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.     

Assessment of cost as a function of abatement options in maritime emission control areas

This paper assesses cost as a function of abatement options in maritime emission control areas (ECA). The first regulation of air pollutions from ships which came into effect in the late 1990s was not strict and could easily be met. However the present requirement (2015) for reduction of Sulfur content for all vessels, in combination with the required reduction of nitrogen and carbon emissions for new-built vessels, is an economic and technical challenge for the shipping industry. Additional complexity is added by the fact that the strictest nitrogen regulations are applicable only for new-built vessels from 2016 onwards which shall enter US or Canadian waters. This study indicates that there is no single answer to what is the best abatement option, but rather that the best option will be a function of engine size, annual fuel consumption in the ECA and the foreseen future fuel prices. However a low oil price, favors the options with the lowest capex, i.e. Marine Gas Oil (MGO) or Light Fuel Oil (LFO), while a high oil price makes the solutions which requires higher capex (investments) more attractive.     

Ship emissions and their externalities in cruise ports

This paper presents an estimation and analysis of ship exhaust emissions and their externalities in the popular cruise destinations of Dubrovnik (Croatia) and Kotor (Montenegro) along the eastern coast of the Adriatic Sea. To this extent, the recent record (2012–2014) of cruise ships calling at these ports is used to model and estimate the ship exhaust emission inventories and externalities within the associated bays and ports.The results indicate that cruise ship traffic produces continuously increasing air pollution in both ports over recent years. More importantly, however, the analysis of the ship operating characteristics reveals that for any given ship traffic involving specific vessels using marine fuel of a given quality, the presence of other factors (e.g. berth availability, berth accessibility etc) can also influence the ship emission levels. This is particularly evident in the case of the port of Kotor where berth space insufficiency dictates the need for ship anchorage thus leading to increased air pollution and costs of associated damage.The application and results of the aforementioned ship activity-based methodology to the ports of Dubrovnik and Kotor improves our understanding of ship emissions in cruise bays and ports, and contributes toward the implementation of port policies for the effective control of air quality in such environmentally sensitive locations.     

On two speed optimization problems for ships that sail in and out of emission control areas

This paper deals with two speed optimization problems for ships that sail in and out of Emission Control Areas (ECAs) with strict limits on sulfur emissions. For ships crossing in and out of ECAs, such as deep-sea vessels, one of the common options for complying with these limits is to burn heavy fuel oil (HFO) outside the ECA and switch to low-sulfur fuel such as marine gas oil (MGO) inside the ECA. As the prices of these two fuels are generally very different, so may be the speeds that the ship will sail at outside and inside the ECA. The first optimization problem examined by the paper considers an extension of the model of Ronen (1982) in which ship speeds both inside and outside the ECA are optimized. The second problem is called the ECA refraction problem, due to its conceptual similarity with the refraction problem when light travels across two different media, and also involves optimizing the point at which the ship crosses the ECA boundary. In both cases the objective of the problem is to maximize daily profit. In addition to mathematical formulations, examples and sensitivity analyses are presented for both problems.     

Adapting the shipping sector to stricter emissions regulations: Fuel switching or installing a scrubber?

This paper examines how the existing fleet in the shipping industry can be adapted to the new emission regulations through the two main techniques that currently exist: (a) the use of low-sulphur marine diesels; and (b) the installation of scrubbers. A method is presented here for drawing up an economic assessment of both these techniques under uncertainty. It enables the best option to be selected at any given time taking into account fuel prices (spot and futures), scrubber installation costs, the time that the vessel operates in an Emission Control Area (ECA) and the remaining useful lifetime of the vessel. The paper also considers the possibility of an unexpected change from a non-ECA navigation area to an ECA. The assessment is carried out in a manner consistent with marine diesel and crude oil spot and futures market quotes. Our results show the net present value of investing in the installation of scrubbers and investing in changing fuel types for different assumptions on how vessels are operated. We also analyse increases in fuel consumption and CO₂ emissions as a consequence of using scrubbers and how they affects the financial analysis if such incremental emissions must be paid under a CO₂ pricing mechanism.     

