Examining quick delivery at an affordable cost by the NSR/SCR-combined shipping in the age of Mega-ships

ABSTRACT

The Mega-ships, the maximum containerships represented by 20,000TEU-class (LOA:400m, Breadth: 60m, Draft: 16m) which are able to transit both the Malacca Strait and the Suez Canal, have emerged in 2013, aiming at lower shipping cost by economy of scale. At the same time, they inevitably increased port calls in a rotation to collect more cargo demand, resulting in the longer transit time than ever before. Taking this trend into account, the authors proposed the quick delivery scenario between East Asia and Northwest Europe by the NSR (Northern Sea Route)/SCR (Suez Canal Route)-combined shipping, of which 4,000 TEU ice-class containership transits the NSR during the summer season and the SCR in the wintertime, based on a year-round scheduled operation. The quick delivery scenario gives the shorter transit time at an affordable shipping cost depending on the NSR navigable season length. However, the quick delivery scenario cannot avoid uncertainties in navigation especially via the NSR in the summer season, due to rough weather, sea ice, low visibility and icing in the icy water section of the NSR. The authors preliminarily concluded that a year-round scheduled operation of the NSR/SCR-combined shipping will be secured, if the practical navigation schedule is appropriately prepared.     

Economic feasibility of an NSR/SCR-combined container service on the Asia-Europe lane: a new approach dynamically considering sea ice extent

The trend towards global warming and the rapid decline in the extent of summer Arctic sea ice over recent years has increased the feasibility of international Arctic shipping. In this study we propose a seasonal NSR (North Sea Route)/SCR (Suez Canal Route)-combined shipping service linking Shanghai and Rotterdam, using the Northern Sea Route during the economical navigable window but using the traditional Suez Canal Route at other times. Different from the previous literatures, this paper dynamically considers the sea ice extent in the model, which is more reasonable for the assessment of Arctic container shipping, because fuel consumption is highly related to ship speed, while ship speed is determined by the relative distances of ice-covered and ice-free route stages. A new approach is developed to predict the time points at which the ship enters and exits the ice-covered stage, given that both the ship position and the extent of sea ice are constantly changing. The results show that the NSR/SCR-combined Arctic container service can be more economical than the SCR, given lower NSR tariffs.     

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.     

Impacts of Kra Canal and its toll structures on tanker traffic

This article discusses the proposed Kra Canal and its impacts on the tanker market from an economic perspective. We forecast tanker size distributions and further analyze the impacts of toll structures on tanker traffic. The forecast for tanker size distributions is based on distance savings for tankers as potential users of the Kra Canal. The database covers 105 busiest oil transport routes through the Strait of Malacca for the three-year period 2013–2015. Forecasts for individual routes are achieved using an autoregressive model. Two toll polices, namely the willingness-to-pay policy and the differential-pricing policy, are analyzed in order to maximize the annual toll income of the Kra Canal. The findings for the proposed Kra Canal will attract large vessels from the Strait of Malacca. An interesting finding is that the Kra Canal becomes more profitable during an unfavorable tanker market situation when the time-charter rate is low and fuel price is high. The article concludes with a policy that satisfies the goals of canal operator and government.     

A reactive container rerouting model for container flow recovery in a hub-and-spoke liner shipping network

This paper focuses on the container rerouting due to a disruption, aims at making the optimal container flow recovery plan for the affected liner shipping company. First, we make the initial effort to bring up with a basic framework of disruption management for liner shipping. Second, we present a compact integer linear programming model for addressing the container rerouting problem under the proposed framework in a hub-and-spoke liner shipping network, based on a given recovery vessel schedule that determines to omit a port of call. Other shipping companies’ services and other modes (roadway, railway, and airline) as candidate alternative means to transport the miss-connected containers are also incorporated in the proposed model. The container flow recovery plan would select the optimal alternative paths for the miss-connected containers balancing the trade-off between container transport costs and delivery delay penalty costs. Finally, a case study from a global liner shipping company is investigated and the computational results indicate the model can be solved effectively and efficiently for the real-scale problem. Thus, the proposed approach in this paper can supply real-time decision support tool for the liner shipping operators on handling the process of container flow recovery.     

