Fleet deployment optimization for liner shipping Part 1. Background, problem formulation and solution approaches

The background and the literature in liner fleet scheduling is reviewed and the objectives and assumptions of our approach are explained. We develop a detailed and realistic model for the estimation of the operating costs of liner ships on various routes, and present a linear programming formulation for the liner fleet deployment problem. Independent approaches for fixing both the service frequencies in the different routes and the speeds of the ships, are presented.     

Fleet deployment optimization for liner shipping Part 2. Implementation and results

We use linear programming (LP) for solving the problem of the optimal deployment of an existing fleet of multipurpose or fully containerized ships, among a given set of routes, including information for lay-up time, if any, and type and number of extra ships to charter, based on a detailed and realistic model for the calculation of the operating costs of all the ship types in every route and on a suitable LP formulation developed in earlier work of the authors. The optimization model is also applicable to the problem of finding the best fleet compostion and deployment, in a given set of trade routes, which may be the case when a shipping company is considering new or modified services, or a renewal of the existing fleet. In addition, two promising mixed linear-integer programming formulations are suggested.     

Fleet deployment optimization for liner shipping: an integer programming model

Extending and improving an earlier work of the second author, an Integer Programming (IP) model is developed to minimize the operating and lay-up costs for a fleet of liner ships operating on various routes. The IP model determines the optimal deployment of an existing fleet, given route, service, charter, and compatibility constraints. Two examples are worked with extensive actual data provided by Flota Mercante Grancolombiana (FMG). The optimal deployment is solved for their existing ship and service requirements and results and conclusions are given.     

Fleet deployment optimization models.Part 2

The fleet deployment problem for the one origin,one destination fixed-price contract requiring the transport of a given total amount of cargo within a given period is formulated and solved for the case that one or more cost components are given staircase functions of time. A computer program has been developed to implement the solution of this problem. The fleet deployment problem with one or more costs being random variables with known probability density functions is also formulated. Analytical expressions for hte basic probabilistic quantities, i.e the probability density function,the mean and the variance of the total operating cost, are presented. Finally, sample results are presented and discussed and some extensions for further research are suggested.     

Designing optimal routes in a liner shipping problem

A real liner shipping problem of deciding optimal weekly routes for a given fleet of ships is considered and a solution method for solving the problem is proposed. First, all feasible routes for each ship are generated together with the cost and the duration for each route. The routes are given as input to an integer programming (IP) problem. By solving the IP problem, routes for each ship are selected such that total transportation costs are minimized and the demand at each port is satisfied. The total duration for the routes that are selected for a given ship must not exceed one week.

The real liner shipping problem is solved together with four randomly generated test problems. The computational results show that proposed solution method is suitable for designing optimal routes in several liner shipping problems.     

Designing optimal routes in a liner shipping problem

A real liner shipping problem of deciding optimal weekly routes for a given fleet of ships is considered and a solution method for solving the problem is proposed. First, all feasible routes for each ship are generated together with the cost and the duration for each route. The routes are given as input to an integer programming (IP) problem. By solving the IP problem, routes for each ship are selected such that total transportation costs are minimized and the demand at each port is satisfied. The total duration for the routes that are selected for a given ship must not exceed one week.

The real liner shipping problem is solved together with four randomly generated test problems. The computational results show that proposed solution method is suitable for designing optimal routes in several liner shipping problems.     

集装箱船舶大型化对中国班轮运输的影响

通过竞争情报分析提供了各班轮公司未来船队结构和运力的变化趋势,由此观察到各班轮公司为了降低自身的营运成本,在最近几年大量订购超巴拿马型甚至更大型的集装箱船舶参与运输,但是却不能达到其预期的规模效应。原因就在于相当一部分成本随着船型的增大而线性增加,规模不经济。我们探讨了中国的班轮运输市场的几个重要特点:中外贸易的不平衡导致了货源的不平衡;未来贸易结构的调整会影响航线的布局和调派;贸易上的不稳定因素使班轮公司遇到外在的风险。这些特点会深远地影响集装箱船舶大型化的经济受益,相反的,集装箱船舶大型化的趋势也会加剧这些负面的影响,危及整个班轮运输市场。     

