subsequently trom estimated scaullings. The early cycles should treat each function as continuous, as at this stage relative values are more important than absolute values. The later cycles will use the step functions that may apply in practice, e.g. diesel engines available with integer number of cylinders. The application of step functions too early may lead to the area to be enlarged proving non-optimal when more accurate design information has been generated. It should be noted that principal dimensions are the independent variables. Deadweight, although a convenient and simple measure of ship size, is a merging of three one-dimensional measures which does not reflect the relative importance of length, breadth and draft (or depth for volume-limited ships). There is an infinite number of ships which can be designed to have equal deadweight, but one of these will prove to be more economical than all the others, given particular operating and financial circumstances. Route characteristics generally have a strong influence on the principal dimensions which, in conjunction with hull-fullness, may determine displacement and, for a particular ship type, largely determine lightship also. Hence, deadweight tends to be a drop-out from the calculation and should not require to be attained exactly in a broad-based design system. What is required is the optimal ship within a general band of deadweight and speed, allowing the individual dimensions to take up whatever values produce the most profitable ship within any given market constraints, such as availability of cargoes and port facilities. Such a design system is most easily applied to the straightforward ship types (such as bulk carriers) which usually dominate the number of enquiries; in practice, this frees valuable design effort for the more complex ship types, where a wider range of design features needs to be investigated, e.g. ship motions for offshore craft. ee preeedn F pa? un ho rm 2 oc 5 Pe MPARISON OF ALTERNATIVE SHIP DESIGNS 5 and ve ign? Having briefly looked at the design process and where téchnical land economic factors come together, a more detailed discussion of the comparison of alternative ship designs follows, as this is the usual situation facing the designer. The alternatives need not be entire ships; they may of course involve individual features, such as a comparison of different argo handling systems or different materials for piping systems. Such features are straightforward to analyse economically, when they do not affect earning capacity, as in the latter case. The lternative first costs and maintenance costs are evaluated in erms of annual cash flows and converted to present worths to find he system with the highest NPV (in this case income is not involved, so the least negative value is looked for), or ncremental rate of return, if cost savings are being related to xtra first cost. n practice, most alternative designs differ not only in building d operating costs, but in performance, so that care must be taken Port II - Application To Ship Design - 79to include second-order ’ effec handling gear many not only save on operat For ¢ ample, better cargo costs, but may save port time, offering the prospect of carrying more cargo per annum. Here, those alternative features which have a significant effect on the overall design are mainly considered. The secrets of success in comparing alternative designs are to obtain sufficiently realistic data and to use an appropriate method of economic analysis. These seemingly simple requirements are not satisfied without some careful effort; there are many examples, published and otherwise, which violate these principles and therefore produce results which are likely to be misleading. The scope for error multiplies with the size and complexity of the alternatives; short-cuts and doubtful assumptions may be tolerated for low investments in small items of equipment, but are liable to produce serious errors when entire ships or major systems are being compared. Some of the most common pitfalls include: Emphasis on costs alone rather than the difference of income minus costs, i.e. profit. Failure to recognise that the engineer is usually more concerned to evaluate differences correctly than absolute values, e.g. ranking the alternatives, rather than deciding whether to make any investment at all. Failure to distinguish between differences which separately influence earning capacity or payload, either from mass or from volume considerations. Failure to establish a sufficiently realistic model of ship operation, e.g. by implicitly assuming that ships carry 100% payloads 100% of the time, or by not recognising that some ships operate at constant speed, while others operate at constant power or constant fuel consumption. Failure to consider the whole service life of the design, in particular