Dynamic speed choice in bulk shipping

• Published in: Maritime economics & logistics Vol. 20; no. 2; pp. 253 - 266
• Main Authors: Adland, Roar, Jia, Haiying
• Format: Journal Article
• Language: English
• Published: London Palgrave Macmillan UK 01.06.2018; Palgrave Macmillan
• Subjects: Business and Management; Economic conditions; Logistics; Maritime industry; Markets; Multiple regression models; Operations Management; Original Article; Policies; Pricing; Regression analysis; Sailing; Shipping; Ships; Speed limits; Weather; AIS data; fuel prices; freight rates; bulk carriers; speed; slow steaming
• ISSN: 1479-2931; 1479-294X
• DOI: 10.1057/s41278-016-0002-3

Dynamic speed choice in real-life seaway and market conditions, when subject to technical and contractual constraints, is a highly complex problem. In this paper, we investigate dynamic speed choice using a large dataset of average sailing speeds for nearly 18,000 individual voyages as calculated from Automated Identification System (AIS) data. Using a set of multiple regression models, we expand the traditional analysis of speed determinants, from only macroeconomic variables to also include proxies for organizational constraints, operator quality, trading pattern, loading conditions, technical constraints and ship-specific variables. We find that owners do not appear to adjust vessel speeds based on freight market conditions and fuel prices, as argued in classical maritime economic theory. Instead, vessel-specific variables such as age and design speed, as well as operational factors such as loading conditions, show some explanatory power. The poor model fit may be due to factors outside our model, such as weather conditions and contractual limitations. From a policy point of view, the results actually suggest that higher fuel prices do not contribute to a reduction in vessel speeds and emissions.