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

31 Pages Posted: 15 May 2012 Last revised: 1 Oct 2013

See all articles by Chung-Yee Lee

Chung-Yee Lee

Hong Kong University of Science & Technology (HKUST) - Department of Industrial and Engineering and Logistics Management

Hau L. Lee

Stanford Graduate School of Business

Jiheng Zhang

HKUST

Date Written: January 7, 2013

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.

Keywords: slow steaming, ocean container transport, shipping time, bunker cost, delivery reliability, Markov chain

Suggested Citation

Lee, Chung-Yee and Lee, Hau L. and Zhang, Jiheng, The Impact of Slow Ocean Steaming on Delivery Reliability and Fuel Consumption (January 7, 2013). Available at SSRN: https://ssrn.com/abstract=2060105 or http://dx.doi.org/10.2139/ssrn.2060105

Chung-Yee Lee (Contact Author)

Hong Kong University of Science & Technology (HKUST) - Department of Industrial and Engineering and Logistics Management ( email )

Clear Water Bay
Kowloon
Hong Kong

Hau L. Lee

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Jiheng Zhang

HKUST ( email )

Clear Water Bay
Kowloon
Hong Kong

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
487
Abstract Views
2,203
rank
69,351
PlumX Metrics