Optimization of the dimensions of dry bulk ships: The case of the river Rhine

A significant part of the cost of maritime transport is incurred at the start and end of the logistics chain, the hinterland transport. For this transport leg, the price of transport is a crucial decision driver for shippers. Since the European market for the transport of dry bulk goods is highly competitive the average price and cost of transport will be nearly equal over extended time periods. This implies that if a transport operator can lower his costs, he will improve his competitive position. In order to do so, operators have tried to maximize economies of scale by building bigger inland ships, but it is unclear whether the biggest ship leads to the largest benefits. In this article, the optimal dimensions of dry bulk ships intended for operation on the river Rhine, the main waterborne freight corridor in Europe, are established. The optimization is performed for two criteria: the ship-related elements of the freight rate and the total logistic costs. The results of this article suggest that the benefits of increasing the maximum allowed length of dry bulk ships on the Rhine will be limited but that wider ships can lead to a reduction in costs.