Required Freight Rate Research Articles

Feasibility and implications of the Northern sea route choice: the role of commodity prices, in-transit inventory, and alternative operational modes for the oil product tanker market

ABSTRACT The feasibility of the Northern Sea Route (NSR) is assessed against the established Suez Canal route (SCR) and the longer Cape of Good Hope route. The analysis reflects real practices of route choice for oil products between the Far East and Europe depending on varying market conditions. A required freight rate (RFR) model is developed based on both optimal speeds and real speeds. Automatic Identification System (AIS) data are used to identify route choice patterns and real speeds of Long Range 2 (LR2) tankers during 2013–2020. Cargo value on-board and alternative fuel types/modes based on oil, and current and future technologies of dual fuel Oil/Liquefied Natural Gas (LNG) are considered. Cape is a competitive alternative under low fuel/commodity prices, and its use is explained, especially during the oil oversupply in 2015–2016 and 2020. The NSR is more competitive when moving towards short-hauls, under high fuel/commodity prices, and discounted or zero icebreaking fees, but is uncompetitive most of the times when ice damage repairs are included in the model.

Maritime fuels of the future: what is the impact of alternative fuels on the optimal economic speed of large container vessels

This study aims to determine the most appropriate alternative fuel technology to comply with possible different imposed emission regulations while ensuring optimal business performance. In this context, the most suitable alternative fuel technology minimizes the required freight rate while maximizing overall performance on technological, environmental, and other criteria. A decision support tool was developed combining the overall performance of alternative fuels based on technological, environmental, and other criteria via a simple multiattribute rating technique model with a financial model based on discounted cash flow analysis. In this model, also an optimization model is implemented to minimize the required freight rate by optimizing for economic vessel speed. This model provides quantified insights into the financial and operational effects of transitioning via either a 'market-based measure' regulatory scenario or an 'emission cap' scenario if current fuels do not reach the zero-emission targets in the future. Based on the analysis, it can be concluded that upgraded bio-oil, Fischer–Tropsch diesel and liquefied bio-methane can be considered the 'most promising' alternative maritime fuels of the future. Current fuels such as Heavy fuel oil and Liquified natural gas remain the 'most probable' to retain dominance without regulations. If there is a transition toward these alternative fuels, this will also lead to a shift toward lower sailing speeds.

Economic and environmental feasibility of Northern Sea Route for container service: impact by ice besetting events

ABSTRACT Northern Sea Route (NSR) has attracted much attention from the academia. However, the relevant issues, namely, the seasonal variation of sea ice coverage, the possibility and delay of ice besetting events (IBEs), formulation of ice-breaker escort fee and rescue fee, and the internalization of environmental costs, are considered in past models, but not in a systematic manner. To break through the limitations of previous studies, this paper investigates the economic and environmental feasibility of the NSR for container service, and clarifies the said issues using the latest survey data on a business case. Specifically, a novel evaluation model was developed to estimate the required freight rate (RFR) comprehensively, from the perspective of economic and environmental costs. Based on the modeling results, the optimal scheme was designed for all-season commercial liner transportation via the NSR. Besides, the RFR-based logit competitiveness model was adopted to evaluate how the NSR as an alternative to the Suez Canal Route (SCR) is affected by multiple factors: the delay induced by the IBEs, carbon tax rate, loading factor of eastbound containerships, and fuel price. The research results provide reference for decision-makers to formulate operations plans for ice class, navigation speed, and ship type.

Feasibility of the Northern Sea Route for seasonal transit navigation: The role of ship speed on ice and alternative fuel types for the oil product tanker market

The feasibility of the Northern Sea Route is assessed for seasonal operations of oil product tankers using alternative fuel types. A speed optimisation model is used that minimises the required freight rate (RFR) of a Long Range 2 (LR2) tanker against alternative routes. A cost model is developed that incorporates real hourly speed data from tanker voyages between the 2011 and 2019 summer/autumn seasons, and primary and secondary data regarding cost and operational factors. The analysis is based on naphtha and jet fuel/kerosene trades between Europe and Asia. A prospective ban on the use of High Sulphur Fuel Oil (HSFO) in the Arctic, and alternative fuels, such as the new Very Low Sulphur Fuel Oil (VLSFO) and Liquified Natural Gas (LNG) are included to take into account of the International Maritime Organisation (IMO) 2020 global sulphur limit and its long-term strategy towards the reduction of greenhouse gas emissions.