Future cost scenarios for reduction of ship CO2 emissions

International shipping is a significant contributor to Global Greenhouse Gas (GHG) emissions, responsible for approximately 3% of global CO₂ emissions. The International Maritime Organization is currently working to establish GHG regulations for international shipping and a cost effectiveness approach has been suggested to determine the required emission reductions from shipping. To achieve emission reductions in a cost effective manner, this study has assessed the cost and reduction potential for present and future abatement measures based on new and unpublished data. The model used captures the world fleet up to 2030, and the analysis includes 25 separate measures. A new integrated modelling approach has been used combining fleet projections with activity-based CO₂ emission modelling and projected development of measures for CO₂ emission reduction. The world fleet projections up to 2030 are constructed using a fleet growth model that takes into account assumed ship type specific scrapping and new building rates. A baseline trajectory for CO₂ emission is then established. The reduction potential from the baseline trajectory and the associated marginal cost levels are calculated for 25 different emission reduction measures. The results are given as marginal abatement cost curves, and as future cost scenarios for reduction of world fleet CO₂ emissions. The results show that a scenario in which CO₂ emissions are reduced by 33% from baseline in 2030 is achievable at a marginal cost of USD 0 per tonne reduced. At this cost level, emission in 2010 can be reduced by 19% and by 24% in 2020. A scenario with 49% reduction from baseline in 2030 can be achieved at a marginal cost of USD 100 per tonne (27% in 2010 and 35% in 2020). Furthermore, it is evident that further increasing the cost level beyond USD 100 per tonne yield very little in terms of further emission reduction. The results also indicate that stabilising fleet emissions at current levels is obtainable at moderate costs, compensating for fleet growth up to 2030. However, significant reductions beyond current levels seem difficult to achieve. Marginal abatement costs for the major ship types are also calculated, and the results are shown to be relatively homogenous for all major ship types. The presented data and methodology could be very useful for assisting the industry and policymakers in selecting cost effective solutions for reducing GHG emissions from the world fleet.     

Impact of scale increase of container ships on the generalised chain cost

In recent years, an increase in the size of the container ships could be observed. The question is how these larger ships will influence the total generalised costs from a port of loading to a destination in the European hinterland. The second question is whether a scale increase of the container ships on other loops, such as a loop from the United States to Europe, has the same impact on the generalised chain costs as on the loop from Asia to Europe. A derived question is which element of the total chain has the highest importance, and whether this balance varies as the ship size changes. In this article, a model is developed that allows answering the above research questions. The model is designed to simulate the cost of a complete loop of a container ship and of a chain that uses that same loop. For the chain cost simulation, the maritime part is determined by the loop. From the ports of loading and unloading, the port container handling and the hinterland transportation costs are also integrated. The model also allows calculating the total chain cost from a point of origin (either a hinterland region or a port) to a destination point (also a port or a hinterland region). An actual container loop of a container shipping company can be introduced in the model. An application is made to two existing container loops, namely from Asia respectively the United States to Europe. It turns out that changing ship does indeed lead to economies of scale, but also that the impact is larger on the Asia–Europe connection than on the US–Europe connection. Furthermore, the maritime component has the biggest share in the total chain cost, but as ship size increases, the shares start getting closer to each other. This research contributes to the existing literature in two ways. First of all, it quantifies the impact of the scale increase of container ships throughout the total chain. Second, this is done from a bottom-up engineering modelling approach.     

