The effectiveness and costs of speed reductions on emissions from international shipping

Greenhouse gas emissions from international shipping are an increasing concern. The paper evaluates whether vessel speed reduction can be a potentially cost-effective CO₂ mitigation option for ships calling on US ports. By applying a profit-maximizing equation to estimate route-specific, economically-efficient speeds, we explore policy impacts of a fuel tax and a speed reduction mandate on CO₂ emissions. The profit-maximizing function incorporates opportunity costs associated with speed reduction that go unobserved in more traditional marginal abatement cost analyses. We find that a fuel tax of about $150/ton fuel will lead to average speed-related CO₂ reductions of about 20–30%. Moreover, a speed reduction mandate targeted to achieve 20% CO₂ reduction in the container fleet costs between $30 and $200 per ton CO₂ abated, depending on how the fleet responds to a speed reduction mandate.     

Effect of a speed reduction of containerships in response to higher energy costs in Sulphur Emission Control Areas

The objective of this paper is to explore the possible consequences of the future low-sulphur fuel requirements in Sulphur Emission Control Areas (SECA) on vessel speed, from the standpoint of the container shipping industry. Rational energy use, speed reduction, and revenues are closely related in the container shipping sector because speed reductions may provide substantial energy and cost savings. The operators could consider reducing their speed in SECA in order to save on fuel that will become relatively expensive. However, to maintain a weekly frequency without adding new ships, such a behaviour implies that the required speed at sea outside the SECA area increases. This paper aims to investigate if such a difference in speed is cost-effective, and if the increase in speed outside SECA may result in an increase in CO₂ emissions of the total cycle. We propose a cost model that estimates the cost-minimising combination of speeds inside and outside SECA, and the resulting CO₂ emissions of the liner service. Applying this model to representative liner services serving North Europe, we find that differentiating speed accordingly slightly decreases total costs and increases CO₂ emissions in a similar way. The results are sensitive to the price of low-sulphur fuels, the part of the cycle in SECA and the number of ships deployed in the service.     

The multi-port berth allocation problem with speed optimization and emission considerations

The container shipping industry faces many interrelated challenges and opportunities, as its role in the global trading system has become increasingly important over the last decades. On the one side, collaboration between port terminals and shipping liners can lead to costs savings and help achieve a sustainable supply chain, and on the other side, the optimization of operations and sailing times leads to reductions in bunker consumption and, thus, to fuel cost and air emissions reductions. To that effect, there is an increasing need to address the integration opportunities and environmental issues related to container shipping through optimization. This paper focuses on the well known Berth Allocation Problem (BAP), an optimization problem assigning berthing times and positions to vessels in container terminals. We introduce a novel mathematical formulation that extends the classical BAP to cover multiple ports in a shipping network under the assumption of strong cooperation between shipping lines and terminals. Speed is optimized on all sailing legs between ports, demonstrating the effect of speed optimization in reducing the total time of the operation, as well as total fuel consumption and emissions. Furthermore, the model implementation shows that an accurate speed discretization can result in far better economic and environmental results.     

Assessing the energy and greenhouse gas emissions mitigation effectiveness of potential US modal freight policies

This paper estimates the total embodied energy and emissions modal freight requirements across the supply chain for each of over 400 sectors using Bureau of Transportation Statistics Commodity Flow Survey data and Bureau of Economic Analysis economic input-output tables for 2002. Across all sectors, direct domestic truck and rail transportation are similar in magnitude for embodied freight transportation of goods and services in terms of ton-km. However, the sectors differ significantly in energy consumption, greenhouse gas emissions, and costs per ton-km. Recent pressure to reduce energy consumption and emissions has motivated a search for more efficient freight mode choices. One solution would be to shift freight transportation away from modes that require more energy and emit more (e.g., truck) to modes that consume and emit less (e.g., rail and water).Our results show there are no individual sectors for which targeting changes would significantly decrease the total freight transportation energy and emissions, therefore we have also looked at the prospect of policies encouraging many sectors to shift modes. There are four scenarios analyzed: (1) shifting all truck to rail, shifting top 20% sector mode choice, (2) based on their emissions, (3) based on a multi-attribute analysis, and (4) increasing truck efficiency (e.g., mpg). Increasing truck efficiency by 10% results in similar energy and emissions reductions (approximately 7% for energy and 6% for emissions) as targeting the top 20% of sectors when selected based on emissions, whereas selecting the top 20% based on availability to shift from truck results in slightly less reductions of energy and emissions. Implementing policies to encourage higher efficiency in freight trucks may be a sufficient short term goal while efforts to reduce truck freight transportation through sectoral policies are implemented in the long term.     