湘桂运河建设对长江航运物流格局的影响研究

为做好湘桂运河建设前期论证工作,推动运河连通工程加快实施,从物流通道的视角,以运河前期规划方案和大量调研成果为基础,采用定性分析和定量预测的方法,从内河水运、综合交通、国际物流等层面剖析运河在交通运输格局中的重要地位;从航道网络、港口枢纽、运输组织和货物流向等方面分析运河对长江航运物流格局的影响,预测2035和2050年长江航运向运河通道的货运分流量。     

Connectivity analysis of the global shipping network by eigenvalue decomposition

ABSTRACT

Maritime shipping necessitates flexible and cost-effective port access worldwide through the global shipping network. This paper presents an efficient method to identify major port communities, and analyses the network connectivity of the global shipping network based on community structure. The global shipping network is represented by a signless Laplacian matrix which can be decomposed to generate its eigenvectors and corresponding eigenvalues. The largest gaps between the eigenvalues were then used to determine the optimal number of communities within the network. The eigenvalue decomposition method offers the advantage of detecting port communities without relying on a priori assumption about the number of communities and the size of each community. By applying this method to a dataset collected from seven world leading liner shipping companies, we found that the ports are clustered into three communities in the global container shipping network, which is consistent with the major container trade routes. The sparse linkages between port communities indicate where access is relatively poor.     

An exploratory study on the Northern Sea Route as an alternative shipping passage

This qualitative inductive research explores the potential benefits for the Scandinavian economy and ports through the implementation of the Northern Sea Route (NSR) as an alternative for container shipping to the established Southern route through the Suez Canal. To extract expert’s opinions and address these objectives, we utilised in-depth face-to-face semi-structured interviews through purposive sampling in a single case study setting. The analysis of the data demonstrates that the commercialisation of NSR can yield benefits for the Scandinavian economy (e.g. GDP increase, jobs creation) and reveals the benefits of Scandinavian ports (e.g. ECA’s, flexibility, hinterland, etc.) compared to other ports in North West Europe, which potentially grasp the NSR as an opportunity. However, it is highlighted that this can only be achieved if Scandinavian countries are proactive and secure their involvement.     

Private maritime security company (PMSC) in the Strait of Malacca

Recently, maritime security issues in the Strait of Malacca have been in the limelight. Statistics highlighting the risk of piracy faced by shipping in the Strait of Malacca and the possibility of a terrorist attack have led to an enhanced awareness of the need for heightened security. The declaration by Lloyd’s Joint War Committee (JWC) of the Strait as a “war risk area” has strengthened the perception that the littoral states have not done enough to make the Strait secure for international trade.     

The maximum shipping capacity of the Suez Canal

This paper considers the determination of the maximum shipping capacity of the Suez canal. Initially, some assumptions are made in order to calculate the ‘theoretical’ maximum capacity in terms of ‘standard ships’. This last term defines ships which transit the Canal at a given speed and at a given time interval from the vessel ahead and astern.

Data has been collected from the Canal Zone, the analysis of which provides the necessary information regarding speeds of vessels at different sections of the Canal, time gaps between different classes of ship at different nodes of the Canal, and relationships between time widths of convoys and numbers of ships in those convoys at different points of the Canal.

This data has then been used to calculate the maximum capacity of the Canal in terms of ‘real ships’. For that purpose four schemes have been devised, each taking a different mix of categories of ships. A sensitivity analysis has been undertaken in order to investigate the effect of each class of ship on the real maximum shipping capacity of the Canal. The last two schemes take into consideration the effect of the future introduction of supertankers.     

