2020 has been a challenging year for the shipping industry. With low oil production and falling global demand, many oil and product tankers operate at a loss, the market for chemicals is hampered by uncertain economic pressures, and operators worldwide are forced to optimize their processes while continuing to provide service. Shipping lines, already feeling pressure to reduce costs and increase environmentally sustainable practices, are finding their vessels rushing from one port to the next, in a counterproductive and costly game of “hurry up… and wait”. Conventional wisdom holds that “A ship in harbor is safe, but that’s not what ships are built for.” Unfortunately, with increased congestion in global ports, and tightened markets, a ship waiting in harbor is an expensive risk.
Idling at anchorage burns fuel, opens the vessel to substantially increased risk for safety/security/environmental incidents, and as she waits, service and maintenance costs stack up. In good markets, this can lead to artificially inflated freight rates, raised emissions, and operational risk, but in poor markets, shipping lines are hammered with the same increased costs while potentially losing money for each day on the water. According to Bimco, VLCCs in August and September operated at an average operational loss of 7,000 USD/day, and LR2 freight rates, which stood above 40,000, now are half of that at 20,500. In addition, a vessel at anchorage often represents significant opportunity costs wasted that shipping lines could have taken advantage of with just in time planning.
What does it cost when a vessel steams too quickly?
While consumption rates vary by ship design, hull coating, and engine efficiency, fuel costs generally rise exponentially as speed rises. Consider this calculation from the International Association of Maritime Economists: an 8,000 TEU vessel steaming at 24 knots burns 225 tons of bunkers daily. That same vessel steaming at 21 knots burns 150 tons per day. Even with 2020’s low fuel prices, few companies can afford to burn 25,000 USD/day per vessel.
In the public consciousness, our maritime industry is too often portrayed as a series of one-way chutes. Consumer goods from China to Europe and the Americas. Crude oil from the Arabian peninsula to the refining hubs of BeNeLux, the US Gulf Coast, or East Asia. Iron ore from Australia and South America to the steel production centers in China, Europe, and the US. But when ships move, the more nuanced nature of commercial realities begin to take shape.
Lines jockey for position in complex lanes, and trading companies in the bulk sector can be selling products to customers for discharge even as pilots make their way to the pilot boarding place. Because of this, marine planning often lags behind other transportation sectors and relies heavily on last-minute changes and 24-7 operator availability. While airlines plan arrivals/departures for minute-by-minute slots, often days or weeks in advance, shipping lines are hampered by a lack of transparency in the ports and harbors that they visit.
How to optimize vessel voyage for just in time arrival?
The last vestigial remnant of an isolationist mindset, global shipping, has spent the last twenty years adapting to rapidly increasing information sources. While shipping lines relied on networks of observers, agents, and local offices to even locate their vessel at the turn of the millennium, now GPS and AIS are accessible from every smartphone and computer. With PortXchange, companies are taking that next step: taking advantage of forward planning potential to optimize their voyages for just in time arrival.
PortXchange uses a network of global sources to track, monitor, and predict vessel movements as soon as an arrival is planned at the port. Below, a recent example shows that when a vessel left Klaipėda for Rotterdam, PortXchange used machine learning algorithms, as well as multiple databases of the vessel and terminal details to constantly update the shipping line on predicted arrivals at the Pilot Boarding Place, and allows lines to adapt their speed to save bunkers and CO2. This vessel, which idled then sped up, could have saved 3,000 USD in a 72 nautical mile stretch by taking advantage of the information available.
So, what is PortXchange to shipping lines? Put simply: a valuable tool in the bag for operators juggling a half-dozen scheduling and operational variables. The forward planning capabilities of the system allow users to optimize vessel speed before the port and more efficiently move in-and-out once arrived.
PortXchange occupies a unique place in the market: as trusted industry experts, the platform allows agents, lines, terminals, port authorities, and service providers to share their forward planning without jeopardizing commercial terms or cargo details. For example, when a crude vessel leaves the north coast of South America heading for the US Gulf, it doesn’t matter what other products are moving through their destination berth. But knowing that the terminal plans for two vessels to complete load/discharge operations beforehand and that those vessels will spend a total of 48 hours alongside gives the line valuable information to pass along to the ship’s master, which allow the vessel to set optimal speed… instead of arriving at anchor early only to wait on hot-standby for terminal readiness. Even in the chemical trade, where PortXchange is currently being piloted in the Port of Houston, knowing a terminal schedule can make the difference between making a short trip to a nearby port or idling for days.
Ships make money when they’re moving cargo. Container lines have been using the PortXchange platform for several years, successfully reducing emissions, reducing idle time, saving bunkers, and optimizing sailing schedules. We are proud to have expanded to the liquid bulk market and stand ready to assist any trade lane or shipping line looking to sharpen their competitive edge.