The effects of waiting times on the bunkering decision for tramp ships

Abstract

This study explores the influence of uncertain waiting times together with uncertain fuel prices, in the selection of bunker fuel stops for a shipowner engaged in tramp shipping. We analyze the stochastic bunkering waiting times in the bunkering optimization problem using scenarios constructed from vessels' Automatic Information System (AIS) records and test their relevance to the bunkering decision. Our findings highlight the tradeoff between port efficiency, as characterized by waiting times, and the economic advantages of purchasing bunkers from cheaper port options and finishing the voyage in higher-priced bunker regions. Although the absence of waiting time would have produced similar results in our empirical setup, introducing waiting times altered the dynamics, making a price-attractive port like Piraeus not as attractive when risk-aversion is modeled, particularly given the risk of prolonged waiting.