature [and] risks of encountering drift ice formations.\u201d (vi) \u00a0This variability will require Eimskip to use buffers to accommodate the variation and adjust its \u201cfixed time\u201d scheduling process, which holds Eimskip accountable for large payments to shippers if deliveries arrive late.\u00a0 The variability will pose a significant challenge for Eimskip and ultimately, determine the feasibility and cost-effectiveness of the routes.<\/p>\n

To withstand the hazardous conditions and abide by the Polar Code, an international code requiring specific design, construction, equipment and operations of ships in the Arctic, Eimskip will need special ice-reinforced ships. (vii) \u00a0In May 2016, Eimskip and Royal Atlantic signed a capacity sharing agreement to expand into Greenland and invest in ships built specifically for the Arctic in accordance with the Polar Code.\u00a0 As this partnership demonstrates, to further penetrate the Arctic, Eimskip must acquire not only new ships and new labor to navigate the conditions but also new partners to facilitate expansion.<\/p>\n

\"polar\"<\/a>
(vii)<\/figcaption><\/figure>\n

Despite the uncertainty around when Trans-Arctic routes will open for commercial use, Eimskip should continue to make incremental investments and operating changes to capitalize on the opportunity.\u00a0 More specifically, Eimskip should:<\/p>\n

    \n
  • Forecast and analyze the cost-effectiveness of Trans-Arctic routes by considering the cost of new ice-reinforced ships coupled with anticipated fuel prices, wait times, lengths of journey, canal fees and different sea conditions.<\/li>\n
  • Account for variability in new routes and strategize best routes to reduce variability. \u00a0Eimskip may need to add stops on the route and break-up the long-haul into several, shorter trips.<\/li>\n
  • Analyze the market opportunity since Trans-Arctic routes will be a new offering. \u00a0Demand is expected to be high but currently untested. Ensure changes in operations align with the value Eimskip is providing to customers given the drastic operating changes required to navigate the Arctic.<\/li>\n<\/ul>\n

    Climate change is in motion and the world must adapt.\u00a0 Part of this adaptation is vigorously working to curb climate change, but another part is looking reality in the eye and preparing for the future.\u00a0 Eimskip understands the shifting dynamics of their competitive landscape and must take-action over the next several years to adjust its operating model for the new economic and environmental reality of the shipping industry.<\/p>\n

     <\/p>\n

    [Word Count 798]<\/p>\n

     <\/p>\n

    Fo<\/strong>otnotes:\u00a0<\/strong><\/p>\n

    i. \u201cArtic Sea Ice News & Analysis,\u201d nsidc.org, November 2, 2016, http:\/\/nsidc.org\/arcticseaicenews\/, accessed November 2016.<\/p>\n

    ii. Lincoln E Flake (2013) Navigating an Ice-Free Arctic, The RUSI Journal, 158:3, 44-52, http:\/\/dx.doi.org\/10.1080\/03071847.2013.807585, Accessed November 2016.<\/p>\n

    iii. Costa Paris and Joanne Chiu, \u201cChinese Shipping Group Cosco Planning Regular Trans-Arctic Sailings,\u201d Wall Street Journal, October 29, 2015, http:\/\/www.wsj.com\/articles\/chinese-shipper-cosco-to-schedule-regular-trans-arctic-sailings-1446133485, accessed November 2016.<\/p>\n

    iv. Eimskip, 2015 Global News Magazine (Reykjavik: Eimskip, 2015), p. 3.<\/p>\n

    v. Eimskip, \u201cSail Schedule,\u201d http:\/\/eimskip.is\/EN\/import\/schedule\/default.html, accessed November 2016.<\/p>\n

    vi. Orts Hansen, Gronsedt, Lindstrom Graversen and Hendriksen, \u201cArtic Shipping-Commerical Opportunities and Challenges,\u201d https:\/\/services-webdav.cbs.dk\/doc\/CBS.dk\/Arctic%20Shipping%20-%20Commercial%20Opportunities%20and%20Challenges.pdf, accessed November 2016.<\/p>\n

    vii. \u201cShipping in polar waters,\u201d imo.org, 206, http:\/\/www.imo.org\/en\/mediacentre\/hottopics\/polar\/pages\/default.aspx, accessed November 2016.<\/p>\n","protected":false},"excerpt":{"rendered":"

