Eindhoven University of Technology MASTER Making Smart Use of the Maritime Heavy Lift Shipping Industry Smits, L.L
Total Page:16
File Type:pdf, Size:1020Kb
Eindhoven University of Technology MASTER Making smart use of the maritime heavy lift shipping industry Smits, L.L. Award date: 2016 Link to publication Disclaimer This document contains a student thesis (bachelor's or master's), as authored by a student at Eindhoven University of Technology. Student theses are made available in the TU/e repository upon obtaining the required degree. The grade received is not published on the document as presented in the repository. The required complexity or quality of research of student theses may vary by program, and the required minimum study period may vary in duration. General rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights. • Users may download and print one copy of any publication from the public portal for the purpose of private study or research. • You may not further distribute the material or use it for any profit-making activity or commercial gain Eindhoven, September 2016 Making smart use of the Maritime Heavy Lift Shipping Industry By L.L. (Lars) Smits Student identity number 0650460 In partial fulfilment of the requirements for the degree of Master of Science In Operations Management and Logistics Supervisors: Dr. M. Slikker, TU/E, OPAC Dr. E. Demir, TU/E, OPAC Company supervisors: John Slijkoord, Damen Shipyards Paul van Leeuwen, Damen Shipyards i TUE. School of Industrial Engineering. Series Master Theses Operations Management and Logistics Subject headings: Logistics, Maritime Shipping, Heavy Lift Shipping, Maritime Transportation. ii Abstract This master thesis describes a research conducted at Damen Shipyards. Damen Shipyards is Netherlands biggest shipbuilding company with customers located worldwide and different shipyards in Europa and the South East of Asia. One of the many challenges Damen is facing with their worldwide activities is about shipping the vessels to the customers. The shipping prices can vary greatly for different ships, for different routes and over time. When Damen can transport several ships at once usually the price per ship goes down. We investigate where these variations come from and how Damen can combine more transports in a cost effective manner. Furthermore there is the idea that a longer term planning will decrease the transportation prices received by shipping companies. Whether or not this idea is correct is investigated. This is done by a literature research about maritime shipping costs and heavy lift shipping costs, by interviewing some of the largest heavy lift shipping companies to see if the current way of working leads to optimal shipping costs. The most important conclusions are that currently there is no synchronized way of working between different product groups with regard to stock transportations. Some product groups are reactive in regard to stock transportations where others are proactive. A proactive approach increases the opportunities for stock transportations and lowers the overall logistic costs. Better internal information sharing between different Product Groups and the Deliveries department is needed that will also improve the chances of finding more cost efficient combination transportations. iii Preface This report shows the result of my Master Thesis performed at Damen Shipyards. This is the last requirement in the fulfillment of the Master Operations Management and Logistics in the direction of Operations Planning & Accounting. I have had much pleasure in the time I did this research at Damen and met a lot of great people. Furthermore I was introduced to the maritime industry and got hooked instantly. Therefore I am proud to say that I will be working for Damen soon! I would like to thank Paul van Leeuwen and John Slijkoord who were supervising me throughout this study. I have learned a lot from your experiences on all kinds of interesting topics. Although I sometimes had the idea that you were not convinced of the direction I was heading or you would already know the answers you gave me time and room to develop these insights myself. If I had questions you always tried to help me or showed me where I could find the answers. Furthermore I would like to thank all direct colleagues for the help and the fruitful and pleasant collaboration. I also would like to thank dr. M. Slikker and E. Demir. You have always provided me with honest and constructive feedback. You gave me a lot of freedom to think of creative solutions and gave me good guidance to deliver a nice end product. This Master Thesis is the end of my three year master program at the Technical University of Eindhoven. From the moment I started I had a lot of fun with my classmates. We had a lot of fun in trying to find answers to questions in class as well as