Voyage charterparty arrangement for river tramp shipping: Green and traditional vessels comparison

Abstract

Voyage charterparty arrangement (VCA) for river shipping is a common agreement between a shipowner and a charterer regarding the transportation of specific cargoes from one port to another via a tramp vessel. Optimizing VCA with the essential terms such as laytime and sailing speed of the vessel, is a crucial task for both parties to reduce potential disputes and achieve win-win outcomes. This paper models the problem from two perspectives: the VCA negotiation stage and execution stage. Firstly, according to the given probability distribution of port time, the theoretically optimal laytime is obtained by using textbook formulation of newsvendor problems (NVP). On this basis, considering the concerns about the inaccuracy of the given probability distribution and the adjustment measures taken by charterers and shipowners in reality, an integrated adjustment model is constructed to determine the optimal laytime in the VCA negotiation stage. Secondly, taking into account the vessel's uncertain lock crossing time, an operations coordination model with information sharing of the berth plan is established to obtain the optimal sailing speed under a certain confidence level in the VCA execution stage. Finally, a case study of chartering tramp vessels on the Yangtze River validates the applicability and effectiveness of the models proposed in this paper, and some important management insights are derived. The results show that establishing lower optimal speed limits and relatively shorter laytime when signing a contract with the shipowner of green river vessels is reasonable for the charterer. By notifying the shipowner of the berth plan after the green river vessel crosses through the lock, the charterer can avoid higher demurrage costs due to speeding-up. Operations coordination would be mutually beneficial without abusing the contract terms. Compared to traditional river vessels, it's more reasonable to reduce the benefits allocated to charterers from the deceleration of green river vessels by shipowners.