any fall-off in performance and increase of operating costs with time. Failure to include second-order effects, e.g. reduced fuel consumption not only reduces costs but also fuel load which may enable more cargo to be carried. Confusion over treatment of depreciation; it is not an item of expenditure but a bookkeeping and tax calculation device. Mixing cash flows in real and in money terms, e.g. using rates of return in money terms, but excluding cost escalation (which implies real terms). Failure to take account of financial complexities in cases where these are significant (e.g. cheap loans, accelerated depreciation, subsidies, or taxation) although they do not usually alter the order of merit of technical alternatives. 80 - Engineering Economics and Ship DesignThe above considerations mean that the most elegant technical analysis is useless unless the economic analysis is sufficiently realistic, and vice versa. Most of the practical difficulties boil down to obtaining realistic data to include in the analysis, rather than the mechanics of making the analysis. The fact that certain data may be missing or of doubtful value does not prevent an analysis being made - rather, special attention should be devoted, firstly to see whether the factor concerned is critical or not and, if it is, secondly to assess the sensitivity of the results thereto. The area of uncertainty is then more explicitly appreciated, which simplifies the answer to questions of the type ‘What level can we tolerate in this factor before this design loses its superiority over the alternatives?' A KL, Approach To The Evaluation Of Economic Performance of Freight Earning Vessels / In any marine transport system, the principal parameters to be considered are:- Cargo type, quantity and unit value Distance and physical characteristics of route * Operating system, e.g. unitised, bulk, dedicated vessels. Secondary parameters include:- Number of vessels in fleet x Vessel size Vessel speed, or transit time Cargo stowage and handling rates Fluctuation in cargo availability Availability of return or backhaul cargoes Terminal restrictions Port time - facilities, shifts etc. Inland transport Power requirements Vessel first cost, new or secondhand Shore investments Operating costs dependent on throughput Operating costs not dependent on throughput Fuel costs and availability Financial conditions: taxes, loans, subsidies etc. Life of system components Alternative services and competition. In more specific terms, especially applicable to the movement in ships of bulk commodities available in large quantities, these parameters may be expressed as: Cargo payload Load factor* (see footnote on next page) Round trip distance Speed Effective cargo handling rate Number of ports of call and duration Daily fuel consumption at sea and in port Service days per annum Part III - Application To Ship Design - 81Depreciation (capital) allowances Credit facilities Subsidies Anticipated escalation. * Ship cost ° Crew costs * Maintenance, insurance and other daily running costs * Bunkering pattern * Fuel cost per tonne * Port charges * Cargo handling charges * Freight rate * Expected rate of return * Tax rate * Ship life \ | The essential first step is to establish the technical performance of the vessel (and any alternatives) from design calculations, and collect operational and economic data. (akCShip Data \Type of ship and general characteristics QDeadweight, tonnes (usually to summer draft) SCargo cubic capacity, m? (bale, grain, liquid etc. or other capacity as appropriate e.g. containers) «Service speed,’ knots, loaded and ballast 5Service power, kW or HP together give cSpecific fuel consumption (sfc), grams sea fuel per per kWh or HPh day yAuxiliary and port fuel consumption per day $Gross and Net Tonnage (GT, NT) ( perational Data Cargoes to be carried, average stowage factor Cargo load factor (% full when cargo on board) Product gives Steaming load factor (% miles loaded) overall load Typical round trip steaming distance, nautical factor (LF)* miles Number of ports of call per round trip Average duration of each port call, days Days off-hire per annum * Load factor can be broadly defined as: Actual tonne-miles per annum Potential tonhe-miles per annum It thus has two components: Average cargo payload on loaded voyages Maximum cargo payloa Average miles steamed with cargo as Total miles steamed 82 - Engineering Economics and Ship Designonomic Data (cy Type and duration of charter, where appropriate Average freight rate and any escalation clauses (if known), less commissions Ship first cost, for single ships (or multiple ships if fleet) Any necessary extra initial costs for the vessel in question, e.g. outfit of containers Expected life of ship Expected disposal value** Required rate of return, money or real terms Loan terms** Tax conditions** Exchange