The encyclopedia · Engineering & Operations · Operational decision · 2011–2013
Danaos routed its whole boxship fleet by revenue, not the cheapest mile
Danaos's ORISMA toolkit chooses routes and speeds to maximize fleet revenue, weighing fuel, weather and charter rates together.
Danaos Corporation
the move
A containership owner's hard choice is whether to steam slowly and cheaply or fast and expensively, and with dozens of ships the decision multiplies across routes, fuel and charter markets.
Danaos built the Operations Research In Ship MAnagement toolkit, which uses dynamic programming and scheduling optimization to plan voyage speed, routing, bunkering and chartering from one model that considers financial data, hydrodynamics, weather and market forecasts.
Instead of minimizing each leg's cost, ORISMA maximizes revenue for the whole fleet, and it also cuts emissions, trims staff workload and improves customer satisfaction. The project was a finalist for the 2012 INFORMS Franz Edelman Award.
why it works
- The cheapest route is rarely the most profitable one when charter rates and fuel swing.
- Optimizing fleet-wide performance captures value that per-vessel decisions throw away.
- Weighing fuel, weather and market together turns a guess into a plan.
- Better routing also burns less fuel and lowers emissions, a shared win.
what transfers
Optimizing one asset's cost can hurt the fleet's earnings; the unit of decision is often the whole fleet.
what came after
ORISMA was deployed across Danaos's fleet and documented in an Interfaces paper, and it was a finalist in the 2012 Franz Edelman competition. The company reported it saved several million dollars for its own ships while also reducing carbon emissions and workloads for crews.
references
- Optimizing Ship Routing to Maximize Fleet Revenue at Danaos
- 2012 Edelman Finalist Danaos
- Introduction: 2012 Franz Edelman Award
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