Optimization, risk assessment and resilience in LNG transportation systems

Abstract

PurposeThis paper aims to address how to systematically address vulnerability in a maritime transportation system using a formal vulnerability assessment approach, create quantitative measures of disruption risk and test the effect of mitigating measures. These quantitative data are prerequisites for cost efficiency calculations, and may be obtained without requiring excessive resources.Design/methodology/approachSupply chain simulation using heuristics‐based planning tools offers an approach to quantify the impact of disruption scenarios and mitigating measures. This is used to enrich a risk‐based approach to maritime supply chain vulnerability assessment. Monte Carlo simulation is used to simulate a stochastic nature of disruptions.FindingsThe exemplary assessment of a maritime liquefied natural gas (LNG) transportation system illustrates the potential for providing quantitative data about the cost of disruptions and the effects of mitigating measures, which are foundations for more precise cost efficiency estimates.Research limitations/implicationsThis simulation was done on a simplified version of a real transportation system. For resource reasons, several simplifications were made, both with regards to modeling the transportation system and with the implementation of the formal vulnerability assessment framework. Nevertheless, the authors believe the paper serves to illustrate the approach and potential outcome.Practical implicationsPractitioners are provided with an approach to get more precise quantitative data on disruption costs and cost/efficiency of mitigating measures, providing background data for decisions on investing in reduction of supply chain vulnerability.Originality/valueThe combination of risk assessment methods and inventory routing simulation of maritime supply chain problems is a novelty. Quantifying vulnerability, effects of disruptions and effects of mitigating measures in maritime transportation systems contributes to a little‐researched area.

Supply chain risk management: a literature review

“…Fourth, Wagner and Neshat (2010) and Berle et al (2013) both assessed supply chain vulnerability. Wagner and Neshat (2010) concluded that if supply chain managers were more capable of measuring and managing supply chain vulnerability, they could reduce the number of disruptions and their impact.…”

“…Wagner and Neshat (2010) concluded that if supply chain managers were more capable of measuring and managing supply chain vulnerability, they could reduce the number of disruptions and their impact. Berle et al (2013) argued identifying the "vulnerability inducing bottlenecks" of transportation systems allows for realizing more robust versions of these systems in a cost-effective manner.…”

Sustainable Liquefied Natural Gas Supply Chain Management: A Review of Quantitative Models

“…A stochastic MILP was applied to LNG supply chains to support the strategic planning processes with a focus on economics (i.e., infrastructure, vessels chartering and purchases and sales of LNG) [101]. The vulnerability in the LNG supply chain was addressed by Berle et al [102] through a vulnerability assessment approach and developed a stochastic model to measures disruption risks and tested the effect of mitigating measures using heuristics-based planning and the Monte Carlo simulation tool. The preliminary formulation of the scheduling problem was issued by Halvorsen-Weare et al [103] to ensure that all cargoes are serviced by one vessel with the minimum cost, without consideration for the berth capacity and inventory level constraints.…”

A binary particle swarm optimization algorithm for ship routing and scheduling of liquefied natural gas transportation

“…Gkonis & Psaraftis, 2009;Massol & Tchung-Ming, 2010). Furthermore, in studies such as Berle et al, (2013) and Biobaku et al, (2015), risk analysis tools are also applied in LNG shipping problems. It is noteworthy that, all the mentioned quantitative approaches, have tried to provide cost-effective solutions for both buyers and sellers across the LNG supply chain.…”