Implication Just-in-Time

It is not difficult to make an economic analysis of just-in-time in relation to various ship costs including fuel costs as well as ship air emissions during passage and in port. Numerous analyses including the one carried out by INTERTANKO and OCIMF on virtual arrival shows the benefits. Based on the study by INTERTANKO and OCIMF (2010) for a typical ship, Virtual Arrival gives a 43% reduction in the ship’s voyage fuel consumption. Of course this number will depend on ship type, size, voyage characteristics and current port times. Nevertheless all indications are that if just-in-time is realized, the saving levels will be in double digit numbers. Firstly, the fuel consumption and the amount of CO2 emissions are sensitive to the changes of port time. As port time decreases, the fuel consumption and the amount of CO2 emissions are sharply reduced (assuming total voyage time is fixed). This result means that port time has a big impact on efficient ship operations. The reduction of port time, or minimization of waiting time through just-in-time arrival and departure, improvement of berth productivity and simplification of the administration process, lead not only to the reduction of the operating cost but also to the improvement of the environmental performance of the shipping industry. In particular, this result tells us why port selection (or choice) is important to shipping lines. In other words, when a shipping line establishes and/or improves their service loop based on the calling ports that have high productivity and efficiency, they can improve their ship operational efficiency by minimizing their operating cost and the amount of CO2 emissions. Secondly, as vessel size increases, the impacts of the changes of port time on the operating cost and the amount of CO2 emissions also increase. This result implies why port time is more important to a shipping line that operates larger vessels. Moreover, this result tells us why shipping lines have been focusing on the development of their own container terminals on the major routes. Namely, the larger vessel is more sensitive to unstable port operations and non-production times in port, and this leads to an increase in operating costs and acceleration in the amount of CO2 emissions. In summary, terminal operators have to improve their operational efficiency. This is because the improvement of operational efficiency leads not only to strengthen their own competitiveness but also to contribute to the reduction of costs and the amount of CO2 emissions in the liner shipping industry. A simple exercise is provided in the next section to demonstrate the benefits of port operation improvements.

A simple estimated level of fuel saving and CO2 reductions

Figure below show the actual operation times for a specific ship, denoting that 23.3% of her time is spent in ports (combined berth and anchorage) (MariEMS 2017).

Figure 37: Ship’s times in passage, port and manoeuvring (MariEMS 2017).

The same ship was analysed for number of port calls and just-in-time operations and the required time for just-in-time operation was estimated. If operated according to port just-in-time, the ship time in port will reduce from 23.3% to 16% (a reduction of about 30% of port time). For calculation purposes, it is assumed that the ship would in practice get partial just-in-time operations and thus port time could be reduced from 23.3% to 20.3% in a real feasible scenario. It is further assumed that the extra time gained from better port operation will be used in passage, thus increasing the in-passage periods from 75.2% to 78.2%. This extra time will then be used to proportionally reduce the in-passage ship speed, assuming that the total annual number of port calls will remain the same. The reduced ship speed is then converted to fuel consumption reduction using the well-known cubic relationship between ship speed and required propulsion power. CO2 Emissions reduction is estimated using fuel consumption reduction and relevant emissions factors. Table 5 below shows the result of this simple calculation in terms of ship fuel consumption reduction, denoting a reduction of more than 1,000 tonnes of fuel consumption per year.

Table 5: Estimated ship fuel consumption and emissions reductions (MariEMS 2017).

This exercise shows how effective the port times could be on overall energy efficiency of a ship and how large gains could be achieved via better port related operations.