Feasibility of the Northern Sea Route for oil shipping from the economic and environmental perspective and its influence on China's oil imports

The Northern Sea Route (NSR) has the potential to become a key oil shipping route due to its shorter distance and abundant oil resources in the Arctic. This paper puts forward a model to calculate the Required Freight Rate of the NSR and China's other oil import shipping routes, which includes both the shipping cost and the environmental cost. The calculation is undertaken in the context of IMO Sulfur 2020 limit, and the Very Low Sulfur Fuel oil (VLSFO) is chosen as marine oil. The vessel speed in this study varies with ice thickness in different route segments; the environmental cost in the model has considered emissions from all main air pollutants in addition to CO2. The results show that the NSR has the potential to carry some of China's oil import volume; internalizing the environmental cost has improved the competitiveness of NSR; ice breaking fee and VLSFO price have a significant influence on the attractiveness of NSR, but the price (tax) of CO2 has no obvious impact.

Multi-objective robust early stage ship design optimisation under uncertainty utilising surrogate models

The paper addresses the parametric design and multi-objective optimisation of ships under uncertainty, applying the Holistic Optimisation Design Approach. The methodology starts with the creation of a detailed parametric model that captures both the external and internal geometric characteristics of the vessel, along with the integration of a number of numerical tools, purposely developed in order to determine each variant's performance. This allows the evaluation of a multitude of merit functions and design constraints, all part of the optimisation problem. In contrast to previous approaches, the uncertainties introduced by the physical and financial environment are incorporated in the model, providing a more realistic representation of the solution space to the decision maker. The developed methodology is applied on a case study of a Ro-Pax ship, optimised in the concept design phase with regard to the minimisation of the total resistance, required freight rate and building cost.

Feasibility of the Northern Sea Route: The role of distance, fuel prices, ice breaking fees and ship size for the product tanker market

This paper investigates the feasibility of the Northern Sea Route (NSR) using a speed optimisation model to minimise the required freight rate, by employing current data from a shipowner, supported by secondary data, conducting petroleum product transport on the NSR. The oil product tanker segment is used to assess route alternatives taking into account distance, ship size, ice breaking fees, fuel types and prices. Environmental policy elements are included in the cost analysis to account for low sulphur fuels from 2020, a prospective ban on the use of heavy fuel oil in the Arctic, and a possible global fuel tax.

Analyzing the economic benefit of unmanned autonomous ships: An exploratory cost-comparison between an autonomous and a conventional bulk carrier

Unmanned autonomous ships are seen as a key element of a competitive and sustainable European shipping industry in future. But even if the technology to further automate ships will principally be available at some point, this does not imply that autonomous vessels are also the superior choice for the ship owner. In the end the success of autonomous vessels depends on their impact on the profitability of shipping companies. Following a structured approach this paper analyzes the costs of running an autonomous bulker and compares them against a conventional vessel in a cost-benefit analysis. Hereby it provides insights on the (economic) benefit of autonomous vessels for a first-time. Results principally confirm an economic potential. The expected present value of cost of owning and operating the autonomous bulker over a 25-year period is mUSD 4.3 lower than for a conventionally manned ship. Assuming identical cargo carrying capacity this means that the required freight rate of the autonomous bulker which produces a zero net present value is 3.4% lower than the required freight rate of the conventional vessel. This advantageousness is based on one aspect in particular as the paper argues. Besides cost savings associated with reducing crew levels an autonomous ship brings along additional benefits due to changes in ship design.

