World Bunkering > News > Spring 2011 > Keeping the fleet afloat

Advances in technology have made shipping the most fuel-efficient and carbon-friendly form of commercial transport available. However, ship owners, operators and charterers have to navigate an intricate, multi-faceted and inter-dependent freight market and are at the mercy of hundreds of events that can impact the cost of transport – and hence profit margins – every day.

One of the hardest events to predict is price volatility for bunker fuel – which accounts for at least 25% of the cost of running a vessel. One factor that will certainly have an effect on costs is the implementation of the new MARPOL Annex VI rules, which are expected to increase the cost of fuel by a further 50% as result of the increased use of low-sulphur distillate fuel. Allowable sulphur content within ECAs will be reduced to just 0.1% in 2015, while outside these ECAs, shipowners will be obliged to reduce the sulphur content of fuel to 0.5%. The IMO rules therefore add to the complexity involved in planning routes effectively, ensuring the right ships make the right journeys and optimise fuel consumption.

The size of the available fleet also has to be borne in mind: too few or too many vessels directly affects prices, which in turn affects freight rates. And finally, trading finance and credit conditions can positively or negatively affect both investment spending and consumer activity.

Managing all these elements – and many more – is critical for successful shipping operations, particularly as prices of fuel, commodities, cargo, credit and vessel hire continue to fluctuate once a ship has embarked on its journey.

This is why shipowners, operators and charterers rely on an optimised ship plan that helps them minimise these risks associated with vessel operations. But in today’s complex market, creating just such an effective ship plan is beyond the ability of a chartering and operations department that is meeting weekly and using spreadsheets to manually match open vessels with potential cargos.

This approach is slow, unwieldy and unresponsive: it can only anticipate the voyage at hand, and not very well at that. It also omits critical data and ignores the interrelated nature of challenges faced by shippers. Attempting to develop a comprehensive and optimised ship plan solely on vessel-to-cargo match without analysing critical data on best routes against distance and schedules, or without investigating optimised combinations of bunker fuel, low sulphur zones, cargo and load for those routes has a sinking effect on overall margins.

Like all risk management operations, shippers need a realtime system that offers them complete visibility across all freight operations and that can turn vast amounts of static shipping data into actionable information that supports proactive decision-making and improved bottom-line results.

For example, with an intelligent, dynamic system shippers can make scheduling as efficient as possible, reducing partial loads on any given route, and optimizing the established port schedule to minimize ballast and waiting time. Ships can be better positioned for their next journey after discharging to eliminate empty, and thus profitless, journeys. Owners and charterers can easily incorporate information on vessel availability, type and draft restrictions, and keep track of day-to-day operations, arrivals, departures, loading, discharging, bunkering and disbursement accounting in order to maintain up-to-date, real-time voyage information – without having to delve through six separate databases to do so.

What’s more, a dynamic system can integrate information from pilots and captains as the vessel starts on its journey. If unexpected bad weather or adverse currents delay a journey, that information can be incorporated into existing ship plans. The ability to manipulate up-to-the-minute data ensures that estimates for voyage time, route distances, and bunker fuel are accurate – so mitigating the extensive costs as well as the possibility of unnecessary demurrage costs, missed laycans and even lost business.