Bunker purchasing with contracts

    Research output: Contribution to journalJournal articleResearchpeer-review

    Abstract

    The cost for bunker fuel represents a major part of the daily running costs of liner shipping vessels. The vessels, sailing on a fixed roundtrip of ports, can lift bunker at these ports, having differing and fluctuating prices. The stock of bunker on a vessel is subject to a number of operational constraints such as capacity limits, reserve requirements and sulphur content. Contracts are often used for bunker purchasing, ensuring supply and often giving a discounted price. A contract can supply any vessel in a period and port, and is thus a shared resource between vessels, which must be distributed optimally to reduce overall costs. The Bunker Purchasing with Contracts Problem has been formulated as a mixed integer programme, which has been Dantzig-Wolfe decomposed. To solve it, a novel column generation algorithm has been developed. The algorithm has been run on a series of real-world instances with up to 500+ vessels and 500+ contracts, and provide near optimal solutions. This makes it possible for a major liner shipping company to plan bunker purchasing on a global level, and provides an efficient tool for assessing new contracts.
    Original languageEnglish
    JournalMaritime Economics & Logistics
    Volume16
    Pages (from-to)418-435
    ISSN1479-2931
    DOIs
    Publication statusPublished - 2014

    Keywords

    • Bunker purchasing
    • Liner shipping
    • Mathematical programming
    • Maritime optimization
    • Decomposition methods
    • Mixed integer programming

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