Liner Service Research Articles

Are vessel sharing agreements pro-competitive?

Attention is focussed on a type of strategic alliance of the container shipping industry: vessel sharing agreements. In such consortia carriers jointly provide—but independently sell—a liner service. The strategic alliances studied in this work have not been extensively analyzed in the theoretical literature; a new model is proposed that embodies their main distinguishing features. By it, an examination is provided of the effects on equilibrium prices, equilibrium aggregate quantities and consumer welfare of the formation and enlargement of vessel sharing agreements. A positive answer is developed to the question raised in the title of the present work that supports a laissez-faire policy for these consortia.

Assessing the impact of the maritime silk road

The plans for the Maritime Silk Road affect the existing liner services. The purpose of this paper is to quantify using the terms of network theory the impact of these plans and to project the effects on the fleet, utilization, port throughput, and carbon footprint. The analysis is based on publicly available information and reasonable fleet deployment assumptions. It also considers current and alternative routing schedules from Shanghai to Europe. The impact of existing and expected emission control areas (ECAs) along the port chains is also considered.

Are Vessel Sharing Agreements Pro-Competitive?

Abstract Attention is focussed on a type of strategic alliance of the container shipping industry: vessel sharing agreements. In such consortia carriers jointly provide—but independently sell—a liner service. The strategic alliances studied in this work have not been extensively analyzed in the theoretical literature; a new model is proposed that embodies their main distinguishing features. By it, an examination is provided of the effects on equilibrium prices, equilibrium aggregate quantities and consumer welfare of the formation and enlargement of vessel sharing agreements. A positive answer is developed to the question raised in the title of the present work that supports a laissez-faire policy for these consortia.

Network assignment model of integrating maritime and hinterland container shipping: application to Central America

The authors develop a model to predict worldwide container movements including both maritime and land shipping network from the viewpoint of cargo owners, given the liner shipping network provided by shipping companies and the level of service in each port. The network assignment methodology is applied to both an intermodal shipping network and maritime shipping sub-network, by which the solution can be obtained in a huge, real-scale network including more than 150 worlds’ container ports as well as some hinterland network of the world. The developed model is applied to the Central American region, where the international maritime containers are often transported across national borders by land. It is confirmed that the model output agrees with the actual container movement in terms of the container cargo throughput for each port, land container flow, and maritime flow by shipping company in Central America. Also, the model sensitivity to key parameters included in the model is confirmed reasonable. Finally, it is also confirmed that the model can predict the volume of containers handled in the port of La Union, where no liner service had previously called and a new liner service calls.

A Two-Stage Maritime Supply Chain Optimization Model

Shipping companies usually determine the optimal sailing speed and number of vessels to deploy in their maritime liner services, using a decentralised system, which sometimes extends the transit time between any two ports and thus affects the in-transit inventory and safety stock levels for shippers. On the contrary, if a centralised system is adopted then the shippers' inventory management costs would be considered in the choice of the optimal configuration. This article proposes a model for this trade-off that compares the supply chain optimal solutions and costs of a decentralised versus a centralised system. Assuming that transport demand can either be inelastic or elastic and that end customers' demand to be satisfied by shippers is stochastic, our model provides an optimisation procedure to determine the optimal configuration for any decentralised or centralised liner service, along with a specific application to a containerised Europe-Far East service.

Formulating cargo inventory costs for liner shipping network design

ABSTRACTThis study examines how to incorporate the inventory costs of containerized cargoes into existing liner service planning models such that the designed networks could be improved while not causing extra modeling/computational burden. Two approaches are compared: (i) not considering the inventory costs at all and (ii) incorporating the inventory costs associated with onboard time and those related to transshipment by assuming a fixed connection time. The two models are compared with the ideal model capturing the exact inventory costs on a route choice problem and a capacity planning problem based on extensive randomly generated and practical numerical experiments. The results show that: first, ignoring the inventory costs in service planning models may lead to network design with much higher costs (poor network design decisions); second, in service planning models assuming weekly frequency, the inventory costs associated with onboard time could be formulated exactly, and those related to the connection time of weekly services could be approximated by assuming fixed connection time of 3.5 days for ports with 1 day’s minimum connection time and 4.5 days for ports with 2 days’ minimum connection time.

Speed optimization and bunkering in liner shipping in the presence of uncertain service times and time windows at ports

Recent studies in maritime shipping have concentrated on environmental and economic impacts of ships. In this regard, fuel is considered as one of the important factors for such impacts. In particular, the sailing speed of the vessels affects the fuel consumption directly. In this study, we consider a speed optimization problem in liner shipping, which is characterized by stochastic port times and time windows. The objective is to minimize the total fuel consumption while maintaining the schedule reliability. We develop a dynamic programing model by discretizing the port arrival times to provide approximate solutions. A deterministic model is presented to provide a lower bound on the optimal expected cost of the dynamic model. We also work on the effect of bunker prices on the liner service schedule. We propose a dynamic programing model for bunkering problem. Our numerical study using real data from a European liner shipping company indicates that the speed policy obtained by proposed dynamic model performs significantly better than the ones obtained by benchmark methods. Moreover, our results show that making speed decisions considering the uncertainty of port times will noticeably decrease fuel consumption cost.