The costs and benefits of a nitrogen emission control area in the Baltic and North Seas

The main purpose of this paper is to analyse the socio-economic justification of implementing a Nitrogen Emission Control Area (NECA), starting 2021, for ships in the Baltic Sea and/or the North Sea and English Channel. We analyse the potential for emission reduction, emission control costs, and monetised benefits following the introduction of a NECA. Costs and benefits are compared for 2030. We compile new data on emission control costs for shipping, use the GAINS model for calculations of emission dispersion, and the Alpha-RiskPoll model for estimating monetary values of health impacts. The model results show that costs to conform to the NO_X regulations of a NECA in the Baltic Sea, North Sea or both sea regions would be 111 (100–123), 181 (157–209), and 230 (195–273) million € per year, respectively. Corresponding benefits from reduced emissions are estimated to be 139 (56–294), 869 (335–1882), and 1007 (392–2177) million € per year, respectively. Calculated benefits surpass costs for most scenarios, but less convincingly for a Baltic Sea NECA. Conforming to the NECA regulations by using Liquefied Natural Gas (LNG) propulsion engines is estimated to give the highest net benefits but also the largest variation (costs: 153 (88–238), benefits: 1556 (49–3795) million €/year). The variations are mainly due to uncertainties in the valuation of avoided fatalities and climate impacts. It is concluded that the NECAs for the Baltic and North Seas can be justified using CBA under all but extreme assumptions.     

Have Emission Control Areas (ECAs) harmed port efficiency in Europe?

Ports in the European Union and North America have enforced environmental regulations on controlling SO_x and NOx emissions from ships in their coastal areas known as Emission Control Areas (ECAs). This study uses two-stage approaches to examine whether ECA regulations impact the efficiency of ports operating in such areas. First, port efficiencies are estimated using non-radial slacks-based measure (SBM) Data Envelopment Analysis (DEA) models. The efficiency scores estimated by the SBM DEA models are then regressed on explanatory variables, including the ECA factor, and macroeconomic indicators using bootstrapped truncated regression (BTR) models. Panel data is collected on countries in EU ECAs and non-ECAs regarding such input variables as capital and labor, with cargo as an output variable. The results indicate that ECA regulations can harm port efficiency, reflecting concerns of policy-makers and industrial managers: the average efficiency loss from an ECA designation amounts to 0.058–0.066 on a scale of 0–1, accounting for a 15–18% loss from ECA ports’ average efficiency scores.     

Emission control areas: More or fewer?

As the global sulphur limit implemented by the International Maritime Organization (IMO) and the further development of sulphur emission reduction technologies, the effects of Emission Control Areas (ECAs) on reducing the sulphur emissions from ships will be reduced gradually. To explore the necessity of ECAs in the near future, this paper introduces the fictitious sulphur emission permit allocated to shipping carriers for our considered region. We propose an ECA location problem, which determines the location of ECAs in order to minimize the impact of sulphur emissions on human health, while satisfying the constraint on the fictitious sulphur emission permit. A mixed-integer linear programming model is proposed for our investigated problem. Numerical experiments are carried out by using our proposed model applied to China and Africa, where the sulphur emissions at different sites are estimated via the fuel consumption calculated by collecting data from liner carriers. Results show that, for the case of China, the Bohai Rim, the Yangtze River Delta and the Pearl River Delta have a high probability for establishing ECAs. For the case of Africa, the Guinea Bay and South Africa have a high probability for establishing ECAs.     

An investment appraisal method to compare LNG-fueled and conventional vessels

Ever stricter emission regulations stimulate vessel owners to consider the adoption of alternative marine fuels, such as Liquefied Natural Gas (LNG). In deciding whether to invest in LNG-fueled vessels, initial investment and operating costs are decisive factors that have not yet been fully studied in the literature. In this paper, we present a new investment appraisal method to compare the costs of LNG-fueled vessels with conventional vessels. We analyze the fuel costs and overall exploitation costs by simulating bunker planning decisions under stochastic fuel prices, presence in emission controlled areas, and route lengths. Our analyses reveal that the fuel costs of LNG-fueled vessels are often lower than those of conventional vessels, even under unfavorable LNG prices. Due to the higher initial investment costs in LNG-fueled vessels, these fuel cost reductions do not always translate into lower overall exploitation costs. By conducting numerical experiments, we identified conditions under which the exploitation costs of LNG-fueled vessels are lower than conventional vessels.     

