Skip to main content
Log in

The impact of sulphur limit fuel regulations on maritime supply chain network design

  • S.I. : BALCOR-2017
  • Published:
Annals of Operations Research Aims and scope Submit manuscript

Abstract

Although the greening of the marine sector started over a decade ago, the emissions produced from ships and port operating equipment have been only recently perceived as issues to be addressed. On this basis, the International Maritime Organisation (IMO) decided to enact stricter sulphur limits on the fuel oil used by ships in Sulphur Oxide (SOx) Emission Control Areas in an effort to reduce the environmental impact of the vessel’s bunkers. In this respect, the purpose of the paper is to quantify the cost implications of the IMO revised regulations on the shippers’ traditional supply chain network design decisions through the development of a strategic Mixed Integer Linear Programming decision-support model. The applicability of the model is demonstrated on a realistic maritime supply chain operating within the East Asia—EU trade route. The results reveal that the implementation of the sulphur limits at the route’s ports may not affect the shippers’ network structure under the current fuel prices, as the optimally selected ports have cost effective hinterland transportation connections within the EU market, that make them preferable for the shipper, even though the network’s shipping costs increase.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2

(Source: MRV 2018)

Similar content being viewed by others

References

  • Abadie, L. M., Goicoechea, N., & Galarraga, I. (2017). Adapting the shipping sector to stricter emissions regulations: Fuel switching or installing a scrubber? Transportation Research Part D, 57, 237–250.

    Article  Google Scholar 

  • Armellini, A., Daniottia, S., Pinamontia, P., & Reinib, M. (2018). Evaluation of gas turbines as alternative energy production systems for a large cruise ship to meet new maritime regulations. Applied Energy, 211, 306–317.

    Article  Google Scholar 

  • Ballou, P., Chen, H., & Horner, J. D. (2008). Advanced methods of optimizing ship operations to reduce emissions detrimental to climate change, OCEANS. IEEE (pp. 8–11).

  • Bruzzone, A., Massei, M., Madeo, F., Tarone, F. (2010). Modelling environmental impact and efficiency in maritime logistics. In Proceedings of the 2010 summer computer simulation conference society for computer simulation international (pp. 433–438).

  • Cariou, P., & Cheaitou, A. (2012). The effectiveness of a European speed limit versus an international bunker-levy to reduce CO2 emissions from container shipping. Transportation Research Part D, 17, 116–123.

    Article  Google Scholar 

  • Cheaitou, A., & Cariou, P. (2018). Greening of maritime transportation: a multi-objective optimization approach. Annals of Operations Research, Special Issue: OR in Transport, 1–25.

  • Chhabra, A., Garg, S. K., & Singh, R. K. (2017). Analysing alternatives for green logistics in an Indian automotive organization: A case study. Journal of Cleaner Production, 167, 962–969.

    Article  Google Scholar 

  • Christiansen, M., Fagerholt, K., Nygreen, B., & Ronen, D. (2013). Ship routing and scheduling in the new millennium. European Journal of Operational Research, 228, 467–483.

    Article  Google Scholar 

  • Corbett, J. J., Wang, H., & Winebrake, J. J. (2009). The effectiveness and costs of speed reductions on emissions from international shipping. Transportation Research Part D: Transport and Environment, 14(8), 593–598.

    Article  Google Scholar 

  • Davarzani, H., Fahimnia, B., Bell, M., & Sarkis, J. (2016). Greening ports and maritime logistics: A review. Transportation Research Part D: Transport and Environment, 48, 473–487.

    Article  Google Scholar 

  • Euromonitor International. (2016). Statistics: Refrigeration appliances. Retrieved from Passport GMID, Euromonitor International. http://www.portal.euromonitor.com/portal/statistics/rankcountries. Accessed on March 01, 2017.

  • Fagerholt, K., Laporte, G., & Norstad, I. (2010). Reducing fuel emissions by optimizing speed on shipping routes. Journal of the Operational Research Society, 61(3), 523–529.

    Article  Google Scholar 

  • Fahimnia, B., Bell, M. G., Hensher, D. A., & Sarkis, J. (2015). Green logistics and transportation: A sustainable supply chain perspective. Berlin: Springer.

    Book  Google Scholar 

  • Freight Calculator. (2018). World Freight Rates. http://worldfreightrates.com/freight. Accessed on February 02, 2018.

  • Hermeling, C., Klement, J. H., Koesler, S., Kohler, J., & Klement, D. (2015). Sailing into a dilemma: An economic and legal analysis of an EU trading scheme for maritime emissions. Transportation Research Part A: Policy and Research, 78, 34–53.

    Google Scholar 

  • IMO. (2015). Third IMO Greenhouse Gas Study 2014. http://www.imo.Org/en/OurWork/Environment/PollutionPrevention/AirPollution/Documents/Third%20Greenhouse%20Gas%20Study/GHG3%20Executive%20Summary%20and%20Report.pdf. Accessed on January 18, 2018.

  • IMO. (2016) IMO regulations to reduce air pollution from ships and the review of fuel oil availability. http://www.imo.org/en/MediaCentre/HotTopics/GHG/Documents/sulphur%20limits%20FAQ_20-09-2016.pdf. Accessed on January 18, 2018.

  • Koesler, S., Achtnicht, M., & Köhler, J. (2015). Course set for a cap? A case study among ship operators on a maritime ETS. Transport Policy, 37, 20–30.