The environmental costs and economic implications of container shipping on the Northern Sea Route

The Northern Sea Route (NSR) has tremendous potential for ocean shipping between Europe and Asia due to the savings from shorter transit time and distance. However, the Arctic area is environmentally vulnerable and thus there is a trade-off between NSR’s impacts on environment vs. its economic benefits, especially when compared with the traditional route, such as through the Suez Canal Route (SCR). This study estimates the market shares of different transport modes and alternative shipping routes for the container transport market between Europe and Asia, and the resulting environmental costs. Our result suggests that NSR can be a viable option under the status quo. However, its environmental costs tend to be higher than SCR due to small ship size and low load factor in the present, thus the development of NSR would lead to worse environment outcomes. If these issues can be resolved, NSR can benefit from lower operational and environmental costs, which will lead to higher market share and social welfare. Otherwise, increased use of NSR may lead to higher total environment costs than the status quo.     

沿海内贸集装箱班轮航线优化研究

随着沿海内贸集装箱运输市场的快速发展,各大班轮公司如何把船舶安排到最佳航线上,使有限的船舶资源创造最大的经济利益,成为各大公司研究的课题。根据沿海几大干线港口之间的运量需求,建立非线性规划与整数规划相结合的混合模型,选择典型航线建立运输网络,并对其进行优化。该数学模型可应用于解决我国沿海内贸集装箱船舶运输航线配置问题,进而实现利润最大。     

An equilibrium-based network model for international container flows

The liner shipping industry is a highly complex system and is extremely sensitive to rapid changes in the environment. To facilitate decision-making in response to endogenous and exogenous shocks, this research develops a strategic network model based on equilibrium principles to analyze the international marine liner shipping network according to port charge, congestion level at the port, and load factor of the ship and estimates the possible container flows under different scenarios in the long run. The distribution model of container flows is extended from Beckmann's transformation. To calibrate the parameters employed in the model so that it offers greater fidelity in predicting container flows, we devise a descent direction-based heuristic. The proposed framework is empirically applied to various scenarios to validate the model and predict the flow pattern after significant events. By identifying these events’ potential impact on the maritime network, the presented model can help relevant stakeholders reduce uncertainty when shaping maritime policies so that they can seize opportunities to increase their competitiveness and maintain their advantage in the maritime market.     

Evaluating economic and environmental value of liner vessel sharing along the maritime silk road

The Belt and Road initiative is a novel exploration of China towards strategic collaboration with Eurasia countries to an extent of a larger scale with higher and deeper level of cooperation. To meet the growing global demand of transportation, increasing numbers of liner shipping companies collaborate and form alliances to share vessel capacity and reduce capital costs. Effective liner shipping vessel sharing is essential for the Belt and Road initiative in terms of building efficient maritime transport networks. In promoting environmental development, shipping companies are required to attain higher environmental standards. However, limited literature relates vessel sharing to environmental performance. This paper studies the impacts of liner vessel sharing from the economic and environmental perspectives. Two container allocation models are developed for the two scenarios: with and without vessel sharing. The carbon emissions in transportation are calculated under both scenarios. Numerical studies are carried out using services along the China-Indochina Peninsula Economic (CIPE) Corridor. Liner shipping companies could benefit from vessel sharing in terms of significant profit improvement. Vessel sharing could also benefit the environment by reducing the CO₂ emissions dramatically.     

Optimizing shipping company operations using business process modelling

In order to identify the elements constituting quality in services, a business process modelling methodology has been applied in the case of a Greek liner shipping company. The company operations have been identified and analysed in order to assess the complete performance of service elements and thereafter identify how to match the service performance against the user requirements. A liner container service within Europe has to compete with the road transport which, in many cases, is an alternative to the sea transportation and not complementary to it. Thus, not only the ship has to be envisaged when aiming to improve quality in services but also the whole chain, namely port authorities, land transportation enterprises, subcontractors, agents, charterers and others. A set of potential improvements within this framework are thus suggested and time and cost (examined in a specific voyage scenario) are measured before and after the implementation of these measures. Very large time and cost savings are observed after the application of the technology improvements, allowing, in fact, the shipping company to even increase the number of round trips per year in the examined route. This indicates that very large benefits can be drawn by analysing and critically adjusting business processes in modern shipping companies.     

