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Ship Speed and Fuel Consumption Quotation in Ocean Shipping Time Charter Contracts

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  • Albert W. Veenstra
  • Jan Van Dalen

Abstract

This paper presents an exploration of the process of setting warranted ship speed and fuel consumption in ocean shipping time charter contracts. We formulate a conceptual model in which warranted ship speed and fuel consumption are related to an underperformance claim. We test hypotheses concerning the explanation of warranted and fuel consumption from various contract terms, ship characteristics, and market variables based on an empirical model for warranted ship speed and fuel consumption and time charter fixture data. The analysis shows that although there are some obvious reasons for differences in warranted and design speed and fuel consumption, such as the age of the ship, there is also evidence that shipowners engage in strategic behaviour by quoting warranted speed and fuel consumption in time charter contracts that reflect the development of the market. © 2011 LSE and the University of Bath

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  • Albert W. Veenstra & Jan Van Dalen, 2011. "Ship Speed and Fuel Consumption Quotation in Ocean Shipping Time Charter Contracts," Journal of Transport Economics and Policy, University of Bath, vol. 45(1), pages 41-61, January.
    • Handle: RePEc:tpe:jtecpo:v:45:y:2011:i:1:p:41-61
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    Cited by:

    1. Beullens, Patrick & Ge, Fangsheng & Hudson, Dominic, 2023. "The economic ship speed under time charter contract—A cash flow approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 170(C).
    2. Rehmatulla, Nishatabbas & Smith, Tristan, 2020. "The impact of split incentives on energy efficiency technology investments in maritime transport," Energy Policy, Elsevier, vol. 147(C).
    3. Rehmatulla, Nishatabbas & Smith, Tristan, 2015. "Barriers to energy efficiency in shipping: A triangulated approach to investigate the principal agent problem," Energy Policy, Elsevier, vol. 84(C), pages 44-57.
    4. Pache, Hannah & Grafelmann, Michaela & Schwientek, Anne Kathrina & Jahn, Carlos, 2020. "Tactical planning in tramp shipping - A literature review," Chapters from the Proceedings of the Hamburg International Conference of Logistics (HICL), in: Jahn, Carlos & Kersten, Wolfgang & Ringle, Christian M. (ed.), Data Science in Maritime and City Logistics: Data-driven Solutions for Logistics and Sustainability. Proceedings of the Hamburg International Conferen, volume 30, pages 281-308, Hamburg University of Technology (TUHH), Institute of Business Logistics and General Management.

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