The impact of sulphur limit fuel regulations on maritime supply chain network design
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The impact of sulphur limit fuel regulations on maritime supply chain network design I. Mallidis1 · S. Despoudi2
· R. Dekker3 · E. Iakovou4 · D. Vlachos1
© Springer Science+Business Media, LLC, part of Springer Nature 2018
Abstract Although the greening of the marine sector started over a decade ago, the emissions produced from ships and port operating equipment have been only recently perceived as issues to be addressed. On this basis, the International Maritime Organisation (IMO) decided to enact stricter sulphur limits on the fuel oil used by ships in Sulphur Oxide (SOx) Emission Control Areas in an effort to reduce the environmental impact of the vessel’s bunkers. In this respect, the purpose of the paper is to quantify the cost implications of the IMO revised regulations on the shippers’ traditional supply chain network design decisions through the development of a strategic Mixed Integer Linear Programming decision-support model. The applicability of the model is demonstrated on a realistic maritime supply chain operating within the East Asia—EU trade route. The results reveal that the implementation of the sulphur limits at the route’s ports may not affect the shippers’ network structure under the current fuel prices, as the optimally selected ports have cost effective hinterland transportation connections within the EU market, that make them preferable for the shipper, even though the network’s shipping costs increase. Keywords Sulphur Limits · Shipper · Carrier
1 Introduction Green supply chain management emerged as a response to the introduction of the different environmental awareness regulations in 1990 s (Wu and Dunn 1995). As a result, companies started to implement green practices in their supply chain networks to ensure compliance with
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S. Despoudi [email protected]
1
Department of Mechanical Engineering, Aristotle University of Thessaloniki, P.O. Box 461, 54124 Thessaloniki, Greece
2
Coventry Business School, Coventry University, Priory St, Coventry CV1 5FB, UK
3
Econometric Institute, Erasmus University Rotterdam, Burg. Oudlaan 50, 3062 PA Rotterdam, The Netherlands
4
Department of Engineering Technology and Industrial Distribution, Texas A&M University, College Station, TX 77843, USA
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Annals of Operations Research
regulations and increased profitability. The greening of the supply chain networks could be achieved through reduction of CO2 emissions and thus reduction of Greenhouse Gas (GHG) emissions, waste reduction and treatment, resource efficiency, usage of alternative/ more environmentally friendly fuels (Chhabra et al. 2017). Although green supply chain network policies have been in place for many years, the transportation of global supply chains still accounts for a significant percentage of the global GHG and CO2 emissions. In particular, shipping contributes to the largest portion of globalized supply chain emissions, causing approximately 2.5% of the global GHG emissions (IMO 2015). As the world seaborne trade is expected to increase by 2.8% in 2018, with to
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