Net Present Value models to help determine the economic operational speed of a chartered ship

Maritime shipping, while acting as the most important role in the world transportation system, witnesses the boom of Operational Research (OR) that has been applied to support the decision making towards not only higher profitability from the financial perspective but also better sustainability in the sense of green shipping, due to the sharply fluctuations of fuel price and newly approved emission measures. However, due to the complexity of operational scenarios, existing speed optimisation modelling frameworks are developed on a case by case basis, and the preference between them is yet well-explained in literature. This has now caught the attention to some researchers in line with the needs of evaluating other related problems, e.g., environmental measures, from the perspective of profit-seeking. This thesis, in particular, adopts the Net Present Value (NPV) cash-flow approach that explicitly accounts for each payment made for the decision maker and it can also be used to study the classic modelling frameworks via the technique of NPV Equivalent Analysis (NPVEA) developed in literature. Using our NPV framework, this thesis established how to explicitly consider contracts details, e.g., for time charter contract and voyage-alike charter contract, into speed optimisation models, and how these affect optimal decisions and profitability for a ship operator (or the ship owner). The focus lies on decisions in the deterministic setting that maximises the decision maker's profitability. In particular, we look at the comparison between our proposed NPV modelling framework with classic speed optimisation models from both the mathematical analysis and the numerical experiments. Factors other than contractual details are considered in this thesis as well. In particular, the decision maker's expectations about future is modelled as the Future Profit Potential (FPP), which is the NPV of profits within the relavent future. We thus aim to demonstrate how the setting of FPP will impact the optimisation, and clarify what is the corresponding underlying assumption. Through this work, we also examine some of the selected topics that are marked in literature or yet studied in the context of maritime shipping to provide a modelling framework as well as managerial insights that what is important for the decision maker to consider.