The Northern Sea Route competitiveness for oil tankers

This article proposes a decision model for a ship-owner who contemplates the benefits of sailing north via the Northern Sea Route (NSR) or south via the Suez Canal Route (SCR) when transporting oil products from Russia to Asia. The decision is based on potential cost and transit time savings that change on a monthly basis according to sailing conditions and the area along the NSR. This study is applied to a 1A Ice-Class Panamax tanker vessel sailing through the NSR compared to a Panamax tanker vessel sailing through the SCR. It concludes that the NSR provides a competitive advantage in the months from August to November when conservative assumptions on ice conditions (higher bound) are considered for the level of ice thickness encountered along the route and from July to November when a lower bound is assumed.     

Determinants of the property damage costs of tanker accidents

This study investigates determinants of the vessel, oil cargo spillage, and other-property damage costs of tanker accidents. Tobit estimation of a three-equation recursive model suggests that, among types of tanker accidents, fire/explosion accidents incur the largest vessel damage costs, but the smallest oil cargo spillage costs. Alternatively, grounding accidents incur the smallest vessel damage costs, but the largest oil cargo spillage costs, reflecting the difficulty of controlling oil cargo spillage subsequent to such accidents. Also, oil cargo spillage costs are lower for US flag tanker accidents. A dollar of vessel damage cost increases other-property damage cost by $0.06, whereas a dollar of oil cargo spillage increases this cost by $1.55.     

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.     

Game-theoretical models for competition analysis in a new emerging liner container shipping market

This paper develops three game-theoretical models to analyze shipping competition between two carriers in a new emerging liner container shipping market. The behavior of each carrier is characterized by an optimization model with the objective to maximize his payoff by setting optimal freight rate and shipping deployment (a combination of service frequency and ship capacity setting). The market share for each carrier is determined by the Logit-based discrete choice model. Three competitive game strategic interactions are further investigated, namely, Nash game, Stackelberg game and deterrence by taking account of the economies of scale of the ship capacity settings. Three corresponding competition models with discrete pure strategy are formulated as the variables in shipment deployment are indivisible and the pricing adjustment is step-wise in practice. A ɛ -approximate equilibrium and related numerical solution algorithm are proposed to analyze the effect of Nash equilibrium. Finally, the developed models are numerically evaluated by a case study. The case study shows that, with increasing container demand in the market, expanding ship capacity setting is preferable due to its low marginal cost. Furthermore, Stackelberg equilibrium is a prevailing strategy in most market situations since it makes players attain more benefits from the accommodating market. Moreover, the deterrence effects largely depend on the deterrence objective. An aggressive deterrence strategy may make potential monopolist suffer large benefit loss and an easing strategy has little deterrence effect.     

A microeconomic interpretation for the system optimal traffic assignment problem with nonadditive path cost

Using a Bergson–Samuelson welfare function, we outline a microeconomic interpretation of the effects of the non-linearity in the time/cost relationship for travellers in a congested transport network. It is demonstrated that a marginal cost traffic flow assignment following Wardrop's second principle, although it minimizes the total cost of a transport network, may reduce social welfare compared to the market equilibrium assignment based on Wardrop's first principle. A welfare-maximizing assignment model is presented and used to show that if the travellers' utility functions are linear, the assignment that maximizes social welfare will be the same as the assignment that minimizes total network cost, but if users' utility functions are non-linear (reflecting the traditional non-satiation and diminishing marginal utility axioms), the two assignments will be different. It is further shown that the effects of this non-linearity are such that a welfare-maximizing assignment will meet with less user resistance than a minimum total network cost assignment.     

Container vessel fleet deployment for liner shipping with stochastic dependencies in shipping demand

The problem of optimal container vessels deployment is one of great significance for the liner shipping industry. Although the pioneering work on this problem dates back to the early 1990s, only until recently have researchers started to acknowledge and account for the significant amount of uncertainty present in shipping demand in real world container shipping. In this paper, new analytical results are presented to further relax the input requirements for this problem. Specifically, only the mean and variance of the maximum shipping demand are required to be known. An optional symmetry assumption is shown to further reduce the feasible region and deployment cost for typical confidence levels. Moreover, unlike previous work that tends to ignore stochastic dependencies between the shipping demands on the various routes (that are known to exist in the real world), our models account for such dependencies in the most general setting to date. A salient feature of our modeling approach is that the exact dependence structure does not need to be specified, something that is hard, if not simply impossible, to determine in practice. A numerical case study is provided to illustrate the proposed models.     

