Profitability of Reduction of Speed and Fuel Consumption for Sea Going Bulk Carriers

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Abstract

Extremely high price of oil and consequently fuel used by sea going bulk carriers combined with very low freight rates - BDI (Baltic Dry Index), the main index of the freight market dropped from almost 12,000 to about 700 during the last four years - forced ship owners and operators to re-calculate speed and consumption parameters of their fleet. On the basis of speed/consumption parameters taken directly from ships, the average cost of marine fuel IFO and the freight market reported by The Baltic Exchange the author calculated the profitability of the reduction of speed for typical bulk carriers from about 26,000 to 80,000 DWT. Despite the extremely low freight market and very high price of fuel the savings due to the reduction of fuel consumption are generally consumed by time loss. The speed reduction may be profitable only for the group of the largest of the analyzed ships but every time ship operators have to take into consideration such consequences as the weather risk, positioning for the next employment, charter party obligations etc.

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Folia Oeconomica Stetinensia

The Journal of University of Szczecin

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