Parametric Design and Multiobjective Optimization of Containerships

The introduction of the energy efficiency design index (EEDI) and ballast water treatment regulations by the International Maritime Organization, the fluctuation of fuel price levels, along with the continuous endeavor of the shipping industry for economic growth and profits has led the shipbuilding industry to explore new and cost-efficient designs for various types of merchant ships. In this respect, proper use of modern computer-aided design/computer-aided engineering systems (CAD/CAE) extends the design space, while generating competitive designs with innovative features in short lead time. The present article deals with the parametric design and optimization of containerships. The developed methodology, which is based on the CAESES/Friendship-Framework software system, is demonstrated by the conceptual design and multiobjective optimization of a midsized, 6500-TEU containership. The methodology includes a complete parametric model of the ship's external and internal geometry and the development and coding of all models necessary for the determination of the design constraints and the design efficiency indicators, which are used for the evaluation of parametrically generated designs. Such indicators defining the objective functions of a multiobjective optimization problem are herein the EEDI, the required freight rate, the ship's zero ballast container box capacity, and the ratio of the above to below deck number of containers. The set-up multiobjective optimization problem is solved by use of the genetic algorithms, and clear Pareto fronts are generated. Identified optimal design proves very competitive compared with the standard containership designs in the market.

Parametrical Method for Determining Optimal Ship Carrying Capacity and Performance of Handling Equipment

Abstract The paper presents a method of evaluating the optimal value of the cargo ships deadweight and the coupled optimal value of cargo handling capacity. The method may be useful at the stage of establishing the main owners requirements concerning the ship design parameters as well as for choosing a proper second hand ship for a given transportation task. The deadweight and the capacity are determined on the basis of a selected economic measure of the transport effectiveness of ship – the Required Freight Rate. The mathematical model of the problem is of a deterministic character and the simplifying assumptions are justified for ships operating in the liner trade. The assumptions are so selected that solution of the problem is obtained in analytical closed form. The presented method can be useful for application in the preliminary ship design or in the simulation of pre-investment transportation task studies.

Parametric Design and Multiobjective Optimization of Containerships

The introduction of the energy efficiency design index (EEDI) and ballast water treatment regulations by the International Maritime Organization, the fluctuation of fuel price levels, along with the continuous endeavor of the shipping industry for economic growth and profits has led the shipbuilding industry to explore new and cost-efficient designs for various types of merchant ships. In this respect, proper use of modern computer-aided design/computer-aided engineering systems (CAD/CAE) extends the design space, while generating competitive designs with innovative features in short lead time. The present article deals with the parametric design and optimization of containerships. The developed methodology, which is based on the CAESES/Friendship-Framework software system, is demonstrated by the conceptual design and multiobjective optimization of a midsized, 6500-TEU containership. The methodology includes a complete parametric model of the ship’s external and internal geometry and the development and coding of all models necessary for the determination of the design constraints and the design efficiency indicators, which are used for the evaluation of parametrically generated designs. Such indicators defining the objective functions of a multiobjective optimization problem are herein the EEDI, the required freight rate, the ship’s zero ballast container box capacity, and the ratio of the above to below deck number of containers.The set-up multiobjective optimization problem is solved by use of the genetic algorithms, and clear Pareto fronts are generated. Identified optimal design proves very competitive compared with the standard containership designs in the market.

Parametric Method For Evaluating Optimal Ship Deadweight

Abstract The paper presents a method of choosing the optimal value of the cargo ships deadweight. The method may be useful at the stage of establishing the main owners requirements concerning the ship design parameters as well as for choosing a proper ship for a given transportation task. The deadweight is determined on the basis of a selected economic measure of the transport effectiveness of ship - the Required Freight Rate (RFR). The mathematical model of the problem is of a deterministic character and the simplifying assumptions are justified for ships operating in the liner trade. The assumptions are so selected that solution of the problem is obtained in analytical closed form. The presented method can be useful for application in the pre-investment ships designing parameters simulation or transportation task studies.

The Economy Analysis of Sailing in the Arctic Northeast Passage

As the global temperature warming, the ice zone of Arctic is shrinking gradually. In summer, the waterway that can be used to sail has appeared in arctic waters. Based on the analysis of ice condition of the Northeast Passage, the cost accounting of ice enhanced vessel and the cost accounting of voyage cost, this paper comprehensively analyzes the required freight rate (RFR) of sailing. By comparing the Suez Canal routes with the Northeast Passage routes, an analysis for the sailing economy of the arctic Northeast Passage can be given.

