Robust Fleet Sizing and Deployment for Industrial and Independent Bulk Ocean Shipping Companies

Abstract

Fleet sizing and deployment is a central decision problem of bulk shipping organizations. However, business and shipping market cycles induce significant asset price and transport demand volatility, making strategic fleet sizing extremely challenging. We propose a mixed integer programming (MIP) model of the multi-period fleet sizing and deployment problem. We extend the basic MIP model into a robust optimization model in order to account for the inherent uncertainty of the problem. Our approach can assist companies with varying degrees of risk tolerance in deciding the sale, purchase, chartering, lay-up, and scrapping of ships, as well as the deployment of the active ships to contracts and geographic markets. A realistic case study is presented.