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Dynamic speed choice in bulk shipping

Author

Listed:
  • Roar Adland

    (Norwegian School of Economics)

  • Haiying Jia

    (Center for Applied Research (SNF))

Abstract

Dynamic speed choice in real-life seaway and market conditions, when subject to technical and contractual constraints, is a highly complex problem. In this paper, we investigate dynamic speed choice using a large dataset of average sailing speeds for nearly 18,000 individual voyages as calculated from Automated Identification System (AIS) data. Using a set of multiple regression models, we expand the traditional analysis of speed determinants, from only macroeconomic variables to also include proxies for organizational constraints, operator quality, trading pattern, loading conditions, technical constraints and ship-specific variables. We find that owners do not appear to adjust vessel speeds based on freight market conditions and fuel prices, as argued in classical maritime economic theory. Instead, vessel-specific variables such as age and design speed, as well as operational factors such as loading conditions, show some explanatory power. The poor model fit may be due to factors outside our model, such as weather conditions and contractual limitations. From a policy point of view, the results actually suggest that higher fuel prices do not contribute to a reduction in vessel speeds and emissions.

Suggested Citation

  • Roar Adland & Haiying Jia, 2018. "Dynamic speed choice in bulk shipping," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 20(2), pages 253-266, June.
    • Handle: RePEc:pal:marecl:v:20:y:2018:i:2:d:10.1057_s41278-016-0002-3
    DOI: 10.1057/s41278-016-0002-3
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    References listed on IDEAS

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    1. Pierre Cariou & François-Charles Wolff, 2011. "Do Port State Control Inspections Influence Flag- and Class-hopping Phenomena in Shipping?," Journal of Transport Economics and Policy, University of Bath, vol. 45(2), pages 155-177, May.
    2. Assmann, Lisa & Andersson, Jonas & Eskeland, Gunnar S., 2015. "Missing in Action? Speed optimization and slow steaming in maritime shipping," Discussion Papers 2015/13, Norwegian School of Economics, Department of Business and Management Science.
    3. Olaf Jonkeren & Jos van Ommeren & Piet Rietveld, 2012. "Freight Prices, Fuel Prices, and Speed," Journal of Transport Economics and Policy, University of Bath, vol. 46(2), pages 175-188, May.
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    Cited by:

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    2. Giulia Brancaccio & Myrto Kalouptsidi & Theodore Papageorgiou, 2023. "The impact of oil prices on world trade," Review of International Economics, Wiley Blackwell, vol. 31(2), pages 444-463, May.
    3. Prochazka, Vít & Adland, Roar & Wolff, François-Charles, 2019. "Contracting decisions in the crude oil transportation market: Evidence from fixtures matched with AIS data," Transportation Research Part A: Policy and Practice, Elsevier, vol. 130(C), pages 37-53.
    4. Adland, Roar & Cariou, Pierre & Wolff, Francois-Charles, 2020. "Optimal ship speed and the cubic law revisited: Empirical evidence from an oil tanker fleet," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 140(C).
    5. Xiangang Lan & Xiaode Zuo & Qin Tao, 2023. "Container Shipping Optimization under Different Carbon Emission Policies: A Case Study," Sustainability, MDPI, vol. 15(10), pages 1-20, May.
    6. Bai, Xiwen & Cheng, Liangqi & Iris, Çağatay, 2022. "Data-driven financial and operational risk management: Empirical evidence from the global tramp shipping industry," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 158(C).
    7. Theocharis, Dimitrios & Rodrigues, Vasco Sanchez & Pettit, Stephen & Haider, Jane, 2019. "Feasibility of the Northern Sea Route: The role of distance, fuel prices, ice breaking fees and ship size for the product tanker market," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 129(C), pages 111-135.
    8. Cariou, Pierre & Halim, Ronald A. & Rickard, Bradley J., 2023. "Ship-owner response to carbon taxes: Industry and environmental implications," Ecological Economics, Elsevier, vol. 212(C).
    9. Pierre Cariou & Ronald A. Halim & Bradley J. Rickard, 2022. "Ship-owner Response to Carbon Taxes: Industry and Environmental Implications," Applied Economics and Policy Working Paper Series 320702, Cornell University, Department of Applied Economics and Management.
    10. Giulia Brancaccio & Myrto Kalouptsidi & Theodore Papageorgiou, 2020. "Geography, Transportation, and Endogenous Trade Costs," Econometrica, Econometric Society, vol. 88(2), pages 657-691, March.
    11. Bai, Xiwen & Lam, Jasmine Siu Lee, 2019. "A destination choice model for very large gas carriers (VLGC) loading from the US Gulf," Energy, Elsevier, vol. 174(C), pages 1267-1275.
    12. 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).

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