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.     

Segment-based alteration for container liner shipping network design

Container liner shipping companies only partially alter their shipping networks to cope with the changing demand, rather than entirely redesign and change the network. In view of the practice, this paper proposes an optimal container liner shipping network alteration problem based on an interesting idea of segment, which is a sequence of legs from a head port to a tail port that are visited by the same type of ship more than once in the existing shipping network. In segment-based network alteration, the segments are intact and each port is visited by the same type of ship and from the same previous ports. As a result, the designed network needs minimum modification before implementation. A mixed-integer linear programming model with a polynomial number of variables is developed for the proposed segmented-based liner shipping network alternation problem. The developed model is applied to an Asia–Europe–Oceania liner shipping network with a total of 46 ports and 11 ship routes. Results demonstrate that the problem could be solved efficiently and the optimized network reduces the total cost of the initial network considerably.     

Designing a decision support model for the LNG market

Abstract

As the Liquefied Natural Gas (LNG) market is supply-driven and subject to long-term contracts, both liquefaction companies and shipowners need to make strategic decisions on fleet chartering requirements. These planning decisions become ever more difficult in light of the transformations permeating the LNG market, propelling into a more competitive market with more flexible trades and expanding spot markets. The overcapacity of LNG ships during 2008–2009 triggered by massive overcontracting is a good case in point where the use of decision support models would have been beneficial, especially considering the fortunes and risks at stake. In this paper we present an LNG shipping model that effectively supports decision-making in practice. To demonstrate the value added of the model, we study the implications of LNG project delays and increased decommissioning of ships with respect to market balance and fleet requirements.     

Charges on transport – To what extent are they passed on to users?

The paper first briefly reviews the extent to which profit maximising transport firms with identical cost functions and producing identical transport services pass-on output taxes to transport users under perfect competition, under different forms of imperfect competition and when they act as monopolists. Then the analysis is extended to derive the pass-on rates and activity reductions caused by an output tax when firms care both about profit and consumer surplus, produce symmetrically differentiated services and compete simultaneously in quantities and fare and when they collude. The pass-on rates and activity reductions are highest under collusion and lowest under Cournot competition when they produce complementary services. When they produce substitute services, the result is ambiguous and the competitive situation that yields highest pass-on depends on the firms’ objective functions and how fiercely they compete. Two important counterintuitive results are that the more intensely the firms compete and the more weight they put on consumer surplus, the higher the pass-on rates are.     

Competitive tendering versus performance-based negotiation in Swiss public transport

The purpose of this study is to assess differences in the levels of cost efficiency of bus lines operated under competitively tendered contracts and performance-based negotiated contracts. Following the revision of the Swiss railways act in 1996, regional public authorities were given the choice between two different contractual regimes to procure public passenger transport services. We directly compare the impact of competitive tendering and performance-based negotiation by applying a stochastic frontier analysis to the complete dataset of bus lines (n = 630) operated by the main Swiss company (Swiss Post) at the same time (in 2009) throughout the country. The overall results show that the differences in the levels of cost efficiency between the two contractual regimes are not significant. Our findings are in line with recent evidence of cost convergence between competitive tendering and performance-based negotiation, and suggest that the practice of using both contractual regimes is challenging for the operators in terms of competitive pressure. The threat of competitive tendering may have a disciplining effect on negotiation since it prevents bus companies from bargaining inadequate rents and inducing asymmetric information advantages.     

A demand model for recreational travel

A model is developed to describe and to predict the patterns of regional recreational travel. The model is designed in such a manner to allow its calibration and use without the need to conduct extensive travel surveys in a large region. To allow its use for prediction, the model is based on a causal structure and attempts to derive recreational travel demand from behavioural variables. The main hypothesis of the model is that the amount of recreational travel a recreation area attracts is affected by the accessibility of this area to points of demand potential and by its attractiveness relative to the recreation areas.

