The effect of oil price on container-ship speed and fleet size

The changing prices of bunker fuel open the door for substantial cost savings by adjusting the sailing speed of ships. A large ship may be burning up to 100 000 USD of bunker fuel per day, which may constitute more than 75% of its operating costs. Reducing the cruising speed by 20% reduces daily bunker consumption by 50%. However, in order to maintain liner service frequency and capacity, reducing the cruising speed may require additional ships to operate a route. We construct a cost model that we use to analyse the trade-off between speed reduction and adding vessels to a container line route, and devise a simple procedure to identify the sailing speed and number of vessels that minimize the annual operating cost of the route. Using published data, we demonstrate the potential for large-cost savings when one operates close to the minimal-cost speed. The presented methodology and procedure are applicable for any bunker fuel price.