Economic benefits of introducing LNG-fuelled ships for imported flour in South Korea

As the concerns about air pollution have steadily increased, the perception that ships are the source of pollutants and toxic emissions is also expanding. Thus, the International Maritime Organization (IMO) is tightening maritime regulations to reduce air pollution from ships. Currently, the government and related industries are trying to replace heavy fuel oil with liquefied natural gas (LNG) to counter future IMO regulations. Since the use of LNG is expected to increase costs, it is necessary to estimate the social benefits to determine the legitimacy of the replacement. The purpose of this study is to analyse the public’s willingness to pay (WTP) for products imported in LNG-fuelled ships using the contingent valuation method. Flour, the most of which is currently imported in South Korea, is chosen as the subject of empirical analysis. As a result, the mean additional WTP was KRW 571 (USD 0.51) per kg. This value corresponds to about 36% of the existing flour price. Therefore, South Korean households are willing to pay a considerable premium on the flour imported via LNG-fuelled ships. These results can serve as useful bases for future LNG bunkering-related policies.     

The desulphurisation of shipping: Past,present and the future under a global cap

As from January 2020, the International Maritime Organization (IMO) is implementing a global 0.5% limit on the sulphur content of fuel, commonly known as the global sulphur cap. This limit is the latest policy in the efforts to reduce sulphur emissions from shipping, following the designation of emission control areas (ECAs) and other regional regulations. In this paper, a literature review is conducted of academic studies that have dealt with issues relating to the reduction of maritime sulphur emissions. Various recurring research themes are identified, spanning the areas of operations research, maritime economics and transport policy. The effects and implications of available compliance options are then analyzed from the perspectives of ship operators, shippers and consumers. Using lessons learned from the enforcement of ECA regulations, this is followed by an appraisal of various potential issues related to the enforcement of these new global regulations. It is found that a homogeneous enforcement regime is required to ensure a level playing field amongst ship operators and that the global sulphur cap may lead to serious market distortion, due to the potential short term rise of fuel prices. The paper concludes with a set of recommendations for future research on sulphur emissions from shipping in the aftermath of the global cap and, looking forward, to its relationship to the IMO strategy on the reduction of greenhouse gas (GHG) shipping emissions.     

Estimation of the perceived value of transit time for containerized cargoes

This paper proposes a novel method for estimating the perceived value of transit time of containers by shipping lines. The key idea is that a shipping line’s published schedule is the optimal decision that minimizes the sum of fuel cost and time-associated costs of the containers adopted by the shipping line. Using the proposed method, we find that the adopted values of transit time for nine trans-Pacific services operated by Orient Overseas Container Line and five trans-Pacific services operated by Maersk Line are between US$5/TEU/day and US$30/TEU/day. We further demonstrate how the adopted value can be used for designing the optimal transit times between ports, analyzing the viability of slow-steaming, checking whether ships should speed up to catch up to connecting ships on other services, and helping to predict the market share of less polluting fuels in view of rules on air emission.     

The fleet renewal problem with regional emission limitations: Case study from Roll-on/Roll-off shipping

In this paper, the maritime fleet renewal problem (MFRP) is extended to include regional limitations in the form of emission control areas. The motivation for including this aspect is that strengthening of emission regulations in such areas is expected to be challenging for deep sea shipping in the years to come. In the proposed model, various means to cope with these stricter emission regulations are evaluated for new vessels, and the possibility of upgrading existing vessels with new emission reduction technology is introduced. We consider future fuel prices to be important for the problem, and have chosen to treat them as uncertain, and thus, a stochastic programming model is chosen. A fleet renewal problem faced by the liner shipping operator Wallenius Wilhelmsen Logistics, concerning whether to use low sulphur fuel or have an exhaust gas scrubber system installed to comply with sulphur regulation in emission control areas from 2015, is used as a case study. Furthermore, tests show that the savings from including the aspect of emission control areas in the MFRP are substantial.     

船用厨房燃油灶节能改造探讨

在节能减排的背景之下,游轮产业也需要重视能源节约与环境保护。本文采用能流分析法针对船用厨房燃油灶改造为电磁灶的能流进行分析,结合某游轮厨房灶台系统及其配套通风系统的改造,对比分析两种系统能耗。表明船用厨房燃油灶改造为电磁灶具较大的节能和环保潜力。     

In-situ data vs. bottom-up approaches in estimations of marine fuel consumptions and emissions

