The impact of terminal handling charges on overall shipping charges: an empirical study

Before the introduction of terminal handling charges (THCs), traditional freight rates included both ocean freight charges and terminal charges at ports. Since the introduction of THCs in 1991, the freight rate has become a “port-to-port” charge that covers only the sea leg, while the on-shore costs of using the container terminals are charged separately as THCs. Although both THCs and freight rates are collectively set by conferences, in this study we argue that the former are easier to enforce because they are invariant to other attributes such as haulage distance, inland transport services and types of commodity being shipped. This argument is consistent with the empirical findings from this study that suggest the separation of ocean freight rates from terminal charges has increased the overall shipping charges. In addition, we find that THCs affect the Hong Kong container handling industry by lowering its throughput.     

Shipping Lines and Logistics

Abstract

It has been acknowledged that logistics is a driving force that shapes the integration of the transport chain. This paper argues that while the liner shipping industry exhibits increased horizontal integration, its vertical integration remains limited. A clear distinction is drawn between freight logistics, container logistics and vessel logistics. Freight logistics is defined as part of the supply chain process, the focus of which is the goods being transported. The purpose of container logistics is to optimize the movements of the containers themselves, an operation that is directly related to vessel logistics which is concerned with maximizing vessel utilization. The paper demonstrates that shipping lines have to find the correct balance between these three types of logistics. Their interest in vertical integration is primarily because the management of container logistics provides direct support to vessel logistics. Their involvement in freight logistics remains unclear and uncertain.     

Vessel accident oil-spillage: Post US OPA-90

The vessel accident oil-spillage literature has focused on oil-cargo vessels, tankers and tank barges, implicitly assuming that these vessels incur greater accident oil-spillage than other (i.e., non-oil-cargo) vessels which just carry oil in their fuel tanks. This study investigates the validity of this assumption for the post US OPA-90 (Oil Pollution Act of 1990) period by investigating determinants of vessel accident oil-spillage, where one of the hypothesized determinants is type of vessel (including both oil-cargo and non-oil-cargo vessels). Tobit regression estimates of vessel accident oil-spillage functions suggest that tank barges have incurred greater in-water and out-of-water oil-spillage for the post OPA-90 period than non-oil-cargo vessels; alternatively, tankers have not incurred greater out-of-water (in-water) oil-spillage than non-oil-cargo vessels (except for freight ships). The policy implication is that greater attention needs to be given to reducing tank barge accident oil-spillage in the post OPA-90 period.     

Profit-based maritime container assignment models for liner shipping networks

We propose the problem of profit-based container assignment (P-CA), in which the container shipment demand is dependent on the freight rate, similar to the “elastic demand” in the literature on urban transportation networks. The problem involves determining the optimal freight rates, the number of containers to transport and how to transport the containers in a liner shipping network to maximize the total profit. We first consider a tactical-level P-CA with known demand functions that are estimated based on historical data and formulate it as a nonlinear optimization model. The tactical-level P-CA can be used for evaluating and improving the container liner shipping network. We then address the operational-level P-CA with unknown demand functions, which aims to design a mechanism that adjusts the freight rates to maximize the profit. A theoretically convergent trial-and-error approach, and a practical trial-and-error approach, are developed. A numerical example is reported to illustrate the application of the models and approaches.     

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.     

A co-integration approach to forecasting freight rates in the dry bulk shipping sector

In this paper, a vector autoregressive model is developed for a sample of ocean dry bulk freight rates. Although the series of freight rates are themselves found to be non-stationary, thus precluding the use of many modelling methodologies, evidence provided by cointegration tests points to the existence of stable long-term relationships between the series. An assessment of the forecasts derived from the model suggests that the specification of these long-term relationships does not improve the accuracy of short- or long-term forecasts. These results are interpreted as a corroboration of the efficient market hypothesis.     

Energy efficiency and time charter rates: Energy efficiency savings recovered by ship owners in the Panamax market

This paper presents the first analysis on how financial savings arising from energy efficient ships are allocated between owners and those hiring the ships. This as an important undertaking as allocation of financial savings is expected to have an impact on the incentives faced by ship owners to invest in more energy efficient vessels. We focus on the dry bulk Panamax segment as it contributes to around 50 Mt (5%) of total CO₂ emissions from shipping in 2007 and therefore its importance in terms of environmental impact should not be neglected. The time charter market represents a classical example of the principal–agent problem similar to the tenant–landlord problem in the buildings sector. We discovered that on average only 40% of the financial savings delivered by energy efficiency accrue to ship owner for the period 2008–2012. The finding that only part of the savings are recouped by shipowners affecting their incentives towards energy efficiency could consequently have implications on the type of emission reduction policies opted at both, global and regional levels.     