Benefit of speed reduction for ships in different weather conditions

Currently, the shipping industry is facing a great challenge of reducing emissions. Reducing ship speeds will reduce the emissions in the immediate future with no additional infrastructure. However, a detailed investigation is required to verify the claim that a 10% speed reduction would lead to 19% fuel savings (Faber et al., 2012).This paper investigates fuel savings due to speed reduction using detailed modeling of ship performance. Three container ships, two bulk carriers, and one tanker, representative of the shipping fleet, have been designed. Voyages have been simulated by modeling calm water resistance, wave resistance, propulsion efficiency, and engine limits. Six ships have been simulated in various weather conditions at different speeds. Potential fuel savings have been estimated for a range of speed reductions in realistic weather.It is concluded that the common assumption of cubic speed-power relation can cause a significant error in the estimation of bunker consumption. Simulations in different seasons have revealed that fuel savings due to speed reduction are highly weather dependent. Therefore, a simple way to include the effect of weather in shipping transport models has been proposed.Speed reduction can lead to an increase in the number of ships to fulfill the transport demand. Therefore, the emission reduction potential of speed reduction strategy, after accounting for the additional ships, has been studied. Surprisingly, when the speed is reduced by 30%, fuel savings vary from 2% to 45% depending on ship type, size and weather conditions. Fuel savings further reduce when the auxiliary engines are considered.     

Maritime routing and speed optimization with emission control areas

Strict limits on the maximum sulphur content in fuel used by ships have recently been imposed in some Emission Control Areas (ECAs). In order to comply with these regulations many ship operators will switch to more expensive low-sulphur fuel when sailing inside ECAs. Since they are concerned about minimizing their costs, it is likely that speed and routing decisions will change because of this. In this paper, we develop an optimization model to be applied by ship operators for determining sailing paths and speeds that minimize operating costs for a ship along a given sequence of ports. We perform a computational study on a number of realistic shipping routes in order to evaluate possible impacts on sailing paths and speeds, and hence fuel consumption and costs, from the ECA regulations. Moreover, the aim is to examine the implications for the society with regards to environmental effects. Comparisons of cases show that a likely effect of the regulations is that ship operators will often choose to sail longer distances to avoid sailing time within ECAs. Another effect is that they will sail at lower speeds within and higher speeds outside the ECAs in order to use less of the more expensive fuel. On some shipping routes, this might give a considerable increase in the total amount of fuel consumed and the CO₂ emissions.     

Projecting adoption of truck powertrain technologies and CO2 emissions in line-haul networks

In this paper we present a mixed-integer linear program to represent the decision-making process for heterogeneous fleets selecting vehicles and allocating them on freight delivery routes to minimize total cost of ownership. This formulation is implemented to project alternative powertrain technology adoption and utilization trends for a set of line-haul fleets operating on a regional network. Alternative powertrain technologies include compressed (CNG) and liquefied natural gas (LNG) engines, hybrid electric diesel, battery electric (BE), and hydrogen fuel cell (HFC). Future policies, economic factors, and availability of fueling and charging infrastructure are input assumptions to the proposed modeling framework. Powertrain technology adoption, vehicle utilization, and resulting CO₂ emissions predictions for a hypothetical, representative regional highway network are illustrated. A design of experiments (DOE) is used to quantify sensitivity of adoption outcomes to variation in vehicle performance parameters, fuel costs, economic incentives, and fueling and charging infrastructure considerations. Three mixed-adoption scenarios, including BE, HFC, and CNG vehicle market penetration, are identified by the DOE study that demonstrate the potential to reduce cumulative CO₂ emissions by more than 25% throughout the period of study.     

