Vessel capacity restrictions in the fleet deployment problem: an application to the Panama Canal

Abstract

This paper analyses the consequences of the upcoming Panama Canal expansion using a liner fleet deployment model (LFDM) applied to the container shipment routing problem. As the canal capacity will be increased in 2016 from 5000 TEUs to 13,000 TEUs vessels, new options will be offered to container liner shippers. Some earlier work has suggested impact on shipping patterns, transshipment and cost structures. We derive optimal results for a MIP implementation of the LFDM adapted to the Panama Canal problem for demand scenarios on different international container traffic routes corresponding to a range of ±17 % of the actual Canal traffic in 2014. Our results show positive effects on total costs from fleet redeployment of larger vessels to the Canal-crossing routes, leading to lowered vessel costs and higher utilization rates. The expansion is also environmentally advantageous since the fleet composition will induce lower bunker fuel consumption and thereby lower CO 2 emissions. However, the total Canal costs are still predicted to be a minor proportion of the cost basis without incentives for additional or alternative Canal capacity.

The Panama Canal Expansion

“…Similarly, Rodrigue (2015) warned about the exaggeration of expected benefits from the Panama Canal expansion because this new project would not change current trends in the global market. Moreover, this research agrees with Herrera et al (2017), who argued that although transshipment represents an important percentage of container movement in ports, the Panama Canal expansion would not exert a significant effect on the percentage of transshipment movement. Although this research only studied six transshipment ports located in the Republic of Panama, the result partially validated similar predictions in different regions.…”

“…To test the hypotheses regarding the Panama Canal expansion's effect on the port cargo throughput of transshipment ports, this research used the Wilcoxon signed-rank test. This test, developed by Frank Wilcoxon in 1945, is a non-parametric statistical method to analyze whether there is a significant difference between two or more sets of pairs (Hayes, 2021). In other words, this test can compare several subjects under two different conditions (Scheff, 2016).…”

Fleet Repositioning, Flag Switching, Transportation Scheduling, and Speed Optimization for Tanker Shipping Firms

“…Ref. [26] presented an MIP model adapted to the fleet deployment problem of the Panama Canal and argued that reallocating large ships to Canal-crossing routes could positively affect the total operational costs. Additionally, flag switching is a strategy employed by tanker shipping firms to circumvent EU oil sanctions, highlighting the need for research into fleet repositioning that incorporates flag switching, a topic currently overlooked in the literature.…”

Examining the opportunities and challenges of the Kra Canal: a PESTELE/SWOT analysis

“…Taking the Panama Canal as a case, the expansion project cost of Panama Canal in 2016 was estimated to be US$ 5.25bn [7] and only accounts for quarter cost when comparing the Kra Canal (US$ 28bn). The reduction distance of Kra Canal and Panama Canal are 750 and 15,000 nautical miles, respectively (Rahman et al, 2016;Herrera et al, 2017). Thus, the distance reduction effect of Kra Canal is significantly lower than the Panama Canal, and shipping companies will need to decide whether the weakness of the level of the toll outweighs the strength of the reduced oil consumption and distance travelled.…”