Individual freight effects,capacity utilization,and Amtrak service quality

This paper offers a new perspective on the post-deregulation rail industry. We hypothesize that a link exists between individual freight effects and Amtrak service quality. Specifically, we investigate the relationship between freight control of the infrastructure on which Amtrak trains operate and Amtrak train delays. Our sample consists of 1117 directional station-pairs for fiscal years 2002 through 2007 on 28 Amtrak non-Northeast Corridor passenger routes. We found that freight effects have a significant impact on Amtrak train delays after controlling for other important delay determinants such as the capacity utilization rate. The impact is higher on long-distance routes. We also observed significant differences between the effects of different freight railroads. For example, Amtrak operations on infrastructure controlled by several Class I railroads experienced significantly larger delays than baseline operations, while Amtrak train delays on Burlington Northern and Santa Fe’s tracks actually fell below baseline levels.     

The Northwest Passage: A simulation

We model shipping through the Northwest Passage in northern Canada in order to see if reported recent ice thinning has made this route economic relative to the Panama Canal. Container shipping between Yokohama to New York and St. Johns, Newfoundland is simulated by VSLAM for the two routes using bluewater ships for the Panama Canal and identically sized Canadian Arctic Class 3 (CAC3) ships for the Northwest Passage. Each route is broken into a series of logical legs, and environmental conditions and wait times are assigned. Ice conditions are modeled from historical records. Average speed through the Northwest Passage shows little seasonal variation. Round trips per year are higher through the Northwest Passage. The required freight rate (RFR) to recover all costs including capital recovery is calculated. RFR is slightly lower for the St. Johns to Yokohama transit using the Northwest Passage, and higher for the New York to Yokohama route, as compared to the Panama Canal. Possible future thinning of Arctic ice would further improve the economics of the Northwest Passage.     

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.     

Determinants of vessel-accident bunker spills

The study investigates determinants of vessel-accident bunker fuel spillage. A vessel-accident bunker spillage equation is estimated using Tobit regression and data of individual non-oil-cargo vessel accidents that were investigated by the US Coast Guard during 2001–2008. The results indicate that the bunker spillage of a freight ship and an offshore supply vessel accident will be greater than that of a passenger ship accident. Also, the bunker spillage of a non-oil-cargo vessel accident will be greater if the vessel accident is an abandonment and occurs at night, but less if the accident involves a vessel that has diesel propulsion and even less if the vessel has both diesel propulsion and a steel hull.     

In Search of the Link between Ship Size and Operations

Abstract

Since 1990s the liner shipping industry has faced a period of restructuring and consolidation, and been confronted with a continuing increase in container vessel scale. The impact of these changes is noticeable in trade patterns, cargo handling methods and shipping routes, in short ‘operations’. After listing factors influencing size, growth in container ship size is explained by economies of scale in deploying larger vessels. In order to quantify economies of scale, this paper uses the liner service cash flow model. A novelty in the model is the inclusion of +6000-20-foot Equivalent Unit (TEU) vessels and the distinction in costs between single and twin propeller units on ships. The results illustrate that scale economies have been – and will continue to be – the driving force behind the deployment of larger container vessels. The paper then assesses the link between ship size and operations, given current discussions about the increase in container vessel scale. It is found that (a) ship size and operations are linked; (b) optimal ship size depends on transport segment (deep-sea vs. short-sea shipping, SSS), terminal type (transhipment terminals vs. other terminals), trade lane (East-West vs. North-South trades) and technology; and (c) a ship optimal for one trade can be suboptimal for another.     

Modeling the impacts of alternative emission trading schemes on international shipping

Various market-based measures have been proposed to reduce CO₂ emissions from international shipping. One promising mechanism under consideration is the Emission Trading Scheme (ETS). This study analyzes and benchmarks the economic implications of two alternative ETS mechanisms, namely, an open ETS compared to a Maritime only ETS (METS). The analytical solutions and model calibration results allow us to quantify the impacts of alternative ETS schemes on the container shipping sector and the dry bulk shipping sector. It is found that an ETS, whether open or maritime only, will decrease shipping speed, carrier outputs and fuel consumption for both the container and dry bulk sectors, even in the presence of a “wind-fall” profit to shipping companies. Under an open ETS, the dry bulk sector will suffer from a higher proportional reduction in output than the container sector, and will thus sell more emission permits or purchase fewer permits. Under an METS, container carriers will buy emission permits from the dry bulk side. In addition, under an METS the degree of competition within one sector will have spill-over effects on the other sector. Specifically, when the sector that sells (buys) permits is more collusive (competitive), the equilibrium permit price will rise. This study provides a framework for identifying the moderating effects of market structure and competition between firms on emission reduction schemes, and emphasizes the importance of understanding the differential impacts of ETS schemes on individual sectors within an industry when considering alternative policies.     