rates, if income and expenditure are not in same units Crew costs, annual including benefits, victualling etc. Upkeep costs, annual including maintenance and repair, stores etc. Other costs, annual including insurance, administration etc. Fuel cost per tonne, main and auxiliary machinery Port costs, average per port per GT/NT, or total per round trip Cargo costs per unit, including loading, discharging, claims etc. Annual escalation of each cost item** (8° Derivation of aa Cogh Flows of income and Expenditure wb 42 abbney\ction {\t4) Sea days per round trip (SD) = Miles/(24 x Service speed, knots) (i N.B. Speed should be a realistic value allowing for average weather, fouling, ballast legs, canal passages etc. (ii) Port days per round trip (PD) = Number of ports of call x Average duration. N.B. Allow for waiting and berthing time, delays etc. (144) Number of round trips per annum (RTPA) (365 - Offhire days) (SD + PD) (av) Séa fuel per day (tonnes) = Service power x sfc x 24/10° auxiliary fuel (if any). (v) Total fuel consumed per round trip (FPRT) = Sea fuel x SD + port fuel x PD N.B. Maximum fuel load carried (MEL) will depend on location of bunkering ports and prices, amount of reserve fuel, bunker capacity-of chip, operator's policy etc. Typical reserve about 20% of total carried or 4-6 days steaming, whichever is thé smaTler. (vi) Maximum Payload = Mass limited: Dwt - MFL - stores, water etc. or Volume limite Cargo capacity/average stowage factor ** In ‘short-cut studies', these items will not normally be included, since uniform cash flows are likely to be assumed. Part III - Application To Ship Design afN.B. Check both to find the limiting condition, if it is not obvious. Consider if ballast is required in a load condition, e.g. Ro-Ro vessels. (vii) Cargo carried per annum (CCA) = Max. payload x RTPA sealEL 3 2 N.B. The 2 derives from the ability to carry one cargo outwards and another homewards on a round trip, thus potentially earning two lots of freight income. (viii) Cargo costs per annum = CCA x Cost per unit ty N.B. Ensure consistency of cargo units, e.g. tonnes, m’, container etc. 'Tons' for cargo liners may be ‘freight tons', partly volume, partly mass. (ix) Port costs per annum = Number of calls x RTPA x Cost per GT x GT (or NT for certain ports) (x) Fuel costs per annum = FPRT x RTPA x Cost per tonne. N.B. Allow at some stage for consumption of more expensive fuel, e.g, diesel oil in port, either here or at (v). =dee+ Dow (xi) 'Daily’ costs per annum ="Crew + Upkeep + Other costs eet (xii) Voyage costs per annum = Cargo + Port + Fuel costs VGA = ire zpeo7s Wee (xiii) Capital Charges (CC) = Int (ont ann ta miform cash flows: CR x (First cost - PW x Disposal value) Non-uniform: Full DCF calculation year by year 4 N.B. CR for other initial costs like containers may be different if their life is shorter. EF HO = bine BBA bom Freight Revenue (xiv) Voyage charter or Common carrier: CCA x Freight rate per unit after commissions etc. (xv) Timecharter: Dwt x Months on Hire per Annum x Freight Rate; or Daily Rate x Days on Hire per Annum. N.B. If T/C, no cargo, port or fuel costs, and round trips and cargo carried per annum not important. - Calculation Of NPV, RFR, Etc. The author's philosophy in most cases is to make an initial short-cut economic analysis by hand, assuming uniform cash flows so that CR and SPW may be used. Yhis has the following advantages: * A feel for the range of likely answers is quickly obtained; * Much less initial effort and data collection is required. 84 - Engineering Economics and Ship DesignIn many cases, il may wol be necessary to tale the economic analyses any further, as the simplified calculations will quickly screen the alternatives into 'obviously-on', 'obviously-off', or ‘requires further investiga ion' categories. In the latter case, full DCF calculations, probably now in money terms, usually carried out by computer, should be undertaken; in which case the analyst already has a reasonable idea of the magnitude of the likely answers - a useful check on the compute: or more correctly its input and output. In the case of modest investments, e.g. small items of equipment, it may well not be necessary to go any further than the CR-type approach - indeed the data may not be readily available to do any more, e.g. insufficient records to estimate escalation of maintenance costs or deterioration of performance with time. In these less complex cases, it is rare for the CR-type approach not to rank the alternatives in their correct order of merit - the engineer's job. Of course, a manager deciding whether or not to make the investment will consider the financial complexities, such as loans and taxes - but while the engineer will be aware of their influence, his is not the final decision. In practical calculations of alternative ship designs, many of