The calibration is founded on actual data on recreational travel to national forests in California, U.S.A. It is found in the calibration that accessibility to demand potential is the single most important determinant of recreational travel attraction. A simple relationship is derived to relate travel to each national forest to the relative accessibility of the forest. The model is calibrated and statistically validated.

It is suggested that when constructing travel demand models simplicity be sought, even at the risk of the loss of some explanatory power. In the calibration of such models statistical significant is more important than the ability to reproduce observed patterns.     

Real option analysis for environmental compliance: LNG and emission control areas

A wide array of technical and operational solutions is available to shipowners in order to comply with existing and upcoming environmental regulation within Emission Control Areas (ECAs). Liquefied Natural Gas (LNG) is a promising alternative since it offers potential cost savings in addition to ensuring compliance with ECA regulation. But investment to retrofit existing vessels to be able to use LNG carries significant upfront costs, and a high degree of uncertainty remains on the differential between the prices of LNG and conventional maritime fuels, as well as on the availability of LNG and the reliability of its supply chain. New technologies such as LNG inherently carry substantial risk and an ill-chosen investment strategy may have irreversible consequences that could jeopardise the future of the shipping company. One important question is whether interested owners should invest in LNG now to comply with ECA rules in 2015 and reap the benefits of lower LNG prices, or whether it would be advisable to wait until some of the uncertainty is resolved.While traditional discounted cash flow techniques are unable to account for the value of managerial flexibility linked, for example, to the possibility of deferring an investment, real option analysis can be used to analyse such cases. The paper discusses the optimal time for investment in LNG retrofit and takes specific account of the value of an investment deferral strategy versus the advantages obtainable from the immediate exploitation of fuel price differentials. Through the use of a real option model the paper shows that there is a trade-off between low fuel prices and capital expenses for investment in LNG retrofit. The development in LNG is critically dependent on its future price as well as the reduction in capital costs and ship retrofitting costs. In this respect, policy makers can play a critical role in providing support to advance technical knowledge, maintain LNG prices at favourable levels and in avoiding ambiguity on regulation.     

A cost-competitiveness analysis of charging infrastructure for electric bus operations

This study investigates the cost competitiveness of different types of charging infrastructure, including charging stations, charging lanes (via charging-while-driving technologies) and battery swapping stations, in support of an electric public transit system. To this end, we first establish mathematical models to investigate the optimal deployment of various charging facilities along the transit line and determine the optimal size of the electric bus fleet, as well as their batteries, to minimize total infrastructure and fleet costs while guaranteeing service frequency and satisfying the charging needs of the transit system. We then conduct an empirical analysis utilizing available real-world data. The results suggest that: (1) the service frequency, circulation length, and operating speed of a transit system may have a great impact on the cost competitiveness of different charging infrastructure; (2) charging lanes enabled by currently available inductive wireless charging technology are cost competitive for most of the existing bus rapid transit corridors; (3) swapping stations can yield a lower total cost than charging lanes and charging stations for transit systems with high operating speed and low service frequency; (4) charging stations are cost competitive only for transit systems with very low service frequency and short circulation; and (5) the key to making charging lanes more competitive for transit systems with low service frequency and high operating speed is to reduce their unit-length construction cost or enhance their charging power.     

The nonlinear equation system approach to solving dynamic user optimal simultaneous route and departure time choice problems

Dynamic user optimal simultaneous route and departure time choice (DUO-SRDTC) problems are usually formulated as variational inequality (VI) problems whose solution algorithms generally require continuous and monotone route travel cost functions to guarantee convergence. However, the monotonicity of the route travel cost functions cannot be ensured even if the route travel time functions are monotone. In contrast to traditional formulations, this paper formulates a DUO-SRDTC problem (that can have fixed or elastic demand) as a system of nonlinear equations. The system of nonlinear equations is a function of generalized origin-destination (OD) travel costs rather than route flows and includes a dynamic user optimal (DUO) route choice subproblem with perfectly elastic demand and a quadratic programming (QP) subproblem under certain assumptions. This study also proposes a solution method based on the backtracking inexact Broyden–Fletcher–Goldfarb–Shanno (BFGS) method, the extragradient algorithm, and the Frank-Wolfe algorithm. The BFGS method, the extragradient algorithm, and the Frank-Wolfe algorithm are used to solve the system of nonlinear equations, the DUO route choice subproblem, and the QP subproblem, respectively. The proposed formulation and solution method can avoid the requirement of monotonicity of the route travel cost functions to obtain a convergent solution and provide a new approach with which to solve DUO-SRDTC problems. Finally, numeric examples are used to demonstrate the performance of the proposed solution method.     