Effect of proposed CO2 emission reduction scenarios on capital expenditure

The International Maritime Organisation is currently working on establishing regulations for international shipping regarding greenhouse gas emissions, and a cost-effectiveness approach has been suggested as one method for determining the necessary reductions in emissions from shipping. Previous studies have investigated the CO₂ emission reduction potential for the world shipping fleet up to 2030 and the associated marginal abatement cost levels. To analyse the cost implications of different emission reduction scenarios, this study has calculated the emission reduction potential and additional capital expenditure for 25 CO₂ emission reduction measures applied to 59 ship segments. The expected fleet development over time, keeping track of new ships built from 2010 to 2030 and Existing ships built prior to 2010 and still in operation by 2030, have been modelled. Two alternative approaches to find the cost-effective potential in the world shipping fleet have been applied. One approach is to implement only measures which in themselves are cost-effective (measure-by-measure), and another approach is to implement measures as long as the net savings from cost-effective measures balance the costs of non-cost-effective measures (set of measures). The results demonstrate that by 2030, the majority (93%) of the reduction potential will be related to new ships. Our results show that the measure-by-measure approach would decrease the CO₂ emissions by 30% for new ships while the set-of-measures approach with 53% (of the 2030 baseline emissions of 1316?Mt). The implication of achieving such emission reduction is an increase in the capital expenditure on New ships by 6% (USD 183 billion) and 27% (USD 761 billion), respectively, in the period 2010 to 2030 compared to a business-as-usual scenario. The measure-by-measure approach yields a 5% decrease in CO₂ emission per 1% increase in capital expenditure, while the set-of-measures approach yields a 2% decrease per 1% increase. This is due to the significant variation in capital intensity of the different measures, ranging from almost zero to USD 200 per tonne of CO₂ averted. The results of this study are useful for the shipping industry to assess the economic burden that must be shouldered in order to implement abatement measures under different CO₂ emission reduction scenarios.     

Strategic fleet size planning for maritime refrigerated containers

In the present economic climate, it is often the case that profits can only be improved, or for that matter maintained, by improving efficiency and cutting costs. This is particularly notorious in the shipping business, where it has been seen that the competition is getting tougher among carriers, thus alliances and partnerships are resulting for cost effective services in recent years. In this scenario, effective planning methods are important not only for strategic but also operating tasks, covering their entire transportation systems. Container fleet size planning is an important part of the strategy of any shipping line. This paper addresses the problem of fleet size planning for refrigerated containers, to achieve cost-effective services in a competitive maritime shipping market. An analytical model is first discussed to determine the optimal size of an own dry container fleet. Then, this is extended for an own refrigerated container fleet, which is the case when an extremely unbalanced trade represents one of the major investment decisions to be taken by liner operators. Next, a simulation model is developed for fleet sizing in a more practical situation and, by using this, various scenarios are analysed to determine the most convenient composition of refrigerated fleet between own and leased containers for the transpacific cargo trade.     

Methodology for ro-ro ship and fleet sizing with application to short sea shipping

A novel methodology is developed for determining the characteristics of a cargo roll-on/roll-off (ro-ro) ship and the fleet size required for a given short sea shipping route. The ship and required fleet size to satisfy the transportation demand (for each pair of speed and freight rate) are determined using a database of existing cargo ro-ro ships to obtain the main technical characteristics of the most suitable ship. The time charter, voyage costs and revenue are then calculated considering the technical characteristics of each ship. Fuel costs are corrected for the actual ship speed and loading condition. A number of restrictions in the transportation problem are considered leading to the exclusion of unfeasible solutions. The maximum profit over the period of a year is identified among the feasible pairs of speed and freight rate. This general methodology is applied in a case study that considers the route between Leixões (Portugal) and Rotterdam (Netherlands). The study allows the identification of the most suitable ship and fleet sizes for different market penetration levels and quantifies the impact on shipping company profit of changes in parameters such as fuel costs, time charter costs, emission control area, installed propulsion power and stacking factor.     