Modeling dry-port-based freight distribution planning

In this paper we review the dry port concept and its outfalls in terms of optimal design and management of freight distribution. Some optimization challenges arising from the presence of dry ports in intermodal freight transport systems are presented and discussed. Then we consider the tactical planning problem of defining the optimal routes and schedules for the fleet of vehicles providing transportation services between the terminals of a dry-port-based intermodal system. An original service network design model based on a mixed integer programming mathematical formulation is proposed to solve the considered problem. An experimental framework built upon realistic instances inspired by regional cases is described and the computational results of the model are presented and discussed.     

国际航运业船舶碳减排措施与行动

随着世界经济的发展,世界海运货物周转量随之增加,国际海运业的碳排放量持续增长,航运业减排的任务十分艰巨。本文结合航运业碳排放的特点,研究分析了国际海事组织(IMO)、欧盟及航运企业采取的一系列减排措施和采取的行动,为我国航运业减少碳排放提供了借鉴和参考依据。     

Shipping log data based container ship fuel efficiency modeling

Container shipping lines have been initiating various ship fuel efficiency management programs because bunker fuel costs always dominate the daily operating costs of a container ship. As the basis of these kinds of programs, we develop a viable research methodology for modeling the relationship between the fuel consumption rate of a particular container ship and its determinants, including sailing speed, displacement, sea conditions and weather conditions, by using the shipping log data available in practice. The developed methodology consists of an outlier-score-based data preprocessing procedure to tackle the fuzziness, inaccuracy and limited information of shipping logs, and two regression models for container ship fuel efficiency. Real shipping logs from four container ships (two with 13000 TEUs and two with 5000 TEUs) over a six-month sailing period are used to exhibit the applicability and effectiveness of the proposed methodology. The empirical studies demonstrate the performance of three models for fitting the fuel consumption rate of a ship and the industrial merits of ship fuel efficiency management. In addition, we highlight the potential impacts of the models developed in this study on liner shipping network analysis, as these models can serve as base models for additionally considering the influence of displacement and weather conditions on ship fuel efficiency and exhaust emissions.     

Understanding connectivity to international markets: a systematic review

Improving freight connectivity is increasingly a topic at the centre of the international trade and transport policy agendas. An examination of available documents and studies in both the policy-making and the academic fields shows that the concept of freight connectivity has often been defined in different ways, and thus has taken a variety of meanings. This poses the question on what connectivity is and what are its determinants in the context of international trade. We are not aware of any studies that have analysed, in a systematic way, the different perspectives and determinants of freight connectivity so as to increase access to international markets. This paper seeks to fill this gap by performing a systematic literature review that spans disciplines such as Transport Engineering, Transport and International Economics, and Supply Chain Management. The outcome of this examination is a multidisciplinary framework that hopefully will help stakeholders to understand freight connectivity to international markets better, as well as guide future research and analysis in policy-making.     

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.     

Reversing port rotation directions in a container liner shipping network

Reversing port rotation directions of ship routes is a practical alteration of container liner shipping networks. The port rotation directions of ship routes not only affect the transit time of containers, as has been recognized by the literature, but also the shipping capacity and transshipment cost. This paper aims to obtain the optimal port rotation directions that minimize the generalized network-wide cost including transshipment cost, slot-purchasing cost and inventory cost. A mixed-integer linear programming model is proposed for the optimal port rotation direction optimization problem and it nests a minimum cost multi-commodity network flow model. The proposed model is applied to a liner shipping network operated by a global liner shipping company. Results demonstrate that real-case instances could be efficiently solved and significant cost reductions are gained by optimization of port rotation directions.     

Assessment of profit,cost and emissions by varying speed as a function of sea conditions and freight market

This paper assesses shipping profits, costs and emissions by speed and as a function of sea and freight market conditions. Traditionally, seagoing vessels have been designed to operate at standardized, maximum economic speeds based on hydrodynamic considerations. High fuel costs and increased environmental concerns have challenged this practice. While speed reductions may reduce costs and emissions, most studies are based on still water conditions despite these being the exceptions. In addition, shipping lines operate in a commercial market with the objective of making profit and not solely on cost reductions. Our results show that significant cost and emissions reductions can be achieved and that the maximum economic speeds based on hydrodynamic considerations even in a good freight market are lower than the design speeds.