Study on China-EU container shipping network in the context of Northern Sea Route

The emerging Northern Sea Route (NSR) represents change to the existing liner network for China-EU container shipping. It is necessary to re-examine the container network in this context and assist liner companies in decision-making. This paper assesses the potential of the NSR based on designing a multi-port multi-trip liner service by establishing a two-stage optimization model. Based on the estimated data of NSR shipping, ship routing schemes on both the NSR and conventional routes are proposed. It is determined that container service along the NSR is largely influenced by ice-breaking charge, seasonality, and cargo volume, which makes NSR more likely to act as a supplementary line of the liner network in the short or medium term. The results also indicate that use of NSR may drive the redeployment of shipping network and hub ports in the long term. This study's conclusions may prove useful for strategic planning by liner companies, port authorities, and governments to assess the operation of liner service via the NSR.

Strategic maritime container service design in oligopolistic markets

This paper considers the maritime container assignment problem in a market setting with two competing firms. Given a series of known, exogenous demands for service between pairs of ports, each company is free to design liner services connecting a subset of the ports and demand, subject to the size of their fleets and the potential for profit. The model is designed as a three-stage complete information game: in the first stage, the firms simultaneously invest in their fleet; in the second stage, they individually design their services and solve the route assignment problem with respect to the transport demand they expect to serve, given the fleet determined in the first stage; in the final stage, the firms compete in terms of freight rates on each origin–destination movement. The game is solved by backward induction. Numerical solutions are provided to characterize the equilibria of the game.

Multi-objective optimization for planning liner shipping service with uncertain port times

This paper considers a joint tactical planning problem for the number of ships, the planned maximum sailing speed, and the liner service schedule in order to simultaneously optimize the expected cost, the service reliability and the shipping emission in the presence of port time uncertainty. The problem is formulated into a stochastic multi-objective optimization problem at the operational level. The relationships between the objectives and the decision variables are established. A simulation-based non-dominated sorting genetic algorithm is then presented to solve this problem. A case study is provided to illustrate the results and the application of the model.

Bi-criteria approach to containership slot allocation in liner shipping

Containership capacity allocation is an important issue since liner companies must avoid unused space on a voyage to maximize their revenue. Therefore, in the face of uncertain cargo demand and fiercely competitive markets, liner carriers build revenue management systems to maximize voyage profits through careful consideration of slot allocation and pricing. A containership slot allocation model is proposed in this article to deal with two conflicting objectives: carrier’s freight contribution and agents’ degree of satisfaction, as well as fuzzy constraints, that is, uncertainties of cargo transportation demand and weight. This model is formulated using fuzzy multi-objective programming for deep-sea liner service containership slot allocation. Interactive fuzzy multi-objective linear programming with fuzzy parameters is applied to solve this problem. The proposed model is applied to an Asia-Europe service route of a liner company to test its efficacy. Results show the model’s applicability and excellent performance in practice.

Optimal sequence of container ships in a string

Container ships in a string may not have the same capacity. Therefore, the sequence of ships affects the number of containers that are delayed at export ports due to demand uncertainty, for instance, “a large ship, followed by a small ship, then another large ship, and finally another small ship” is better than “a large ship, followed by another large ship, then a small ship, and finally another small ship”. We hence aim to determine the sequence of the ships in a string to minimize the delay of containers, without requiring the probability distribution functions for the future demand. We propose three rules to identify an optimal or near-optimal string. The rules have been proved to be effective based on extensive numerical experiments. A rough estimation indicates that over 6 million dollars/year could be saved for all liner services in the world by optimizing the sequences of ships.

Liner services network design and fleet deployment with empty container repositioning

Transportation demand of shipping container fluctuates due to the seasonality of international trade, thus, every 3–6months, the liner company has to alter its current liner shipping service network, redeploy ships and design cargo routes with the objective of minimizing the total cost. To solve the problem, the paper presents a mixed integer linear program model. The proposed model incorporates several relevant constraints, such as weekly frequency, the transshipment of cargo between two or more service routes, and transport time. Extensive numerical experiments based on realistic date of Asia–Europe–Oceania shipping operations show that the proposed model can solve real-case problems efficiently by CPLEX. The results demonstrate that the model can reduce ship’s capacity consumption and raise ships’ capacity utilization.

Strategic Maritime Container Transport Design in Oligopolistic Markets

This paper considers the maritime container assignment problem in a market setting with two competing firms. Given a series of known, exogenous demands for service between pairs of ports, each company is free to design a liner service network serving a subset of the ports and demand, subject to the size of their fleets and the potential for profit. The model is designed as a three-stage complete information game: in the first stage, the firms simultaneously invest in their fleet; in the second stage, they individually design their networks and solve the route assignment problem with respect to the transport demand they expect to serve, given the fleet determined in the first stage; in the final stage, the firms compete in terms of freight rates on each origin-destination movement. The game is solved by backward induction. Numerical solutions are provided to characterize the equilibria of the game.