Pollution by marine fuels and their influence on ecosystems and the human populace are growing concerns in the maritime industry. Consequently, emission regulations, alternate marine fuels and fuel efficiency enhancements are being pursued to ensure that marine emissions are curtailed within acceptable limits. Many strategic decisions related to these areas are taken based on cost and emission estimates which in turn depend on the accuracy of the estimation of marine fuel consumptions. The estimates are based on various methodologies which attempt to capture maritime fuel consumptions at local, regional and global levels. The bottom-up approach is the most predominant method to estimate emissions and thereby to assess compliance with the emissions regulations. The bottom-up methodologies rely heavily on average values of specific fuel consumptions and engine load factors. A case study which utilizes in-situ data is conducted to investigate the accuracy of the current approach and the results are compared with the estimates based on bottom-up approaches found in the literature. The findings revealed significant variations between the estimates and the actual fuel consumptions informing implications of unrealistic cost and emission estimates. As a solution the paper suggests a new concept in order to establish more reliable estimations of fuel consumptions and hence emissions predictions.     

Estimating the environmental costs of port related emissions: The case of Kaohsiung

This study estimates the emission costs of ships and trucks in the Port of Kaohsiung, Taiwan, focusing mainly on particular matter and volatile organic compounds. By calculating annual ship and truck emissions we find that the major contributors are tankers, container ships and bulk ships and trucks. Using a bottom-up methodology, the combined environmental costs of ships and trucks are estimated to be over $123 million per year.     

Optimization of a container vessel fleet and its propulsion plant to articulate sustainable intermodal chains versus road transport

The recent European regulations on emissions from heavy duty vehicles (Euro VI) along with the enforcement of ECA regulations have represented an additional challenge for the sustainability of the motorways of the sea. The main aim of this paper is to identify the optimal sizing and the most adequate propulsion plant for a fleet of feeder vessels that, by operating under motorways of the sea conditions, is able to articulate competitive intermodal chains versus the road for the door-to-door transport by ensuring the sustainability of the intermodality in the current normative framework. Thus, a mathematical model is developed to evaluate, aside from the total costs and the time invested in the transport, the environmental costs of the unimodal transport and of intermodal chains with different sizing and technologies for the vessels. The resolution of this multiobjective model was carried out with an NSGA-II algorithm in an application to a transport network between Spain and France. This application concluded that fast and small vessels with LNG propulsion plants are the most convenient to maximize the competitiveness advantage against the road alternative. Likewise, the analysis of the environmental performance of both transport systems in the application case from 2010 to 2015 shows an unfavourable environmental evolution for the intermodality.     

Assessing methods for comparing emissions from gasoline and diesel light-duty vehicles based on microscale measurements

This paper assess whether a real-world second-by-second methodology that integrates vehicle activity and emissions rates for light-duty gasoline vehicles can be extended to diesel vehicles. Secondly it compares fuel use and emission rates between gasoline and diesel light-duty vehicles. To evaluate the methodology, real-world field data from two light-duty diesel vehicles are used. Vehicle specific power, a function of vehicle speed, acceleration, and road grade, is evaluated with respect to ability to explain variation in emissions rates. Vehicle specific power has been used previously to define activity-based modes and to quantify variation in fuel use and emission rates of gasoline vehicles taking into account idle, acceleration, cruise, and deceleration. The fuel use and emission rates for light-duty diesel vehicles can also be explained using vehicle specific power -based modes. Thus, the methodology enables direct comparisons for different vehicle fuels and technologies. Furthermore, the method can be used to estimate average fuel use and emission rates for a wide variety of driving cycles.     

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.     

Environmentally friendly cost efficient and effective sea transport outsourcing strategy: The case of Statoil

Statoil is a completely integrated oil and gas Norwegian company which established in 1972. The company is one of the most technology-intensive world’s leading energy producers and covers more than 35 countries across the globe. This study proposes how Statoil coordinate with environmentally friendly, cost efficient and effective sea transport supplier. The study used the theories of supply chain management such as model of industrial purchasing process, model of strategic triangle and Kraljic purchasing portfolio model. The result of the study identified that the emission of environmentally harmful gases from sea transport are dependent on the size and the speed of the ships, and the type of fuel they consume. The best solution for Statoil to get environmentally friendly sea transport service is using suppliers that are certified by the preferred standard of ITTC 7.5-04-01-01.2 or ISO 15016:2002. The requirement of environmentally friendly sea transport supplier by Statoil maximizes the suppliers’ risk. Therefore, making partnership with the supplier is the effective and giving the contract with a cost reimbursable agreement of fuel price adjustment (escalation clause) is the cost efficient coordination of Statoil.