Analyzing trade-offs between transportation,inventory and production costs on freight networks

The purpose of this paper is to determine optimal shipping strategies (i.e. routes and shipment sizes) on freight networks by analyzing trade-offs between transportation, inventory, and production set-up costs. Networks involving direct shipping, shipping via a consolidation terminal, and a combination of terminal and direct shipping are considered. This paper makes three main contributions. First, an understanding is provided of the interface between transportation and production set-up costs, and of how these costs both affect inventory. Second, conditions are identified that indicate when networks involving direct shipments between many origins and destinations can be analyzed on a link-by-link basis. Finally, a simple optimization method is developed that simultaneously determines optimal routes and shipment sizes for networks with a consolidation terminal and concave cost functions. This method decomposes the network into separate sub-networks, and determines the optimum analytically without the need for mathematical programming techniques.     

Bunker levy schemes for greenhouse gas (GHG) emission reduction in international shipping

A fuel levy is one of the market-based measures (MBMs) currently under consideration at the International Maritime Organization. MBMs have been proposed to improve the energy efficiency of the shipping sector and reduce its emissions. This paper analyses the economic and environmental implications of two types of levy on shipping bunker fuels by means of an analytical model built on the cobweb theorem. A unit-tax per ton of fuel and an ad-valorem tax, enforced as a percentage of fuel prices, are examined. In both cases, a speed and fuel-consumption reduction equivalent to an improvement in the energy efficiency of the sector would be expected as a result of the regulation enforcement. The speed reduction in the unit-tax case depends on fuel prices and the tax amount, whereas in the ad-valorem case it relies upon the enforced tax percentage.Both schemes lead to industry profit decline, the extent of which depend on the structure of the levy and market conditions. Since there is concern that the costs resulting from the policy will be passed from shipping companies to their customers along the supply chain, the paper dwells on how the costs arising from the enforcement of the levy will be actually allocated between ship-owners and operators, and cargo-owners. In a market characterised by high freight rates and with no or limited excess capacity, a higher percentage of the total tax amount is transferred from ship-owners to shippers. In case of a recession the opposite happens.     

External costs from vessel emissions at port: a review of the methodological and empirical state of the art†

The accurate calculation of external costs from vessel emissions and shipping (as it happens with transport) strongly depends on parameters such as location, the time of the day and vessel operative. Thus, the use of a full bottom-up approach and granular traffic details is suggested. The latter may represent a substantial improvement in the resolution of shipping activity, energy demand, emissions and cost data being the latter essential for better regulations. The revised work identifies the Impact Pathway Approach (IPA) as the best-practice bottom-up methodology for calculating site-specific external costs derived from shipping air emissions. It has been widely adopted, among others, over major European studies (CAFE, BeTa, NEEDS and HEATCO). Also, it shows that due to costly and complex requirements of creating a shipping and harbour-specific bottom-up approach, external cost calculation based on tonne per euro factors obtained from European Studies (top-down approach) has been widely accepted. Moreover, methodological improvements and the possible achievement of refined estimations (IPA) dedicated to ports and shipping are strongly suggested, as these may improve information quality used for environmental policy and measures that contribute to the internalisation of externality costs.     

Evaluating the effects of speed reduce for shipping costs and CO2 emission

Global greenhouse gas emissions have driven up carbon dioxide levels beyond 400 parts per million, thereby increasing the rate of global warming. This paper conducted a thorough assessment of available operating strategies to identify the approach to speed reduction that is best able to minimize costs and reduce the impact of shipping on the environment. Our results indicate that optimum speed reduction is a dynamic process depending largely on charter rates and fuel prices. The significant cost advantages afforded by this approach could improve the competitiveness of ship operators.     