Hybrid Electric Drive for DDG-51 Class Destroyers

The first of the Arleigh Burke class destroyers is nearing its mid-life. This class of ships was designed during the late 1970s through the 1980s to meet the threats that were prevalent at that time. Since entering service in 1991, these ships have shown themselves to be extremely versatile and the class now consists of nearly 60 ships in service. Their combat systems have been continually upgraded and adapted to meet the new threats the United States faces today. However, in order to keep these platforms viable throughout the first half of the 21st century, their operating costs must be reduced. Manpower, maintenance, and fuel are three of the top operating cost drivers. Most surface combatants spend very little of their underway time operating at full speed or even close to that. Over 1/3 of their underway time is spent at 12 knots and under. This is less than half of their maximum speed and only a fraction of the maximum power owing to the cubic speed–power relationship. Although the existing mechanical drive system is reasonably efficient, the main gas turbines are extremely inefficient at these very low power levels. A shaft-mounted auxiliary electric propulsion system (EPS) can take advantage of excess capacity in the ship service generators to reduce the main engine operating hours. Enabling bi-directional power flow from this auxiliary electric drive will provide additional generation capacity for ship service loads at a modest additional cost. It also provides a "cross-connect" capability from one shaft to the other. This paper will explore one prospect for reducing the operating cost of the DDG-51 class of ships by installing an auxiliary EPS that would powered by the ship service electrical plant. This additional system would serve to reduce both underway fuel usage as well as maintenance on the gas turbine main engines by reducing the number of operating hours on each engine. We will examine the technology trade-offs in this ongoing study.     

Optimal reefer slot conversion for container freight transportation

Given a fleet of container ships of varying capacity, a cost-efficient approach for improving fleet utilization and reducing the number of delayed containers is to optimize the sequence of container ships in a given string, a problem which belongs to the large ship-deployment class. A string sequence with ‘uniformly’ distributed ship capacity is more likely to accommodate a random container shipment demand. The number of one’s total ship slots acts as a gauge of the capacity of the container ships. Meanwhile, there are two types of ship slots: dry slots and reefer slots. A dry slot only accommodates a dry container, while a reefer slot can accommodate either a dry or a reefer container. The numbers of dry and reefer slots for ships in a string are different. Therefore, in this study, we propose a model that considers both dry and reefer slots and use it to elucidate the optimal ship-deployment sequence. The objective is to minimize the delay of dry and reefer containers when the demand is uncertain. Furthermore, based on the optimal sequence deduced, the study also investigates the need to convert some dry slots to reefer slots for the container ships.     

Replacement, obsolescence and modifications of ships

A theory of replacement in the context of ocean going vessels is discussed. The approach is based upon costs rather than profits, and while there appear to be many difficulties in applying replacement theory to ships it is shown that there are some segments where the theory can still usefully be applied. The effect on replacement resulting from varying important cost parameters is shown and it is found that while fiscal measures have very little effect, capital cost and operating cost profiles have the most important influence. It is concluded that shipowners need to keep themselves fully informed of changes in cost and improvements in technology that may indicate replacement of a vessel somewhat sooner than normal replacement age.     

Causes and effects of FDI by the Norwegian maritime industry

A theory of replacement in the context of ocean going vessels is discussed. The approach is based upon costs rather than profits, and while there appear to be many difficulties in applying replacement theory to ships it is shown that there are some segments where the theory can still usefully be applied. The effect on replacement resulting from varying important cost parameters is shown and it is found that while fiscal measures have very little effect, capital cost and operating cost profiles have the most important influence. It is concluded that shipowners need to keep themselves fully informed of changes in cost and improvements in technology that may indicate replacement of a vessel somewhat sooner than normal replacement age.     

Minimizing lifetime structural costs: Optimizing for production and maintenance under service life uncertainty

Current naval shipowners are being forced to extend the service lives of their aging vessels from budgetary and political constraints. This is causing them to incur significant costs due to maintaining the structure of these older ships to keep the ships in operation. These increasing costs make it desirable to design new naval structures with their minimization in mind, as well as ensuring that such vessels are robust to changes in expected service life with respect to their total lifetime cost. However, such structures will necessarily have higher production costs, therefore, an optimization framework is presented to estimate both production and maintenance costs for a naval vessel's internal structure and develop trade-spaces between these two competing objectives in order to find designs that represent a balance of both.     