    Article  Google Scholar 

  • Kontovas, C. A. (2014). The Green Ship Routing and Scheduling Problem (GSRSP): A conceptual approach. Transportation Research Part D, 31, 61–69.

    Article  Google Scholar 

  • Kujanpää, L., & Teir, S. (2017). Implications of the new EU maritime emission monitoring regulation on ship transportation of CO2. Energy Procedia, 114, 7415–7421.

    Article  Google Scholar 

  • Lam, J. S. L. (2010). An integrated approach for port selection, ship scheduling and financial analysis. Netnomics: Economic Research and Electronic Networking, 11(1), 33–46.

    Article  Google Scholar 

  • Lam, J., & Gu, Y. (2013). Port hinterland intermodal container flow optimisation with green concerns: a literature review and research agenda. International Journal of Shipping and Transport Logistics, 5(3), 257–281.

    Article  Google Scholar 

  • Mallidis, I., Dekker, R., & Vlachos, D. (2012). The impact of greening on supply chain design and cost: A case for a developing region. Transport Geography, 22, 118–128.

    Article  Google Scholar 

  • Mallidis, I., Vlachos, D., Iakovou, E., & Dekker, R. (2014). Design and planning for green global supply chains under periodic review replenishment policies. Transportation Research Part E, 72, 210–235.

    Article  Google Scholar 

  • Mansouri, S. A., Lee, H., & Aluko, O. (2015). Multi-objective decision support to enhance environmental sustainability in maritime shipping: A review and future directions. Transportation Research Part E: Logistics and Transportation Review, 78, 3–18.

    Article  Google Scholar 

  • MRV. (2018). EU MRV regulation. https://www.dnvgl.com/maritime/eu-mrv-regulation/index.html. Accessed on January 18, 2018.

  • Psaraftis, H. N., & Kontovas, C. A. (2010). Balancing the economic and environmental performance of maritime transportation. Transportation Research Part D: Transport and Environment, 15, 458–462.

    Article  Google Scholar 

  • Sheng, D., Li, Z., Fu, X., & Gillen, D. (2017). Modeling the effects of unilateral and uniform emission regulations under shipping company and port competition. Transportation Research Part E: Logistics and Transportation Review, 101, 99–114.

    Article  Google Scholar 

  • Shi, Y. (2016). Reducing greenhouse gas emissions from international shipping: Is it time to consider market-based measures? Marine Policy, 64, 123–134.

    Article  Google Scholar 

  • Ship and Bunker. (2018). World Bunker Prices. https://shipandbunker.com/price. Accessed on February 02, 2018.

  • Sys, C., Vanelslander, T., Adriaenssens, M., & Van Rillaer, I. (2016). International emission regulation in sea transport: Economic feasibility and impact. Transportation Research Part D, 45, 139–151.

    Article  Google Scholar 

  • UNCTAD. (2017). Review of Maritime Transport 2017. http://unctad.Org/en/PublicationsLibrary/rmt2017_en.pdf. Accessed on January 18, 2018.

  • Wang, K., Fu, X., & Luo, M. (2015). Modeling the impacts of alternative emission trading schemes on international shipping. Transportation Research Part A, 77, 35–49.

    Google Scholar 

  • Wen, M., Pacino, D., Kontovas, C. A., & Psaraftis, H. N. (2017). A multiple ship routing and speed optimization problem under time, cost and environmental objectives. Transportation Research Part D, 52, 303–321.

    Article  Google Scholar 

  • Windeck, V., & Stadtler, H. (2011). A liner shipping network design–routing and scheduling impacted by environmental influences. In J. Pahl, T. Reiners, & S. Voß (Eds.), Network optimization. INOC 2011. Lecture Notes in Computer Science. Berlin: Springer.

    Google Scholar 

  • Wu, H. W., & Dunn, S. C. (1995). Environmentally responsible logistics systems. International Journal of Physical Distribution Logistics and Management, 25, 20–38.

    Article  Google Scholar 

  • Wu, Z., & Pagell, M. (2011). Balancing priorities: Decision-making in sustainable supply chain management. Journal of Operations Management, 29, 577–590.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to S. Despoudi.

Appendices

Appendix 1: Inbound and outbound transportation costs per mode of transport

See Tables 14, 15, 16 and 17.

Table 14 Truck Transportation Costs from the EPs to the DCs
Table 15 Rail Transportation Costs from the EPs to the DCs
Table 16 Barge Transportation Costs from the EPs to the DCs
Table 17 Delivery Truck Transportation Costs from the DCs to the RSs

Appendix 2: Lead times from Shanghai to the EPs and on to the DCs per mode

See Tables 18, 19 and 20.

Table 18 Lead time (days) from Shanghai to the EPs onto the DCs (Ship+Truck)
Table 19 Lead time (days) from Shanghai to the EPs onto the DCs (Ship+Rail)
Table 20 Lead time (days) from Shanghai to the EPs onto the DCs (Ship+Barge)

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Mallidis, I., Despoudi, S., Dekker, R. et al. The impact of sulphur limit fuel regulations on maritime supply chain network design. Ann Oper Res 294, 677–695 (2020). https://doi.org/10.1007/s10479-018-2999-4

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10479-018-2999-4

Keywords

Navigation