Maritime Emission Regulations and Operations Research in Shipping

Maritime fuel management (MFM) controls the procurement and consumption of the fuels used on board and therefore manages one of the most important cost drivers in the shipping industry. At the operational level, a shipping company needs to manage its fuel consumption by making optimal routing and speed decisions for each voyage. But since fuel prices are highly volatile, a shipping company sometimes also tactically procures fuel in the forward market to control risk and cost volatility. From an operations research perspective, it is customary to think of tactical and operational decisions as tightly linked. However, the existing literature on MFM normally focuses on only one of these two levels, rather than taking an integrated point of view. This is in line with how shipping companies operate; tactical and operational fuel management decisions are made in isolation. We develop a stochastic programming model involving both tactical and operational decisions in MFM in order to minimize the total expected fuel costs, controlled for nancial risk, within a planning period. This paper points out that after the latest regulation of the Sulphur Emission Control Areas (SECA) came into force in 2015, an integration of the tactical and operational levels in MFM has become important for shipping companies whose business deals with SECA. The results of the computational study show that isolated decision making on either tactical or operational level in MFM will lead to various problems. Nevertheless, the most severe consequence occurs when tactical decisions are made in isolation

Maritime Emission Regulations and Operations Research in Shipping

Maritime fuel management (MFM) controls the procurement and consumption of the fuels used on board and therefore manages one of the most important cost drivers in the shipping industry. At the operational level, a shipping company needs to manage its fuel consumption by making optimal routing and speed decisions for each voyage. But since fuel prices are highly volatile, a shipping company sometimes also tactically procures fuel in the forward market to control risk and cost volatility. From an operations research perspective, it is customary to think of tactical and operational decisions as tightly linked. However, the existing literature on MFM normally focuses on only one of these two levels, rather than taking an integrated point of view. This is in line with how shipping companies operate; tactical and operational fuel management decisions are made in isolation. We develop a stochastic programming model involving both tactical and operational decisions in MFM in order to minimize the total expected fuel costs, controlled for nancial risk, within a planning period. This paper points out that after the latest regulation of the Sulphur Emission Control Areas (SECA) came into force in 2015, an integration of the tactical and operational levels in MFM has become important for shipping companies whose business deals with SECA. The results of the computational study show that isolated decision making on either tactical or operational level in MFM will lead to various problems. Nevertheless, the most severe consequence occurs when tactical decisions are made in isolation

Can an Emission Trading Scheme really reduce CO2 emissions in the short term? Evidence from a maritime fleet composition and deployment model

Global warming has become one of the most popular topics on this planet in the past decades, since it is the challenge that needs the efforts from the whole mankind. Maritime transportation, which carries more than 90% of the global trade, plays a critical role in the contribution of green house gases (GHGs) emission. Unfortunately, the GHGs emitted by the global fleet still falls outside the emission reduction scheme established by the Kyoto Protocol. Alternative solutions are therefore strongly desired. Several market-based measures are proposed and submitted to IMO for discussion and evaluation. In this paper, we choose to focus on one of these measures, namely Maritime Emissions Trading Scheme (METS). An optimization model integrating the classical fleet composition and deployment problem with the application of ETS (global or regional) is proposed. This model is used as a tool to study the actual impact of METS on fleet operation and corresponding CO2 emission. The results of the computational study suggest that in the short term the implementation of METS may not guarantee further emission reduction in certain scenarios. However, in other scenarios with low bunker price, high allowance cost or global METS coverage, a more significant CO2 decrease in the short term can be expected

The Impact of Bunker Risk Management on CO2 Emissions in Maritime Transportation Under ECA Regulation

The shipping industry carries over 90 percent of the world’s trade, and is hence a major contributor to CO2 and other airborne emissions. As a global effort to reduce air pollution from ships, the implementation of the ECA (Emission Control Areas) regulations has given rise to the wide usage of cleaner fuels. This has led to an increased emphasis on the management and risk control of maritime bunker costs for many shipping companies. In this paper, we provide a novel view on the relationship between bunker risk management and CO2 emissions. In particular, we investigate how different actions taken in bunker risk management, based on different risk aversions and fuel hedging strategies, impact a shipping company’s CO2 emissions. We use a stochastic programming model and perform various comparison tests in a case study based on a major liner company. Our results show that a shipping company’s risk attitude on bunker costs have impacts on its CO2 emissions. We also demonstrate that, by properly designing its hedging strategies, a shipping company can sometimes achieve noticeable CO2 reduction with little financial sacrifice

Integrated maritime bunker management with stochastic fuel prices and new emission regulations

