Optimal selection of multi-fuel engines for ships considering fuel price uncertainty

Abstract

Maritime transport serves as the backbone of international trade, accounting for more than 90% of global trade. Although maritime transport is cheaper and safer than other modes of transport, it often means long sailing distances, which often results in substantial fuel consumption and emissions. Liner shipping, a vital component of maritime transport, plays an important role in achieving sustainable maritime operations, necessitating the implementation of green liner shipping practices. Therefore, this study formulates a nonlinear integer programming model for a multi-fuel engine selection optimization problem to optimally determine ship order choice in terms of the fuel engine type, fleet deployment, fuel selection, and speed optimization, with the aim of minimizing the total weekly cost containing the weekly investment cost for ship orders and the weekly fuel cost. Given the complexity of solving nonlinear models, several linearization techniques are applied to transform the nonlinear model into a linear model that can be directly solved by Gurobi. To evaluate the performance of the linear model, 20 sets of numerical instances with, at most, seven routes are conducted. The results show that among 20 numerical instances, 16 sets of numerical instances are solved to optimality within two hours. The average gap value of the remaining four sets of numerical instances that cannot be solved to optimality within two hours is 0.51%. Additionally, sensitivity analyses are performed to examine crucial parameters, such as the weekly investment cost for ordering ships, the ship ordering budget, and the potential application of new fuel engine types, thereby exploring managerial insights. In conclusion, our findings indicate that equipping ships with low-sulfur fuel oil engines proves to be the most economical advantageous option in the selected scenarios. Furthermore, ordering ships with low-sulfur fuel, oil + methanol + liquefied natural gas engines, is beneficial when the weekly investment cost for such engines does not exceed $13,000, under the current parameter value setting.