Should chemical tankers' tank cleaning waters be banned from discharging into the sea?

Entering of chemical substances into aquatic environment occurs either by involuntary accidents or discharging of chemical wastes resulting from tank washing operations of tankers carrying chemicals. MARPOL 73/78 Convention strict regulations on discharging of chemical residues left in their tanks to the sea, but permits the discharging of such residues provided certain conditions are met. In the present study; the period from 1996 to 2016 is examined and the number of new tankers participating in the chemical tanker fleet and the distribution of these tankers according to dwt tonnage is shown. The tanker fleet which consisted of 1.882 ships in 1966 reached 3.923 units in 2016. Accordingly, the volume of chemical merchandise carried by sea was 132 million tons in 1996, but it reached 287 million tons in 2016. According to the order books, it is understood that these figures will increase even more. The increase in the number of tankers and the growth of the capacities means that more chemical substances are transported at the same time and the tonnage of the chemical waste discharged to the sea is also on increase. Based on the scientific background which proves that chemicals cause biological accumulation and acute and chronic toxicity on aquatic life, and the results of chemical tanker development over the last 20 years that has been presented; It is necessary for maritime authorities to reconsider the legal arrangements for allowing chemical tankers to discharge chemical wastes from tank washing waters to the sea.     

Joint impact of competition,ownership form and economic regulation on airport performance and pricing

The combined impact of ownership form, economic regulation and competition on airport performance is analyzed using data envelopment analysis to measure cost efficiency in the first stage and regression analysis to measure the impact of the environment in the second stage. The empirical results of an analysis of European and Australian airports over a 10 year timeframe reveal that under relatively non-competitive conditions, public airports operate less cost efficiently than fully private airports. Irrespective of ownership form, regulation is necessary to emulate competitive forces thus pushing airport management towards cost efficiency and reasonable pricing policies. Under potential regional or hub competition, economic regulation inhibits airports of any ownership form from operating and pricing efficiently. Although public and fully private airports operate equally efficiently in a competitive setting, private airports still set higher aeronautical charges. Furthermore, mixed ownership forms with a majority public holding are neither cost efficient nor low price, irrespective of the level of competition.     

Liner ship route schedule design with port time windows

This paper examines a practical tactical liner ship route schedule design problem, which is the determination of the arrival and departure time at each port of call on the ship route. When designing the schedule, the availability of each port in a week, i.e., port time window, is incorporated. As a result, the designed schedule can be applied in practice without or with only minimum revisions. This problem is formulated as a mixed-integer nonlinear nonconvex optimization model. In view of the problem structure, an efficient holistic solution approach is proposed to obtain global optimal solution. The proposed solution method is applied to a trans-Atlantic ship route. The results demonstrate that the port time windows, port handling efficiency, bunker price and unit inventory cost all affect the total cost of a ship route, the optimal number of ships to deploy, and the optimal schedule.     

Platinum,fuel cells,and future US road transport

The rate at which fuel cell vehicles (FCVs) might displace the conventional fleet is examined under constraints imposed by the limited availability of platinum. It concludes that a transition period as short as 31 years is not feasible. Under the most favorable circumstances, a complete transition of the US fleet to this new technology would require about 66 years and 10,800 net tonnes of platinum. Platinum demand for the US auto industry alone would amount to 48% of world production during much of that transition period. The effect of that demand on the price of platinum would add to the problem of reducing vehicle cost to a competitive range. If US platinum consumption were to remain at its current level of 16% of annual world production, fleet conversion would require 146 years. These results imply that, without alternative catalysts, fuel cells alone cannot adequately address the issues facing the current system of road transport.