Development of Preliminary Design Model for Ultra-Large Container Ships by Genetic Algorithm

In this study, we carried out a precedent investigation for an ultra-large container ship, which is expected to be a higher value-added vessel. We studied a preliminary optimized design technique for estimating the principal dimensions of an ultra-large container ship. Above all, we have developed optimized dimension estimation models to reduce the building costs and weight, using previous container ships in shipbuilding yards. We also applied a generalized estimation model to estimate the shipping service costs. A Genetic Algorithm, which utilized the RFR (required freight rate) of a container ship as a fitness value, was used in the optimization technique. We could handle uncertainties in the shipping service environment using a Monte-Carlo simulation. We used several processes to verify the estimated dimensions of an ultra-large container ship. We roughly determined the general arrangement of an ultra-large container ship up to 1500 TEU, the capacity check of loading containers, the weight estimation, and so on. Through these processes, we evaluated the possibility for the practical application of the preliminary design model.

The Northwest Passage: A simulation

We model shipping through the Northwest Passage in northern Canada in order to see if reported recent ice thinning has made this route economic relative to the Panama Canal. Container shipping between Yokohama to New York and St. Johns, Newfoundland is simulated by VSLAM for the two routes using bluewater ships for the Panama Canal and identically sized Canadian Arctic Class 3 (CAC3) ships for the Northwest Passage. Each route is broken into a series of logical legs, and environmental conditions and wait times are assigned. Ice conditions are modeled from historical records. Average speed through the Northwest Passage shows little seasonal variation. Round trips per year are higher through the Northwest Passage. The required freight rate (RFR) to recover all costs including capital recovery is calculated. RFR is slightly lower for the St. Johns to Yokohama transit using the Northwest Passage, and higher for the New York to Yokohama route, as compared to the Panama Canal. Possible future thinning of Arctic ice would further improve the economics of the Northwest Passage.

Feasibility of a Sea Route through the Canadian Arctic

One predicted consequence of global warming is the thinning of Arctic sea ice. This raises the question whether the fabled Northwest Passage can be used for year round ship traffic, and whether the distance saved by using the polar route justifies the incremental investment in ice-breaking ships. A conceptual study using computer simulation was conducted to evaluate the Northwest Passage versus the Panama Canal routes between eastern North America and Japan. Recent historical ice conditions were modelled stochastically to calculate ship transit time. The economic performance was then evaluated by estimating the port-to-port shipping cost component of the overall required freight rate, again using stochastic modelling for a variety of cost factors. The most critical economic variable is the incremental capital cost between an ice capable and a standard Panamax ship. Shipping from St John's Newfoundland to Yokohama is economic through the Northwest Passage even with an incremental capital cost of 80%. Extending the route to New York would make the Northwest Passage non-competitive. We report the sensitivity of the port-to-port shipping cost for a number of economic factors, with capital and fuel cost being the most significant.

Optimum structural design of tankers using multi-objective optimization technique

While designing a ship's structure, the material cost of hull's weight and the overall cost of construction processes should be minimized considering safety and reliability. In the past, the minimum weight design has focused mainly on reducing material cost and increasing dead weight, which reflects the interests of a ship's owner. But, in the past experience, the minimum weight design has inevitably led to increasing the construction cost, making it necessary for ships' structural designers to consider both structural weight and construction cost. From this point of view, this study proposes a multi-objective optimization technique for designing ships' structures. According to the proposed algorithm, the results of optimization were compared to the structural design of an existing very large crude oil carrier. Objective functions were weight cost and construction cost of the very large crude oil carrier, and evolution strategies, one of the stochastic search methods, was used as an optimization solver. For the scantlings of members and the estimations of objectives, the classification rule was adopted for longitudinal members, and the direct calculation method, generalized slope deflection method, was adopted for transverse members. To choose the most economical design point among the results of Pareto optimal set, the required freight rate was evaluated for each Pareto point, and compared to the required freight rate of the actual ship.

