The prospects of the icebreaking tankers’ sector appear negative, as the decline in freight rates is expected to continue next winter (2006-2007), according to shipbrokers. The sector consists of a special category of vessels that can carry oil through the frozen waters of the Baltic and the Barents seas. These tankers charge higher rates than normal tankers when the frozen seas render them essential. Routes concern mainly the shipping of crude oil from Russia, so the maintenance of high oil production is crucial for the viability of the market, in which Greeks have significant interests. Shipowners pay between $5 million and $10 million for the conversion of a normal tanker into an icebreaker, while in the construction of new ships the surcharge on the final price ranges between 5 and 10 percent, according to a recent report by Fortis Bank, which has funded several such orders. Until recently, the higher chartering rates for icebreakers were enough for the amortization of the conversion surcharge or the building of such a tanker often after just one year of operation, rendering this market particularly attractive. Last year an icebreaking tanker in the aframax category (with a capacity of 100,000 deadweight tons) would receive an average of $80,000 per day in excess of what conventional tankers would be paid. However, the Swiss shipping agency Riverlake Shipping suggests that this premium has this year been reduced to just $20,000, a decline of 75 percent. Within this context, the amortization of the investment in icebreakers may take more winters than one. Shipbrokers expect the further rate decline this coming winter to reach 10 percent. For example, the aframax icebreakers’ premium rates will range between $46,000 and $66,000 next winter. The main reason for this decline is the considerable growth of the global icebreaker fleet, expected to double this year as the 40 existing icebreaking tankers will become 70 by the year’s end, with another 12 new vessels to be delivered in 2007. Clarkson research company suggests that the fleet of category 1A icebreakers (which can sail in thicker ice than the smaller 1B and 1C categories) has grown by 22 percent each year on average since 2002 and from this year is expected to continue growing by 20.3 percent annually, until 2010. Greek interests Among the sector’s biggest names are several Greek shipowners, after their recent investment in icebreaking tankers. Therefore, Clarkson notes, Dynacom of Giorgos Prokopiou and TEN of Nikos Tsakos are second and third respectively in the worldwide ranking of the 1A category, behind Sovcomflot. In total, though, the icebreakers market is led by the Greek company Marmaras Navigation of Diamantis Diamantidis, according to the number of ships owned, as it controls 12 icebreaking tankers. Recent reports in the international press have suggested that Diamantidis is seeking a buyer for his fleet and asking $1 billion. Second behind Marmaras Navigation lies TEN, which at the beginning of the year announced it had purchased the icebreaker fleet of Western Petroleum for $530 million, and now controls a total of 11 icebreakers. In the third sport, along with Sovcomflot, is another Greek company, Minerva Marine of the Martinos family. There certainly are some alternative options should the decline in rates continue for these vessels next winter, as they can also operate as conventional tankers, particularly for medium-range routes, although this was not the original target of the shipowners who have invested in this market.