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Optimal economic ship speeds, the chain effect, and future profit potential

Optimal economic ship speeds, the chain effect, and future profit potential
Optimal economic ship speeds, the chain effect, and future profit potential
In this research, we study at which speeds an oceangoing ship should ideally travel on each of a series of legs of a journey as to maximise the Net Present Value (NPV) of the ship. A novel class of models for the ship speed optimisation problem, which we refer to as P (n, m, G o ) , is presented. It is based on incorporating cash-flow functions and is flexible in modelling journey structures of variable composition. By studying properties of optimal leg speeds within this NPV framework, we demonstrate two novel elements of ship speed optimisation: (a) When executing a series of identical journeys, optimal ship speeds from one execution of the journey to the next are shown to change. We refer to this as the chain effect . (b) The ship’s optimal speed is in general highly dependent on the decision maker’s views on the ship’s future profit potential (FPP). We present two efficient algorithms to solve the models. The methodology is applied to case studies based on the literature and the results are compared with classic model formulations. Net Present Value Equivalence Analysis (NPVEA) shows how the proposed framework increases understanding of the applicability and limitations of these classic model formulations. The use of the FPP concept is recommended in speed optimisation and job selection models.
Maritime speed optimisation, chain effect, dynamic programming, future profit potential
0191-2615
168-196
Ge, Fangsheng
e2de5b47-3d9a-47d5-a029-ea64069819f6
Beullens, Patrick
893ad2e2-0617-47d6-910b-3d5f81964a9c
Hudson, Dominic
3814e08b-1993-4e78-b5a4-2598c40af8e7
Ge, Fangsheng
e2de5b47-3d9a-47d5-a029-ea64069819f6
Beullens, Patrick
893ad2e2-0617-47d6-910b-3d5f81964a9c
Hudson, Dominic
3814e08b-1993-4e78-b5a4-2598c40af8e7

Ge, Fangsheng, Beullens, Patrick and Hudson, Dominic (2021) Optimal economic ship speeds, the chain effect, and future profit potential. Transportation Research Part B: Methodological, 147, 168-196. (doi:10.1016/j.trb.2021.03.008).

Record type: Article

Abstract

In this research, we study at which speeds an oceangoing ship should ideally travel on each of a series of legs of a journey as to maximise the Net Present Value (NPV) of the ship. A novel class of models for the ship speed optimisation problem, which we refer to as P (n, m, G o ) , is presented. It is based on incorporating cash-flow functions and is flexible in modelling journey structures of variable composition. By studying properties of optimal leg speeds within this NPV framework, we demonstrate two novel elements of ship speed optimisation: (a) When executing a series of identical journeys, optimal ship speeds from one execution of the journey to the next are shown to change. We refer to this as the chain effect . (b) The ship’s optimal speed is in general highly dependent on the decision maker’s views on the ship’s future profit potential (FPP). We present two efficient algorithms to solve the models. The methodology is applied to case studies based on the literature and the results are compared with classic model formulations. Net Present Value Equivalence Analysis (NPVEA) shows how the proposed framework increases understanding of the applicability and limitations of these classic model formulations. The use of the FPP concept is recommended in speed optimisation and job selection models.

Text
Ge Beullens Hudson Chain Effect and Future Profit Potential - Accepted Manuscript
Restricted to Repository staff only until 21 March 2023.
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More information

Accepted/In Press date: 21 March 2021
Published date: May 2021
Additional Information: Publisher Copyright: © 2021 Elsevier Ltd Copyright: Copyright 2021 Elsevier B.V., All rights reserved.
Keywords: Maritime speed optimisation, chain effect, dynamic programming, future profit potential

Identifiers

Local EPrints ID: 448805
URI: http://eprints.soton.ac.uk/id/eprint/448805
ISSN: 0191-2615
PURE UUID: af9ecaa6-0500-4f7d-8e52-f44d2fd69da6
ORCID for Patrick Beullens: ORCID iD orcid.org/0000-0001-6156-3550
ORCID for Dominic Hudson: ORCID iD orcid.org/0000-0002-2012-6255

Catalogue record

Date deposited: 06 May 2021 16:31
Last modified: 21 May 2021 01:42

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