Bunker risk management strategies in liner shipping companies part I : operational measures to reduce bunker risk

As a result of bunker price volatility and overcapacity in the shipping market, shipping lines are facing increasing pressure to mitigate their exposure to bunker risk. Apart from fiscal measures, liner shipping companies can only exercise control over operational measures to reduce cost. Hence this...

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Main Author: Lee, Amanda Rui Fang.
Other Authors: Teo Chee Chong
Format: Final Year Project
Language:English
Published: 2012
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Online Access:http://hdl.handle.net/10356/49452
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Institution: Nanyang Technological University
Language: English
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spelling sg-ntu-dr.10356-494522023-03-03T17:13:47Z Bunker risk management strategies in liner shipping companies part I : operational measures to reduce bunker risk Lee, Amanda Rui Fang. Teo Chee Chong School of Civil and Environmental Engineering DRNTU::Engineering::Maritime studies::Maritime management and business As a result of bunker price volatility and overcapacity in the shipping market, shipping lines are facing increasing pressure to mitigate their exposure to bunker risk. Apart from fiscal measures, liner shipping companies can only exercise control over operational measures to reduce cost. Hence this is an area they should actively pursue to reduce cost. Using “K” Line as a case study, two cost models were developed to reduce operational cost through increasing efficiency and profitability and reduce operational costs where possible. The first model, called the slow steaming model, enables companies to minimize their cost expenditures by reducing the cruising speed of their fleet to a speed that is more cost effective. In essence the model depicts how speed can be traded for cost effectiveness. While the slow steaming model is effective in reducing bunker costs, operational challenges surrounding its implementation require liner shipping companies to develop other cost reducing operational capabilities to supplement slow steaming. This include the second cost model presented in this report, called the bunker port choice and quantity model, which shows how having a flexible bunker port choice and bunkering quantity result as part of the optimal bunkering strategy per voyage can reduce cost. Finally, the interdependency of these two cost models with the Bunker Adjustment Factor (BAF) and Financial Hedging is presented, revealing supplementary avenues for liner shipping companies to mitigate bunker risk through a comprehensive bunker risk mitigating strategy. Bachelor of Science (Maritime Studies) 2012-05-18T08:03:32Z 2012-05-18T08:03:32Z 2012 2012 Final Year Project (FYP) http://hdl.handle.net/10356/49452 en Nanyang Technological University 49 p. application/pdf
institution Nanyang Technological University
building NTU Library
continent Asia
country Singapore
Singapore
content_provider NTU Library
collection DR-NTU
language English
topic DRNTU::Engineering::Maritime studies::Maritime management and business
spellingShingle DRNTU::Engineering::Maritime studies::Maritime management and business
Lee, Amanda Rui Fang.
Bunker risk management strategies in liner shipping companies part I : operational measures to reduce bunker risk
description As a result of bunker price volatility and overcapacity in the shipping market, shipping lines are facing increasing pressure to mitigate their exposure to bunker risk. Apart from fiscal measures, liner shipping companies can only exercise control over operational measures to reduce cost. Hence this is an area they should actively pursue to reduce cost. Using “K” Line as a case study, two cost models were developed to reduce operational cost through increasing efficiency and profitability and reduce operational costs where possible. The first model, called the slow steaming model, enables companies to minimize their cost expenditures by reducing the cruising speed of their fleet to a speed that is more cost effective. In essence the model depicts how speed can be traded for cost effectiveness. While the slow steaming model is effective in reducing bunker costs, operational challenges surrounding its implementation require liner shipping companies to develop other cost reducing operational capabilities to supplement slow steaming. This include the second cost model presented in this report, called the bunker port choice and quantity model, which shows how having a flexible bunker port choice and bunkering quantity result as part of the optimal bunkering strategy per voyage can reduce cost. Finally, the interdependency of these two cost models with the Bunker Adjustment Factor (BAF) and Financial Hedging is presented, revealing supplementary avenues for liner shipping companies to mitigate bunker risk through a comprehensive bunker risk mitigating strategy.
author2 Teo Chee Chong
author_facet Teo Chee Chong
Lee, Amanda Rui Fang.
format Final Year Project
author Lee, Amanda Rui Fang.
author_sort Lee, Amanda Rui Fang.
title Bunker risk management strategies in liner shipping companies part I : operational measures to reduce bunker risk
title_short Bunker risk management strategies in liner shipping companies part I : operational measures to reduce bunker risk
title_full Bunker risk management strategies in liner shipping companies part I : operational measures to reduce bunker risk
title_fullStr Bunker risk management strategies in liner shipping companies part I : operational measures to reduce bunker risk
title_full_unstemmed Bunker risk management strategies in liner shipping companies part I : operational measures to reduce bunker risk
title_sort bunker risk management strategies in liner shipping companies part i : operational measures to reduce bunker risk
publishDate 2012
url http://hdl.handle.net/10356/49452
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