Optimizing shipping company operations using business process modelling

In order to identify the elements constituting quality in services, a business process modelling methodology has been applied in the case of a Greek liner shipping company. The company operations have been identified and analysed in order to assess the complete performance of service elements and thereafter identify how to match the service performance against the user requirements. A liner container service within Europe has to compete with the road transport which, in many cases, is an alternative to the sea transportation and not complementary to it. Thus, not only the ship has to be envisaged when aiming to improve quality in services but also the whole chain, namely port authorities, land transportation enterprises, subcontractors, agents, charterers and others. A set of potential improvements within this framework are thus suggested and time and cost (examined in a specific voyage scenario) are measured before and after the implementation of these measures. Very large time and cost savings are observed after the application of the technology improvements, allowing, in fact, the shipping company to even increase the number of round trips per year in the examined route. This indicates that very large benefits can be drawn by analysing and critically adjusting business processes in modern shipping companies.     

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。     

Strategic alliances in container liner shipping

The economic crisis in the years between 2008 and 2010 has demonstrated the necessity for substantial adjustments on behalf of container lines. Capacities were shifted quickly to emerging and less affected markets allowing a faster recovery of globally organized companies. This paper illustrates the dynamics in the container shipping market. Alongside the main characteristics of the Top 20 ocean shipping companies, liner services are described. These services are classified by geographic coverage and vessel deployment. In addition, this paper provides a better understanding of the collaboration among service providers. Starting from a general framework of co-operative liner services, in-depth analyses of the global alliances in liner shipping are obtained. These formations - Grand Alliance, New World Alliance and CKYH Alliance - are compared with alternative forms of collaboration in the liner shipping industry. The analysis of alliance announcements which are related to operational and strategic changes indicates that the “global alliances” cannot be regarded as closed corporate-like entities. In effect, service agreements are not only negotiated with the focal members of the specific alliance. Instead, every service is arranged individually and under specific conditions. By understanding the dynamics within alliances, we are able to develop an assessment relating to the stability of collaborations. Ultimately, these insights direct us to several paths for future research.     

The impact of port operations on efficient ship operation from both economic and environmental perspectives

Recently, shipping lines have focused on efficient ship operation, which relates to energy efficiency issues in shipping and, particularly, to operational issues such that the minimisation of fuel consumption and resulting greenhouse gas emissions. Efficient ship operation in container lines is closely related to the ship’s time at sea and ship’s time in port. Reduction in port time, thanks to high-quality port operations, allows improvement in the operational efficiency of a liner service by reducing the fuel consumption of a ship at sea and its resulting CO₂ emissions. The main goal of this article is to investigate how time in port affects efficient ship operation in terms of operating costs, CO₂ emissions and externalities. For this, as a methodology, a simulation based upon system dynamics is introduced. Major finding is that less time in port resulting from the improvement of port operations contributes to efficient ship operation in terms of operating costs, amount of CO₂ emissions and external effects in the liner shipping industry. In particular, a sensitivity analysis on efficient ship operation vis-à-vis the quality of port operation shows that bigger ships need to select highly productive calling ports that provide less time in port.     

Korean liner shipping in the era of global alliances

In the course of the last two decades Korean shipping has emerged as a major player in the liner market. In 1970 there was not a single container ship in the Korean fleet; yet, within the next two decades, shipping companies from Korea have become included among the top 10 liner operators in the world, in the context of a spectacular ascent of Asian companies in international container shipping. During the same period the organization of liner shipping itself underwent major changes. In the 1970s and 1980s, pools and powerful consortia prevailed, maximizing frequency and optimizing fleet deployment under pressure from the high investment entailed by containerization. The era of consortia, however, came to a close in the early 1990s; intermodalism and the expansion of the major liner companies into forward and backward segments of the transport chain rendered them inflexible for pursuing individual strategies of product diversification with a view to larger market shares. Global alliances were finally born as a result of a major reshuffling of co-operation agreements and of the globalization of the production process on the demand side. The aim of this paper is to follow and assess the options available to an aggressive low-cost national fleet in its journey to competitive maturity through a period of changing organization of liner shipping, focusing on the course of the leading Korean container company, and one of the largest in the world today, Hanjin. It highlights at the same time both the deep structural changes which liner shipping has undergone in the last two decades and the effects of current changes, such as the recent wave of mergers in this sector.