The impact of alternative routeing and packaging scenarios on carbon and sulphate emissions in international wine distribution

There is a large body of research related to carbon footprint reduction in supply chains and logistics from a wide range of sectors; however the decarbonisation of freight transport is mostly explored from a single mode perspective and at a domestic/regional level. This paper takes into account a range of alternative transport modes, routes and methods with particular reference to UK wine imports from two regions: northern Italy and Southeast Australia. The research examines supply chain structures, costs and the environmental impact of international wine distribution to the UK. A number of options are evaluated to calculate the carbon footprint and sulphate emissions of alternative route, mode, method of carriage, and packaging combinations. The estimation of CO₂e emissions incorporates three main elements - cargo mass, distance and method of carriage; sulphate emissions are derived from actual ship routes, engine power and operational speeds. The bottling of wine either at source or close to destination is also taken into consideration. The key findings are: there are major differences between the environmental footprint of different routeing and packaging scenarios; the international shipping leg almost always has a much larger footprint than inland transport within the UK except in the hypothetical case of the rail shipments from Italy using flexitanks. With reference to sulphate, the lowest cost scenario among the sea maximizing options is also the sulphate minimising solution.     

Developments of CO2-emissions and costs for small electric and combustion engine vehicles in Germany

Electric vehicles have the potential to lower emissions in the mobility sector, but especially high costs might hinder their market development. This paper aims to access environmental and economic impacts and potentials by comparing CO₂-emissions and costs of small vehicles. Considering actual data it is analysed, if and under which conditions electric vehicles are financially competitive for private consumers and under which conditions emissions can be saved. For this, a multiple-stage approach is focusing on (1) emissions during production and operation, (2) private costs and (3) external costs of emissions. A model of total cost of ownership is applied for the analysis of private and external costs.Results show that emissions of electric vehicles exceed emissions of combustion engine vehicles in the production phase, but electric vehicles cause fewer emissions during operation. Total emissions can be saved by electric vehicles even with low annual driving distances (2500–5500 km/a today). Results highly depend on the form of electricity production.Today, private costs of electric vehicles exceed the costs of combustion engine vehicles. Due to cost decreases electric vehicles can gain financial advantages in the future. External costs are high, especially for combustion engine vehicles (up to 15% of private costs), but in none of the considered cases high enough to give electric vehicles a financial advantage today. This picture will change in the future.     

A review and analysis of the investment in,and cost structure of,intermodal rail terminals

The results presented in this article identify the role of costs in the scientific and grey freight terminal handling literature and analyses the handling costs of different terminal sizes. The literature review shows that handling costs only play a marginal role in the scientific research in intermodal rail freight terminals (IRT). This is remarkable given the large role costs occupy in decision-making in freight transport. Furthermore, the used cost levels show a wide range of proposed amounts and terminal sizes or handling technologies are seldom addressed. Finally, many of the scientific papers do not make it clear whether the average transhipment cost or market price is referred to. Next, the analysis of the investment in, and cost structure of, IRTs shows that IRT investments are very capital-intensive leading to relatively high average costs per handling. However, given the cost characteristics of IRTs, the average cost per handling represents the underlying cost structure and are – in this sense – representative. The cost analysis demonstrates that extra-large IRTs actually have the lowest average handling costs, followed by small IRTs.     

Atmospheric Emissions from Shipping: The Need for Regulation and Approaches to Compliance

Shipping has traditionally been viewed as the least environmentally damaging mode of freight transport. Recent studies have increasingly questioned this perception, as attention has focused on both the greenhouse gas emissions (mainly CO₂) and the emission of health-damaging pollutants (such as sulphur, nitrogen oxides and particulates) by ships. This paper reviews the available evidence on the atmospheric emissions of shipping. It proposes that the profit objective has prompted the pursuit of greater fuel efficiency within the sector, but that reliance on market forces alone is insufficient to deliver on the environmental imperative. The paper outlines the current and planned regulatory regime for the atmospheric emissions from ships and posits that greater, and more diverse, market regulation is required. Alternative general approaches to regulatory compliance are categorised as ‘alternative sources of energy’ or ‘abatement technologies’ and the characteristics of a range of specific options are analysed. The paper concludes that although the shipping industry has been slow to improve its environmental credentials, a combination of regulation and technological innovation provides it with significant potential to dramatically reduce its environmental impact.     