US shipping policy under conditions of a new world economic and political environment

The maritime policy of the US has evolved over more than 100 years from the support of US shipping through mail and fleet auxiliary contracts before the turn of the century, to the present array of direct and indirect Government aids and regulations based on the assumption that a strong maritime industry composed of both US-flag shipping and US-shipbuilding capacity is essential for the economic well-being and defence of the country. Notwithstanding massive direct and indirect aid to the US merchant marine, amounting to well over a billion dollars a year in recent years, US shipping and shipbuilding has declined dramatically and now comprises less than 3% of world shipping. Only 2.8% of US foreign trade by volume and 6% by value is today carried in US flag ships. Government aids constitute well over 33% of total revenues of US-flag shipping.

The traditional argument for US Government support has been the need for cost parity to permit US-flag shipping to compete effectively in international trade against foreign shipping serving the same routes with presumably lower operating costs. This argument is difficult to sustain today, as vessel costs of many other industrialized nations are now about equal to those of US-flag ships.

In 1970 the US enacted a new, vastly more liberal, maritime act for the support of the US maritime industry. Notwithstanding its even more liberal terms and elimination of the strict cost-parity interpretation, the US maritime industry continues its decline. The recent bankruptcy of two old, established subsidized shipping companies has caused tremors in the industry, yet no new ideas, policies, or plans seem to be forthcoming. It is the objective of this paper to study the development and effects of various historic US Government policies relating to the support of the US maritime industry, and evaluate the positions taken by proponents or opponents of the maritime policy leading to the policy development.

The decision processes are studied by evaluating literature on the evolution of Congressional, administration, industry, and labour interest and positions on the issue of Government aid to the maritime industry. The impact and effectiveness of various elements of past and present US maritime policy is evaluated in relation to the stated objectives. The alternatives to these policies are reviewed in the light of the changing US position in international trade, military strategy, and political objectives. In addition the effectiveness of the present and alternative policies is evaluated as it is and will be affected by changing technology in use, composition of ownership, and operations of US-flag shipping and shipbuilding.     

The impacts of strait and canal blockages on the transportation costs of the Chinese fleet in the shipping network

ABSTRACT

Straits and canals have always served as key nodes in shipping networks. The blockage of a strait or canal will lead to ship deviations and increased transportation costs. To measure this impact on the Chinese fleet, our study develops a mathematical model that is based on a programming formulation. Each strait or canal is assumed to be blocked in turn, and the increased transportation costs for the Chinese fleet in different scenarios are calculated and compared using the proposed programming formulation in order to measure the impact of the blocked strait or canal on the Chinese fleet. Larger increases in transportation costs have greater impacts on the fleet. The results show that a blockage of the Strait of Hormuz would have the greatest impact of all straits and canals; it would cause the Chinese fleet to lose a portion of its import and export market, and such a blockage cannot be addressed through ship deviations. Based upon increased transportation costs, the four straits or canals that would have the greatest impact if blocked are the Mandeb Strait, the Suez Canal, the Sunda Strait and the English Channel.     

Basic cost-size relations in general cargo ships

This paper discusses a basic cost relationship applied to the purchase costs of general cargo ships, sold in yen, in the period 1975-1984, and delivered by Japanese yards. The use of Fairplay's sample allows classical double log relatonships to be amended for gear, of which only derricks and cranes are considered. As far as the basic cost-size relationship is concerned, a power factor of 0.7 has been estimated. This exactly averages the 0.6-0.8 range,which follows from traditional geometrical properties in mechanical engineering. The specific introduction of 'number of gear' by type derricks, cranes or both, allows a single cost function to be identified for all classes with separately estimated cost components for cargo handling gear. The latter prove cranes to be more expensive both in terms of their net installation costs and with respect to their influence on the over-all purchase cost, i.e hull and machinery.