Route Planning for Bulk Carrier MV Lotus Dawn - Assignment Example

Name} {Instructor} {Course} {Date} Route Planning for Bulk Carrier MV Lotus Dawn This report will examine the routing options for a voyage of the bulk carrier MV Lotus Dawn from Manila, Philippines to New York, and make a recommendation as to which of the three alternative routes – via the Panama Canal, via the Suez Canal, or via the Cape of Good Hope – will be the most practical in terms of trip time and costs. Because only limited information is provided about the ship and the costs that will be incurred, a number of assumptions will have to be made: Operating costs of the ship can be ignored – Besides fuel costs, the Lotus Dawn will also incur expenses for the consumption of diesel fuel to power generators, crew wages, food and consumable supplies, and wear-and-tear (depreciation) on the vessel. Because we do not have details of these costs, a completely accurate cost figure cannot be determined for any route. However, a comparative cost for each of the available routes can be determined based on refuelling and other known costs, and by following the simple rule of thumb that overall operating costs are directly proportional to the length of the voyage. Port costs at Manila and New York are already accounted for – Information is available for the tariffs, tolls, and other port costs for the bunker ports at Balboa, Panama, Cape Town, South Africa, and Port Said, Egypt, and for the transit of either the Panama or Suez canals. Since these are options they will have to be accounted for separately in the analysis, but the costs at the terminal ports in Manila and New York are fixed no matter which route the Lotus Dawn takes. Thus for the purposes of determining the most practical route, the costs at these two ports can be ignored. MV Lotus Dawn is an average-sized Panamax vessel – A “Panamax” is a bulk carrier of the maximum size capable of passing through the Panama Canal, typically of between 50,000 and 80,000 deadweight tonnes, up to 290 metres in length, 32 metres in beam, and 12 metres’ draft. (Vessel Classifications, n.d.) Because vessel weights, usually in gross tonnes, and sometimes lengths are used to determine canal transit fees and other port costs, the size of the Lotus Dawn must be known. Since it is not given, the assumption is made that the vessel is 65,000 dwt, 230 metres in length, with a beam of 25 metres and a draft of nine metres. A reasonable assumption of gross tonnage is 60% of dwt (Gjenvick-Gjønvik Group, 2010), which results in a figure of 39,000 gross tonnes and 26,000 net tonnes for the Lotus Dawn. Since the cargo is not specified, it is assumed to be dry bulk cargo. Eight hours for time in bunker port is added to the voyage – Although it is reasonable to add up to three days or 5% of the total sailing hours to an estimate for a laden voyage according Makkar (2005, p. 41), this can be added later, if desired, since the object of this analysis is to compare the route options and the ‘extra time’ factor is common to all the choices, in the same way port costs at Manila and New York are. Refuelling calculations are based on the vessel’s having a 5% reserve upon reaching New York – Just as a fuel reserve is specified for the ship’s arrival at the bunker port, it does not seem prudent to plan the voyage in such a way that the Lotus Dawn reaches its final destination with completely dry fuel tanks. Any of this assumed data, particularly vessel size and weight and per-hour or per-nautical mile operating costs, would help to make a more specific and accurate analysis and recommendation. Enough information is provided, however, to develop a reasonable comparison and justify a recommended route. Option 1: via the Suez Canal Departing from Manila at 1000 local time on 28 December 2010, the Lotus Dawn sails southward to Singapore, then northward through the Strait of Malacca to enter the Indian Ocean. The route then takes the ship westward across the Indian Ocean and the Gulf of Aden, northward through the Red Sea and the Gulf of Suez, with arrival at the southern end of the Suez Canal at Suez at 0000 local time on 20 January 2011. The northbound convoy