Commentary | Green Landscape

Optimized Operations Are Green Operations

Tags: Ocean, Green Logistics, Ports

Kris Kosmala, Vice President Asia Pacific, Quintiq, 610-964-8111

Many companies in the ocean shipping industry are coping with increasing operating costs, below break-even performance, and aggressive price competition. Under these circumstances, the environmental impact of shipping, and ways to minimize its harmful emissions, are pushed into the shadow of more urgent cost-cutting activities.

In the meantime, governments around the world continue introducing environmental policies and regulations that impact the development of ships, ports, and operating procedures, aiming to facilitate greener operations on land, at sea, and at port. The good news is that even though environmental regulations are burdensome, green operations can yield efficiency and improved profits.

In port, shipping lines have already made significant progress to optimize operations, leading to reduced costs and environmental impact. Better organization of stacks and access lanes within the terminals allow for fluid movement of equipment, shorter driving distances while moving containers about the yard, and faster truck turnaround.

Switching to electricity and alternate fuels to power the equipment brings additional economic and environmental benefits. On the ship side, however, there is still more to do. There is a dearth of breakthrough designs for hulls, engines, and the propulsion systems to make a significant impact. Even the latest generation eco-vessels only tinker with the old and proven technologies.

Taking the Airlines' Lead

As vessel technology slowly evolves, better economics can be found in optimizing operating policies and procedures. As much as ocean shippers may dislike being compared to airlines, they may find guidance in the way air carriers adapted to high fuel prices, overcapacity, conflicting environmental regulations, relentless competition, and fleet modernization dilemmas.

Like air cargo shipping, ocean shipping operations benefit greatly from departing the port seamlessly, gradual speed increase, maintaining a steady cruising speed, gradual speed decrease, and docking into port without error or interference.

It is estimated that each nearshore and port call produces about 30 percent of the total journey's pollution. The more seamlessly vessels transition between ports, the greener and less costly the voyage.

Ideally, the existing inventory of vessels varying in age, sailing capability, and engine design could be upgraded to the latest eco-designs. The timing of decisions to replace old vessels with new ones has a big impact on the bottom line. Rejuvenating the fleet in accordance with the pace of economic events ordering newbuilds at the bottom of the market, and disposing of older vessels at the top of the secondhand market is an art in itself.

Until all ships are fresh eco-builds, the key green decisions affecting fleet economics are sailing speed, and fuel type and chemical makeup. The former impacts the deep sea segment of the voyage, while the latter impacts the vessel once it is close to shore or in port.

Ocean lines should use modern optimization technologies to model complex plans requiring evaluation of multiple operating constraints and complex business rules, then simulate their execution and financial impacts to select the most viable plan for implementation. At sea, the combination of sailing speed, day rate, and utilization represents another opportunity to optimize, and logistics managers can explore these factors with the help of planning optimization technologies.

Closer to shore, however, the situation requires different approaches. Various jurisdictions have differing interpretations of ISO 8217 on their books, and additional environmental regulations come into play at different nautical distance from shore. It is here that greater collaboration between shippers and ports could save money and, in the process, greatly benefit the environment. Currently, most ports utilize relatively simple tools to schedule slots and sequence vessels' arrivals and departures. They have not fully explored the potential of advanced supply chain planning and optimization platforms to manage berth access and collaboratively plan with the shippers. Typically, the ship steams according to the economics of the shipper not according to the availability of the berth to accommodate the ship immediately upon arrival at the destination. A vessel missing its slot, then anchored for days and waiting for the new available berthing slot is bad news for the shipping line, its customers, and for the environment.

Every party in the shipping industry is trying to make a difference on its own. But it is their collaborative efforts and how they use available optimization IT solutions that will see them reap the benefits and have a profound effect on the longevity of their business, and society at large.