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.

Effect of a speed reduction of containerships in response to higher energy costs in Sulphur Emission Control Areas

The objective of this paper is to explore the possible consequences of the future low-sulphur fuel requirements in Sulphur Emission Control Areas (SECA) on vessel speed, from the standpoint of the container shipping industry. Rational energy use, speed reduction, and revenues are closely related in the container shipping sector because speed reductions may provide substantial energy and cost savings. The operators could consider reducing their speed in SECA in order to save on fuel that will become relatively expensive. However, to maintain a weekly frequency without adding new ships, such a behaviour implies that the required speed at sea outside the SECA area increases. This paper aims to investigate if such a difference in speed is cost-effective, and if the increase in speed outside SECA may result in an increase in CO2 emissions of the total cycle. We propose a cost model that estimates the cost-minimising combination of speeds inside and outside SECA, and the resulting CO2 emissions of the liner service. Applying this model to representative liner services serving North Europe, we find that differentiating speed accordingly slightly decreases total costs and increases CO2 emissions in a similar way. The results are sensitive to the price of low-sulphur fuels, the part of the cycle in SECA and the number of ships deployed in the service.

System Dynamics Modeling for Determining Optimal Ship Sizes and Types in Coastal Liner Services

The problem of determining the required ship investment for deployment is an ongoing problem faced by governments and ship operators. The nature of ship investment is capital-intensive and the return on investment is often take long time. This paper attempts to establish system dynamics modeling (SDM) to simulate and solve this problem in order to help ship operators make effective strategic decisions. A case study of coastal liner services between Incheon and Baengnyeong Island in South Korea was performed. Using scenario analysis, the possible ship sizes (small: 350 tons; large: 2,500 tons) and types (new or used) were considered by comparing potential revenue with costs. The results indicated that putting a used large-sized ship into operation would accommodate the increasing passenger and cargo volumes, and improve customer services.

The reduction of ship-based emissions: aggregated impact on costs and emissions for North Europe-East Asia liner services

This paper investigates the aggregated impacts of future environmental policies aimed at abating atmospheric emissions from ships. These policies include the low-sulphur fuel requirements from Annex VI of MARPOL and a European market-based instrument on CO2 emissions. Two regulatory scenarios are proposed as well as a cost model for liner services on the North Europe-East Asia trade for the period 2015 to 2025. This paper assesses the cumulated cost implications of sulphur and CO2 policies for a typical North Europe-East Asia loop. This provides an economic assessment of the aggregated effect of sulphur and CO2 policies at the shipping lines’ level. In addition, an analysis on the indirect environmental impact of these policies is carried out. We show that the policy on sulphur emissions from ships may have a significant effect on CO2 emissions. The results of this paper, both from the economic and environmental analyses, argue for a holistic approach when regulating vessel-based emissions.

An Overview on the Implied Obligations in a Contract of Affreightment

Abstract If there were no express provisions in the charter party as to seaworthiness or a ship owner's obligation to exercise reasonable dispatch, there is an implied obligation in common law. At other times, in the absence of an express term, the right to nominate a port does not give rise to a correlative warranty on the nomination to a safe port. Likewise, a change of circumstances occurring after the conclusion of the contract may be sufficient to discharge the parties from further performance of their contract. In common law, the shipper has an implied obligation to inform the ship owner on the dangerous nature of the shipped goods. Last but not least, whether the owner of the vessel operates a liner service or a under a charter undertakes that his vessel, while performing its obligations under the contract of carriage, will not deviate from the contract of carriage. Based on theoretical and jurisprudential aspects, this article aims to analyze the consequences of the ship owner's breach of the contract, the implications of express liberty clauses, and where appropriate, the Hague-Visby Rules incorporation effect. In conclusion, the obligations have different meanings depending on the type of the contract of affreightment and the circumstances in which the obligation must be fulfilled or the moment while operating.

Long-haul liner service route design with ship deployment and empty container repositioning

This paper proposes a single liner long-haul service route design problem including route structure design, ship deployment and empty container repositioning. The objective of this problem is to minimise the total cost incurred from a liner long-haul service route, including ship related costs, fuel consumption costs, port related costs, laden containers and empty container inventory-in-transition costs. We propose a three-stage optimisation method to tackle the problem. We introduce the notions of topological structure and ship load factors, which lead to a classification of shipping route structures and the relationships between the container flow pattern and the route structure. This greatly simplifies the route structure design decisions at the first stage and enables us to develop an efficient heuristic algorithm to reposition empty containers at the second stage. The ship deployment problem concerning the number of ships and their capacity and sailing speeds is considered at the third stage. The model takes advantage of the characteristics of the existing route structures and can solve the service route design problems effectively from the practical perspective. In addition, the established relationships between the load factors and the route structure provide useful insights into ship utilisation and route structure choice. Case studies are presented to show efficiency and applicability of the proposed research methodology.