Liner shipping service optimisation with reefer containers capacity: an application to northern Europe–South America trade

Abstract

Increasing the number of vessels in a container liner service while reducing speeds, known as slow steaming strategy, has been a short-term response since 2008 to the challenges of over-capacity and the rise in bunker prices faced by shipping lines. This strategy, which reduces the fuel cost per voyage but increases the operating costs as more vessels are added to the service, is difficult to sustain when the transit time significantly affects the transportation demand. This article proposes a model applied to this situation, referred to as a case of optimal speed under semi-elastic demand, for which containerised perishable product transport is sensitive to time, while frozen and dry products are not. It investigates if slow steaming is still optimal when working to maximise the total profit on the cycle. In order to demonstrate the proposed model, a numerical application is carried out for a direct Northern Europe to East Coast of South America container service, a route selected due to the high volume of fresh products. For this application, the speed that maximises the total profit with inelastic and semi-elastic demand is then estimated for several bunker fuel prices.