through the Canal departs Suez at 0600, arriving in Port Said at approximately 2000 the same day. (Atlas Maritime Services, n.d.) Allowing eight hours for refuelling in Port Said, the ship will depart at 0400 local time on 21 January 2011 and sail to New York via the Strait of Gibraltar and the North Atlantic, arriving at 1500 local time on 9 February 2011. The total trip distance is 11,580 nautical miles, with a total transit time of 42 days, eight hours. Fuel requirements to reach Port Said, 6,398 nautical miles from Manila, are 795.59 tonnes (723.26 tonnes burned plus 72.33 tonnes reserve); at the given cost of $600 per tonne, this leg of the voyage costs $477,354. To reach New York, 5,182 nautical miles from Port Said, with a 5% reserve, 542.75 tonnes must be loaded at Port Said. At a cost of $570/tonne, this is an additional $309,368. Total cost for the transit of the Suez Canal is $185,230. (Leth Agencies, 2010) Port fees at Port Said, assuming the use of one tug and a pilot, total $15,328. (Rafimar Group, 2010) Total cost for the voyage from Manila to New York is $987,280. Option 2: via the Panama Canal Departing from Manila at 1000 local time on 28 December 2010, the Lotus Dawn sails southward to enter the Pacific Ocean via the San Bernardino Strait at the southern end of Luzon Island, then directly eastward to the port of Balboa on the Pacific end of the Panama Canal, a distance of 9,389 nautical miles, arriving at 0600 local time on 31 January 2011. Allowing eight hours for refuelling in Balboa and 12 hours’ transit time of the Panama Canal (according to the Panama Canal Authority, an average transit takes 8-10 hours), the Lotus Dawn will pass Colón, Panama at 0200 local time on 1 February 2011 and proceed to New York via the Windward Passage, a distance of 1,990 nautical miles. Estimated time of arrival in New York is 0700 local time on 8 February 2011. Total trip distance is 11,419 nautical miles, with a trip time of 41 days, nine hours. To reach Balboa with the specified ROB, 1,167.50 tonnes of bunker oil will be required, at a cost of $700,500. An additional 130.07 tonnes at $490 per tonne will be required to reach New York with 5% ROB, adding $63,734 for a total fuel cost for the voyage of $764,234. Port charges at Balboa will total $11,675. (Gateway Transit, n.d.) Toll charges for the Canal total $183,115 (Panama Canal Authority, 2009), resulting in a total cost for the entire voyage of $959,024. Option 3: via the Cape of Good Hope From Manila, the Lotus Dawn will sail southwest, passing the Sunda Strait and crossing the southern Indian Ocean to arrive in Cape Town, South Africa, 6,822 nautical miles from Manila, on 21 January 2011 at 2100 local time. Departing Cape Town at 0500 local time 22 January, the Lotus Dawn will sail 6,773 nautical miles to reach New York at 1000 local time 15 February 2011. The voyage covers 13,595 nautical miles in 48 days, 12 hours. The total cost for the voyage is $829,570, which is broken down as follows: 848.31 tonnes of fuel are required to reach Cape Town with the specified reserve, for a total cost of $508,986. An additional 726.81 tonnes at $425 per tonne are required to reach New York, for an additional fuel cost of $308,894. Port costs at Cape Town are quoted in South African Rands, so using the current exchange rate of 0.13665 USD = 1 Rand available from Oanda.com, fees charged at the Cape Town port amount to $11,690. (Mentor Shipping Agency, 2010) Recommendation The route via the Suez Canal is the least practical of the three, for several reasons. It is the most expensive of all three options, largely due to the high fuel cost at Port Said. There is also considerable risk in the route the ship must follow. The Lotus Dawn will pass Singapore and the Malacca Strait, a region of very high ship traffic, which presents some risk of an accident or a simple delay. More worrisome is the passage through the Somali pirate-infested waters of the Gulf of Aden, where 22 ships are still being held captive, with news of additional hijackings coming almost weekly. (“Status of seized vessels and crews in Somalia, The Gulf of Aden and the Indian Ocean”, 2010) The Lotus Dawn will also be passing