    Although climate change generates huge losses for Mother Nature and humankind, it turns out that it\u2019s not all bad news. In fact, the devastating effects of climate change may generate substantial financial gains for some industries. One such industry is the shipping industry, and Eimskip, the oldest Icelandic shipping company in the world, is curbing its carbon emissions while also recognizing the opportunities arising from the melting of our final frontier. <\/p>\n","protected":false},"author":1956,"featured_media":9757,"comment_status":"open","ping_status":"closed","template":"","categories":[1398,1505,1218,1226,1062,1504],"class_list":["post-9530","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-arctic","category-cargo-shipping","category-climate-change","category-global-warming","category-shipping","category-trans-arctic"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/climate-change-challenge-2016\/","yoast_head":"\nThe Melting Final Frontier: A Silver-Lining for Cargo Liners - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Melting Final Frontier: A Silver-Lining for Cargo Liners - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"Although climate change generates huge losses for Mother Nature and humankind, it turns out that it\u2019s not all bad news. In fact, the devastating effects of climate change may generate substantial financial gains for some industries. One such industry is the shipping industry, and Eimskip, the oldest Icelandic shipping company in the world, is curbing its carbon emissions while also recognizing the opportunities arising from the melting of our final frontier.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\/\" \/>\n<meta property=\"og:site_name\" content=\"Technology and Operations Management\" \/>\n<meta property=\"article:modified_time\" content=\"2016-11-04T19:50:46+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/MAIN-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"808\" \/>\n\t<meta property=\"og:image:height\" content=\"295\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\\\/\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\\\/\",\"name\":\"The Melting Final Frontier: A Silver-Lining for Cargo Liners - Technology and Operations Management\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2016\\\/11\\\/MAIN-1.jpg\",\"datePublished\":\"2016-11-04T03:03:25+00:00\",\"dateModified\":\"2016-11-04T19:50:46+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\\\/#primaryimage\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2016\\\/11\\\/MAIN-1.jpg\",\"contentUrl\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2016\\\/11\\\/MAIN-1.jpg\",\"width\":808,\"height\":295},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Submissions\",\"item\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"The Melting Final Frontier: A Silver-Lining for Cargo Liners\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/#website\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/\",\"name\":\"Technology and Operations Management\",\"description\":\"MBA Student Perspectives\",\"potentialAction\":[{\"@type\":\"性视界Action\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"The Melting Final Frontier: A Silver-Lining for Cargo Liners - Technology and Operations Management","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\/","og_locale":"en_US","og_type":"article","og_title":"The Melting Final Frontier: A Silver-Lining for Cargo Liners - Technology and Operations Management","og_description":"Although climate change generates huge losses for Mother Nature and humankind, it turns out that it\u2019s not all bad news. In fact, the devastating effects of climate change may generate substantial financial gains for some industries. One such industry is the shipping industry, and Eimskip, the oldest Icelandic shipping company in the world, is curbing its carbon emissions while also recognizing the opportunities arising from the melting of our final frontier.","og_url":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\/","og_site_name":"Technology and Operations Management","article_modified_time":"2016-11-04T19:50:46+00:00","og_image":[{"width":808,"height":295,"url":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/MAIN-1.jpg","type":"image\/jpeg"}],"twitter_card":"summary_large_image","twitter_misc":{"Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\/","url":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\/","name":"The Melting Final Frontier: A Silver-Lining for Cargo Liners - Technology and Operations Management","isPartOf":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/#website"},"primaryImageOfPage":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\/#primaryimage"},"image":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\/#primaryimage"},"thumbnailUrl":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/MAIN-1.jpg","datePublished":"2016-11-04T03:03:25+00:00","dateModified":"2016-11-04T19:50:46+00:00","breadcrumb":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\/#primaryimage","url":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/MAIN-1.jpg","contentUrl":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/MAIN-1.jpg","width":808,"height":295},{"@type":"BreadcrumbList","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-melting-final-frontier-a-silver-lining-for-cargo-liners\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/d3.harvard.edu\/platform-rctom\/"},{"@type":"ListItem","position":2,"name":"Submissions","item":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/"},{"@type":"ListItem","position":3,"name":"The Melting Final Frontier: A Silver-Lining for Cargo Liners"}]},{"@type":"WebSite","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/#website","url":"https:\/\/d3.harvard.edu\/platform-rctom\/","name":"Technology and Operations Management","description":"MBA Student Perspectives","potentialAction":[{"@type":"性视界Action","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/d3.harvard.edu\/platform-rctom\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission\/9530","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission"}],"about":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/types\/hck-submission"}],"author":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/users\/1956"}],"replies":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/comments?post=9530"}],"version-history":[{"count":0,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission\/9530\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/media\/9757"}],"wp:attachment":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/media?parent=9530"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/categories?post=9530"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}