A Study on Economic Operation for Liner-Fleet by Fluctuation of Fuel Oil Price

Lee, Soo-Dong; Chang, Myung-Hee

Journal of Navigation and Port Research 2011;35(9):765-776.
Published online December 31, 2011.

Focusing on the Case of ‘H’ Shipping Company

A Study on Economic Operation for Liner-Fleet by Fluctuation of Fuel Oil Price

Abstract

For container shipping company, fuel oil prise is a considerable expense. Since 2008, fuel oil prises have risen dramatically. An increasing fuel oil price in container shipping, in the short term, is only partially compensated through surcharges and may affect earnings negatively. This study discusses the impact of an increasing fuel oil price and capital costs for vessels on the Asia-Europe trade of ‘H’ Shipping Company. According to the result of ‘H’ carrier’s operation in 2008, there were no cost differences between 8 and 9 vessels operations in case of fuel oil price with USD 169/tons while adopting USD 31,818 as a fixed cost. We can expect that the fuel oil price will not go lower than USD 200/Ton on the basis of current high oil price phenomenon. When the fuel oil price is over USD 200/ton, 9 vessel operation is more economic than 8 vessel operation even if the fixed cost is over USD 35,000.

Key Words: Fuel Oil Price;Capital Cost for Vessels;Economic Analysis;Liner-Fleet;High Oil Price