Optimizing voyage charterparty (VCP) arrangement: Laytime negotiation and operations coordination

Qinghe Sun, Qiang Meng, Mabel C. Chou

Research output: Journal article publicationJournal articleAcademic researchpeer-review

8 Citations (Scopus)

Abstract

Voyage charter(VC) is a shipping arrangement between a shipowner and a charterer for the carriage of specific cargo from one port to another port on a per-ton or lump-sum basis. In this paper, we present innovative applications of operational models to optimize voyage charterparty (VCP) arrangement for commercial shipping from the contract negotiation stage to its execution stage. We develop novel models to support decision makings of stakeholders, charterer (he) and shipowner (she), under established admiralty law, considering essential terms such as laytime, demurrage and despatch. Firstly, we consider a risk-neutral charterer's optimal laytime decision under uncertain berth availability and weather conditions. Following that, we study the impacts of speed adjustment on the related profit of the two parties. We show that under some circumstances, a shipowner can speed up to the extent that the increase in demurrage revenue compensates the extra cost of bunker fuel expenditure. Operations coordination leads to the mutual benefits of stakeholders.

Original languageEnglish
Pages (from-to)263-270
Number of pages8
JournalEuropean Journal of Operational Research
Volume291
Issue number1
DOIs
Publication statusPublished - 16 May 2021
Externally publishedYes

Keywords

  • OR in maritime industry

ASJC Scopus subject areas

  • General Computer Science
  • Modelling and Simulation
  • Management Science and Operations Research
  • Information Systems and Management

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