outside of class. This is a nice opportunity to thank my family. My parents and brother. Without them I would not have been able to pull this off. iv List of Abbreviations AST: Area Service Team BOF: Basic Ocean Freight BR: Berth Rate CC: Capital Costs CDF: Cumulative Distribution Function DPC: Daily Port Costs DWT: Deadweight FC: Fuel Consumption FCB: Fuel Consumption at Berth FCS: Fuel Costs Sea GRT: Gross Registered Tonnage I: Initial Investment Costs IC: Interest Costs L/C: Letter of Credit LC: Loading Costs MC: Maintenance Costs MEC: Main Engine Capacity MT: Metric Ton MTO: Make To Order MTS: Make To Stock MWS: Marine Warranty Surveyor nm: Nautical mile OC: Operating Costs OOPC: One-off Port Costs PC/UMS: Panama Canal Universal Measurement System PG: Product Group POD: Port/Place of Discharge POL: Port/Place Of Loading PTCC: Percentage Total Charged costs to Customer RSM: Regional Service Manager SCNT: Suez Canal Net Tonnage SR: Sea Rate SUBC: Ship Utilization by Customer cargo SWL: Safe Weight Load TEU: Twenty feet Equivalent Unit TU: Trip Utilization UNCTAD: United Nations Conference on Trade and Development w/m: Weight or Measurement WACC: Weighted Average Cost of Capital v Management summary Very fluctuating costs for heavy lift shipping in a worldwide maritime environment is what Netherlands’ biggest shipbuilding company Damen Shipyards has to deal with on a daily bases. There are concerns that current mid- to short term planning of heavy lift is not optimal in receiving the best possible offers from shipping companies. Furthermore Damen is trying to find a way how to optimally make use of their size to make more cost efficient stock transportations. Last but not least this study quantifies the value of offering more flexibility towards shipping companies. Research questions The following research questions were developed. The main question is: How can maritime heavy lift transportations for complete vessels be designed in an efficient way and what are the impacts on costs and delivery performance? In order to be able to answer this research question three sub-research questions are formulated that need to be answered in advance: 1. What are the current processes in the delivery of complete vessels, what types of activities and factors influence cost and delivery performance and how is current performance measured? 2. What is the value of offered flexibility by customers and what factors influence this value? 3. What processes need to be redesigned to go to a longer-term planning and what would be the consequences on the flexibility towards the customer? Method By describing the internal processes at sub question 1 insights are provided about the internal structure for the heavy lift deliveries. Where the first sub question is more internal oriented, answering the second sub question gives information about external factors such as market structure and the associated costing structure. This is answered with use of literature research (Smits, 2016) and by discussing with heavy lift shipping companies. The information provided by answering sub research question 1 and 2 is used as input for a simulation tool to assess the costs in maritime shipping for a shipping company. After these two questions are answered an answer can be provided for the last sub research question. Possible gaps between the internal way of working and the external market structure can be evaluated. Results Most factors that influence cost and delivery performance are outside of the organization. These factors are among others the position within a trade network, trade imbalances, complementarity of trade, competition, liner services, connectivity, distance but also the volume or weight of the shipped product are all influencers of costs for maritime shipping. There are some internal factors as well. The amount of offered flexibility for instance can lower the shipping prices. Figure 1 shows the cost structure for one simulation run of the ASD3412ICE for the route Ha Long – Vera Cruz with 28 days of flexibility. The x-axis shows the number of heavy lift ships that are able to lift the vi cargo based on the Safe Weigh Load of the cranes on board, in this case there are 32 ships. The y-axis shows the costs in Euro. The costs are already sorted from low to high. The dark blue bars show the mobilization costs, the blue bars show the loading costs, the aqua colored bars show the sea voyage costs, the green bars show the canal passage costs, the orange bars show the unloading costs and the yellow bars show the demobilization costs. The red crosses show the utilization rates for each specific ship which can be read in the y-axis on the right. Figure 1: Cost structure of shipment of ASD3212ICE. Also combining the transportation of multiple ships can have a significant impact on the price per ship received from shipping companies.