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The Impact of Slow Ocean Steaming on Delivery Reliability and Fuel Consumption

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Document pages: 31 pages

Abstract: With a dominant volume of global transportation being conducted by sea, ocean container transport is having a great impact on the global economy by playing an essential role in global supply chains. During the recession in 2009, many ocean container carriers have accelerated the practice of slow steaming to absorb surplus capacity and cut costs, because sea vessels are drastically more fuel efficient at lower speed. It has since remained a widely adopted practice as a way to reduce bunker costs and carbon footprints. Though longer transportation lead time, a direct consequence of slow steaming, concerns players on the supply chain and can be costly sometimes, what has long been challenging and even more costly if not less for the whole supply chain is the unpredictability of the delay in ocean transport. In this paper, we propose a model to quantify the relationships among shipping time, bunker cost and delivery reliability. Moreover, we verify our model and results via numerical experiments by sampling from actual data from a large ocean carrier in Hong Kong. Our findings lead to a simple and implementable policy with a controlled cost and guaranteed delivery reliability.

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