Microeconomic determinants of dry bulk shipping freight rates and contract times

While the literature has established macroeconomic determinants of shipping freight (charter) rates, there has been no systematic investigation of the microeconomic determinants of shipping freight rates. Therefore, the purpose of this paper is to investigate microeconomic determinants of freight rates in the dry bulk shipping market, using a large sample of individual dry bulk charter contracts from January 2003 to July 2009. Differences in freight rates across major dry bulk shipping routes, the geographical distribution of shipping activities around the world, and the duration of the laycan period of shipping contracts are also investigated. Estimated results suggest that the laycan period and dry bulk freight rates are interrelated and determined simultaneously. Furthermore, vessel deadweight, age and voyage routes are important determinants of dry bulk shipping freight rates, while determinants of the laycan period of chartered vessels include vessel age, freight rate level, and freight rate volatility.     

The time-dependent pollution-routing problem

The Time-Dependent Pollution-Routing Problem (TDPRP) consists of routing a fleet of vehicles in order to serve a set of customers and determining the speeds on each leg of the routes. The cost function includes emissions and driver costs, taking into account traffic congestion which, at peak periods, significantly restricts vehicle speeds and increases emissions. We describe an integer linear programming formulation of the TDPRP and provide illustrative examples to motivate the problem and give insights about the tradeoffs it involves. We also provide an analytical characterization of the optimal solutions for a single-arc version of the problem, identifying conditions under which it is optimal to wait idly at certain locations in order to avoid congestion and to reduce the cost of emissions. Building on these analytical results we describe a novel departure time and speed optimization algorithm for the cases when the route is fixed. Finally, using benchmark instances, we present results on the computational performance of the proposed formulation and on the speed optimization procedure.     

The economic speed of an oceangoing vessel in a dynamic setting

The optimal (economic) speed of oceangoing vessels has become of increased importance due to the combined effect of low freight rates and volatile bunker prices. We examine the problem for vessels operating in the spot market in a tramp mode. In the case of known freight rates between origin destination combinations, a dynamic programming formulation can be applied to determine both the optimal speed and the optimal voyage sequence. Analogous results are derived for random freight rates of known distributions. In the case of independent rates the economic speed depends on fuel price and the expected freight rate, but is independent of the revenue of the particular voyage. For freight rates that depend on a state of the market Markovian random variable, economic speed depends on the market state as well, with increased speed corresponding to good states of the market. The dynamic programming equations in our models differ from those of Markovian decision processes so we develop modifications of standard solution methods, and apply them to small examples.     

Sailing into a dilemma: An economic and legal analysis of an EU trading scheme for maritime emissions

On the basis of a joint economic and legal analysis, we evaluate the effects of a “regional” (European) emission trading scheme aiming at reducing emissions of international shipping. The focus lies on the question which share of emissions from maritime transport activities to and from the EU can and should be included in such a system. Our findings suggest that the attempt to implement an EU maritime ETS runs into a dilemma. It is not possible to design a system that achieves emission reductions in a cost efficient manner and is compatible with international law.     

Low carbon maritime transport: How speed,size and slenderness amounts to substantial capital energy substitution

Three responses that reduce energy consumption and CO₂ emissions in maritime transport are slower speeds, larger vessels and slender hull designs. We use crude oil carriers as our illustrative example; these represent nearly a quarter of international sea cargo movements. We estimate the potential and costs in these which can all be described as capital substituting for energy and emissions. At different degrees of flexibility and time scales: speed reductions are feasible immediately when there are vessels available, though more capital will be tied up in cargo. Deployment of larger and more slender vessels to a greater extent requires fleet renovation, and also investments in ports and infrastructure. A novel finding in our analysis is that if bunker costs rise as a result of emission costs (fees, quotas), then this may depress speeds and emissions more than if they result from higher oil prices. The reason is that for higher oil prices, more capital tied up in cargo may give cargo owners an interest in speeding up, partly counteracting the impulse from fuel costs that tends to slow vessels down. Emission costs, in contrast, do not raise cargo values.