Maritime bunker management (MBM) controls the procurement and consumption of the fuels used on board and therefore manages one of the most important cost drivers in the shipping industry. At the operational level, a shipping company needs to manage its fuel consumption by making optimal routing and speed decisions for each voyage. But since fuel prices are highly volatile, a shipping company sometimes also needs to do tactical fuel hedging in the forward market to control risk and cost volatility. From an operations research perspective, it is customary to think of tactical and operational decisions as tightly linked. However, the existing literature on MBM normally focuses on only one of these two levels, rather than taking an integrated point of view. This is in line with how shipping companies operate; tactical and operational bunker management decisions are made in isolation. We develop a stochastic programming model involving both tactical and operational decisions in MBM in order to minimize the total expected fuel costs, controlled for financial risk, within a planning period. This paper points out that after the latest regulation of the Sulphur Emission Control Areas (SECA) came into force in 2015, an integration of the tactical and operational levels in MBM has become important for shipping companies whose business deals with SECA. The results of the computational study shows isolated decision making on either tactical or operational level in MBM will lead to various problem. Nevertheless, the most server consequence occurs when tactical decisions are made in isolation

An Evaluation of Alternative Energies or fuels for Future Deep Sea Container Shipping

Concerning the container shipping industry, two problems have been raised in recent years. One is the increasing bunker price and the other is more and more serious environmental problem. There have been some solutions for these two problems such as slow steaming, strict regulation or using low sulphur fuels. However, all of these solutions have their own limitations, which prompt the authors of this thesis to look for another solution: finding an alternative shipping fuel or energy for deep sea container shipping industry in the future. After assessing potential shipping fuels and selection criteria, the authors find out that nuclear power, LNG and renewable energy such as wind and solar power can be seen as the potential candidates. The result contains three parts: a comparison table of fuels under different criteria, a survey followed by analytical hierarchy process analysis and interviews with professional people. After a deep analysis of three findings, it is able to see that nuclear power is the most feasible alternative in terms of the academic research. However people still worry about its high initial cost and safety issues. Regarding the high initial cost, the authors made a calculation to show that although the capital cost for one nuclear ship is high, nuclear ship still shows economic benefits when counting on a fleet on a certain route during a life cycle. Regarding the safety issues, the authors find that it is not technical but emotional problem, which make the safety problem become solvable. In general, using the nuclear power could be the most feasible solution for future deep sea container shipping sector.Msc in Logistics and Transport Managemen

Scrubber: a potentially overestimated compliance method for the Emission Control Areas - The importance of involving a ship's sailing pattern in the evaluation

Different methods for sulphur emission reductions, available to satisfy the latest Emission Control Areas (ECA) regulations, may lead to different sailing patterns (route and speed choices of a vessel) and thus have significant impact on a shipping company's operating costs. However, the current literature does not include sailing pattern optimization caused by ECA, and its corresponding cost effects, in the evaluation and selection process for sulphur abatement technology. This leads to an inaccurate estimation of the value of certain technologies and hence an incorrect investment decision. In this paper, we integrate the optimization of a ship's sailing pattern into the lifespan cost assessment of the emission control technology, so that such expensive and irreversible decisions can be made more accurately. The results shows that a considerable overestimation of the value of scrubbers, and thus a substantial loss, can occur if the sailing pattern of a ship is not considered in the decision-making process. Furthermore, we also illustrate that it is more important to involve a ship's sailing pattern when the port call density inside ECA is low

Handling financial risks in crude oil imports: Taking into account crude oil prices as well as country and transportation risks

Financial risks related to crude oil imports are certainly affected by crude oil price uncertainty. Our question is: How important is it to take also physical risks, such as the crude oil exporters’ political risks and transportation risks into account when controlling financial risks in line with the importer’s risk attitude when planning crude oil imports and transportation at a tactical level? In this paper, two-stage stochastic programming models are proposed to illustrate the problem, and a numerical test is conducted to better understand the effects of physical risks. The mechanism for controlling risk will be forward physical contracts. The results show that the real financial risk is much higher than the importer might believe if physical risks are not considered. Unless the importer is risk neutral, more forward crude oil will be imported when physical risks are considered, and the distribution of forward crude oil will depend strongly on correlations among risks.publishedVersio

Autonomous vessels: State of the art and potential opportunities in logistics

The growth in technology on autonomous transportation systems is currently motivating a number of research initiatives. This paper first presents a survey of the literature on autonomous marine vessels in general. By identifying the main research interests in this field, we define nine thematic categories. The collected articles are then classified according to these categories. We show that research on autonomous vessels has increased dramatically in the past decade. However, most of the published articles have focused on navigation control and safety issues. Studies regarding other topics, such as transport and logistics, are very limited. While our main interest is the literature on autonomous vessels, we contrast its development with respect to the literature on autonomous cars so as to have a better understanding about the future potentials in the research on autonomous vessels. The comparison shows that there are great opportunities for research about transportation and logistics with autonomous vessels. Finally, several potential research areas regarding logistics with autonomous vessels are proposed. As the technology behind remote-controlled or autonomous ships is maturing rapidly, we believe that it is already time for researchers in the field to start looking into future water-borne transport and logistics using autonomous vessels