초대형 컨테이너선의 거주구역 재배치에 대한 경제성 평가

최근 들어 초대형 선박에 대한 논의가 활발해진 가운데 선사들은 선박 대형화에 의한 규모의 경제 효과를 꾸준히 추구하고 있다. 기술과 경제성이 보장되는 한 당분간 이러한 선박 대형화의 추세는 지속될 전망이다. 선박대형화에 따라 거주공간의 위치변화에 대한 필요성이 조심스럽게 제기되고 있다. 본 논문은 초대형 컨테이너선의 거주 공간 재배치에 따른 경제성 평가 분석에 관한 내용을 다루었다. 선박의 초기 설계 단계에서, 도면 생성의 보완과 검증을 통하여 거주구역과 엔진실의 공간을 분리하는 제안을 하였다. 그에 관한 장단점을 분석하고, 실현 가능성 여부를 경제성 평가 분석을 통해 검토하였다. 경제성 평가 방법을 위한 목적함수는 요구운임지수를 사용하였다. TEU 증가에 의한 경제성을 전망하고, 이러한 공간 재배치에 따른 조선소와 선주의 경제성 평가를 분석하여 선적 개수의 증가에 따른 경제성 전망을 제시하였다. Recently the building of ultra large container ship are discussed among ship building companies and ship operating company who have a tendency to pursue the advantage of large scale of economy. These tendency will be continued for the time being, if ship-building skill and economical efficiency are available. As the enlargement of container ship size becomes hot issues in ship-building markets, the needs for re-arrangement of accommodation house in large container ship are proposed carefully in some researches. This study examined economical efficiency of re-arrangement of accommodation house in ultra large container ship. The separation between accommodation and engine room is proposed through out drawing works in initial design stage and we examined the merits and demerits of the separation in the view of economical efficiency. The RFR(Required Freight Rate) is considered as the objective function to evaluate the re-designed vessel. The economical benefits are analyzed in the view of ship operator and shipyard respectively.

A Pseudo-Global Optimization Approach with Application to the Design of Containerships

In this paper, we present a new class of pseudo-global optimization procedures for solving formidable optimization problems in which the objective and/or constraints might be analytically complex and expensive to evaluate, or available only as black-box functions. The proposed approach employs a sequence of polynomial programming approximations that are constructed using the Response Surface Methodology (RSM), and embeds these within a branch-and-bound framework in concert with a suitable global optimization technique. The lower bounds constructed in this process might only be heuristic in nature, and hence, this is called a pseudo-global optimization approach. We develop two such procedures, each employing two alternative branching techniques, and apply these methods to the problem of designing containerships. The model involves five design variables given by the design draft, the depth at side, the speed, the overall length, and the maximum beam. The constraints imposed enforce the balance between the weight and the displacement, a required acceptable length to depth ratio, a restriction on the metacentric height to ensure that the design satisfies the Coast Guard wind heel criterion, a minimum freeboard level as governed by the code of federal regulations (46 CFR 42), and a lower bound on the rolling period to ensure sea-worthiness. The objective function seeks to minimize the required freight rate that is induced by the design in order to recover capital and operating costs, expressed in dollars per metric ton per nautical mile. The model formulation also accommodates various practical issues in improving the representation of the foregoing considerations, and turns out to be highly nonlinear and nonconvex. A practical test case is solved using the proposed methodology, and the results obtained are compared with those derived using a contemporary commercialized design optimization tool. The prescribed solution yields an improved design that translates to an estimated increase in profits of about d18.45 million, and an estimated 27% increase in the return on investment, over the life of the ship.

Techno-Economic Optimization of an LNG Carrier with Multicriteria in the Preliminary Design Stage

When economic optimization is considered in the preliminary design of a ship, required freight rate (RFR) is usually taken as the objective function because it is related to the building and the operating costs of a ship, reflecting the interest of both the shipyard and the shipowner. However, the choice of RFR as the objective function sometimes has an adverse effect on the designer. For example, to analyze the effect on the objective function of change of the building and operating costs, a sensitivity analysis is required for each item. That is, the relative importance of the two costs, when constructing a design model, is not obvious as they are combined together. In order to overcome the limitation of single objective optimization, a multicriteria optimization method has been used. To solve the multicriteria optimization problem with efficiency, a hybrid optimization solver is developed by coupling the genetic algorithm and the direct search method. Furthermore, to accelerate the searching speed of the solver in the design space, an Al (artificial intelligence) technique is applied to the hybrid optimization solver. It is applied to the optimum design of a liquified natural gas (LNG) carrier in the preliminary design stage. Through application to the ship design, the relative importance between the operating and building cost in the economic analysis of the ship design was manifested.