through the North Atlantic in the winter, where weather conditions are notoriously severe. All things considered, the Suez Canal route is simply not a good idea. The remaining two options, sailing via Cape Town or the Panama Canal, are harder to eliminate. Both pass through safe and well-travelled waters, and the only obvious difference is that the Cape Town route is less expensive while the Panama Canal route saves time. Here is where the operating cost of the Lotus Dawn might be a significant factor. The difference in voyage cost otherwise is $129,454. Divided by the 7.13 days longer the Cape Town route will take gives a per-day figure of $18,156. In other words, if the per-day operating costs of the Lotus Dawn are less than $18,156 – excluding the cost of fuel, which has already been calculated – then the longer trip via Cape Town is still less costly than the route through the Panama Canal. Another factor to consider is the bottleneck the Panama Canal represents; the analysis made here assumes that the Lotus Dawn will not encounter heavy traffic or another problem in the Canal that would delay its passage. This might be optimistic; current waiting times for Canal passage are 24 to 36 hours for regular vessels. (Inchcape Shipping Services, 2010) Presumably this time can be reduced by planning ahead and securing a passage slot in advance of the ship’s arrival (Panama Canal Authority, 2010), but an unexpected problem could still cause a delay. The final deciding factor would be the requirements of the customer expecting the cargo in New York. If the delivery time can be flexible, the less-risky, lower-cost, but longer Cape Town route would be preferable. If the extra week to delivery is not acceptable, however, then the Panama Canal route would be the better choice – presuming that any expected delays in transiting the Canal would be known and accounted for ahead of time. Without the additional information described above it is difficult to make a definitive recommendation. Based on the information available now, however, it would appear that the route via Cape Town, while longer, would be the safest and most economical alternative, and should be the one chosen. References Atlas Maritime Services. (n.d.) “Suez Canal Guide”. Available from: http://www.atlas.com.eg/scg.html. Gateway Transit. (n.d.) “Panama Canal Handbook”. Available from: http://www.gatewaytransit.com/portexp.htm. Gjenvick-Gjønvik Group. (2010) “Ship Tonnage Explained - Deadweight, Cargo, Gross, Net, Displacement”. Gjenvick-Gjønvik Archives. Available from: http://www.gjenvick.com/SteamshipArticles/ShipTonnage/1932-06-28-ShipTonnageExplained.html. Inchcape Shipping Services. (2010) “Panama Weekly Report No. 31 – Aug. 5, 2010”. Available from: http://iss-marindo.com/Microsites/ NewsDetails.aspx?msid=18&newsid=4313. Leth Agencies. (2010) “Online Toll Calculator for Suez Canal Transit”. Available from: http://www.lethagencies.com/calculator.asp?Port=SUEZTREG. Makkar, Jagmeet. (2005) “Commercial Aspects of Shipping – Voyage Estimation”. Marine Engineers’ Review (India), December 2005, pp. 41-43. Available from: http://www.ics.org.hk/doc%5CMER0512.pdf. Mentor Shipping Agency. (2010) “Official Portnet Harbour Tariff Summary Effective 1 April 2010”. Available from: http://www.mentorshipping.co.za/cargo-sales-tariff.html. Panama Canal Authority. (2010) “Canal FAQ”. Available from: http://www.pancanal.com/eng/noticiero/canal-faqs/index.html. Panama Canal Authority (2009) “Tolls Table”. Available from: http://www.pancanal.com/ eng/maritime/tolls-table.pdf. Rafimar Group. (2010) “Port Said port”. Available from: http://www.rafimar.com/ ports/portsaid.htm. “Status of seized vessels and crews in Somalia, The Gulf of Aden and the Indian Ocean”. (2010) International News.to, 12 August 2010. Rogers Digital – World News. Available from: http://www.international.to/ index.php?option=com_content&view=article&id=548:-status-of-seized-vessels-and-crews-in-somalia-the-gulf-of-aden-and-the-indian-ocean-ecoterra-12-august-2010-&catid=36:news&Itemid=74. “Vessel Classifications”. (n.d.) Worldtraderef.com. Available from: http://www.worldtraderef.com/WTR_site/vessel_classification.asp. Read More