Vessel Damage Cost Differentials: Bulk, Container and Tanker Accidents

Abstract

This paper investigates whether there are accident vessel damage cost differentials among container, tanker and bulk vessels. Tobit estimates of accident vessel damage cost equations suggest that vessel damage cost differentials exist for container versus bulk and tanker versus bulk vessel accidents, but not for container versus tanker vessel accidents. The vessel damage cost per vessel gross ton of a container (tanker) accident is $33.37 ($18.37) less than that of a bulk accident, all else held constant. The damage cost differentials are associated with fire/explosion accidents and human and environmental accident causes. The accident vessel damage cost differentials found in this paper may be compared with vessel hull insurance rates for investigating whether the latter reflect the former. Also, such comparisons may reveal whether there is cross-subsidisation among vessel hull insurance payees.