the above parameters may remain constant for all alternatives, e.g. cargo handling cost. Others may require extensive preliminary technical calculations, e.g. cargo payload requires the accurate estimation of deadweight and power from, principal dimensions. Estimating both first and operating costs must also reflect the differences between the alternative designs. The example which follows h s been deliberately simplified, partly because the assumed constraints determine the ship size and engine power, but it does show t the two designs have been allowed for throughout t eifferences in performance waa Areediport Ss aun Exampl A gee ‘f Se Roa pies d A ; proximately 1.25M tonnes of mineral‘dre per annum require to be transported between mine and smelter 2,000 miles apart. the economic performance © i 60,000 tonnes d.w. with a2 dischargin ional shi Compare 7 sting shore plantJ Port limitations restrict the ship to 225m dverali~ and 13m draft. Available machinery fixes ship speed at about 15 knots. Flag-of-convenience shipowner eile 10 per cent rate of return over 16-year life of ship. ae Ke ka Both Alternatives: SR Breadth restricted to 32.2m for possible Panama Canal transits. Adequate cubic capacity exists for the cargo stowage factor. Dimensions 210mb.p. x 32.3mx 17.7m depth x 13.1mdraft. Same hull form. Fuel consumption 50 tonnes heavy fuel + 2 tonnes diesel oil per day. Time at loading port 1.5 days. Two 8-hour shifts per day worked at discharging port, plus one day manoeuvring and miscellaneous time per call. Basic ship price £18M. Part III - Application To Ship Design - 5Shore Discharging Gear: 1,000 tonnes per hour, at cost of 90p per tonne. Self Unloading Gear: 2,000 tonnes per hour. Weight of gear plus structure 2,300 tonnes Additional cost £9.08M. Additional maintenance £90,000, engineers £50,000 p.a. Additional diesel oil consumption during discharge 0.5 tonnes per working hour. Additional three days out of service per annum. CONVENTIONAL = SELF-UNLOADING Displacement, tonnes 73,500 73,500 Lightship, tonnes 13,250 15,550 Summer deadweight, tonnes 60,250 57,950 Voyage Details Round trip steaming days 21.12% 211.11 Hours to discharge 59.1 28.4 Discharging days 4.70 250, Loading days 1.50™ 1.50 Days per round trip 17.31 15.38 Heavy fuel per round trip, tonnes 555— 555 Diesel oil per round trip, tonnes 35 45 Fuel load carried for round trip 722 720 (includes 20 per cent reserve) ( Other deadweight items 400> 400 Total non-cargo deadweight 1,122 1,120 Maximum payload, tonnes 59,128 56,230 Days in service per an 350 347 Round trips per annum 20.22 22.56 Cargo carried per annum, tonnes 1,195,500 1,282,200 Operating Costs per Annum Crew £ 600,000 650,000 Other 'daily' running costs £ 800, 0007 800,000 Maintenance of self-unloading gear scr 90,000 Heavy fuel costs (£120/tonne) 1,347,000 1,502,000 Diesel oil cost (£180/tonne) 127,000 183,000 Port charges (£20,000/RT) 404,000 451,000 Cargo handling charges 1,076, 001 oi Total Operating Costs 4,354,000 3,676,000 Ship first cost, £ 18,000,000 27,080,000 Capital recovery factor (CR-10%-16) 0.1278 0.1278 Capital charges 2,300,000 3,461,000 “ Total Annual Cost £ 6, 654; 009 7,137,000 Zeus Cost per Tonne Cargo, £ B.566 5.566 J p 85 - Engineering Economics and Ship Designws the cost per tonne is identical. If the caryo quantity per wm had been fixed, the result would have been a reduced load tor for the self-unloader, giving a higher unit cost. If shore scharging costs had been below/above 90p, the conventional ship uld have been better/worse. If an actual freight rate were fixed above £5.566, the self-unloader would have been more rofitable, because of its greater annual tonnage; if below, the Escalation of items of expenditure Credit arrangements Accelerated depreciation allowances Different building times and instalments Residual value Sensitivity of results to changes in principal assumptions, e.g. fuel prices. A third possibility may aiso be investigated: new shore discharging gear with a rate of over 1,000 tonnes per ryt Comparison of Alternative Machinery Systems The comparison of alternative machinery systems is a frequent application of engineering economics, but not all published ‘examples take into account properly both the technical and economic factors. Typical sources of error include:- (4) Incorrect translation of volume and mass differences into usable payloads for varying operational profiles. (ii) Use of test-bed or manufacturer's provisional data instead of service figures for fuel or lubricating oil consumption. Over-optimism about maintenance and repair costs and time out of service. (iv) Use of service power ratings or grades of fuel not typical of actual experience. Where they are significant for the alternatives being studied: (v) Calculations based on one current year's opeation, ignoring changes in performance and operating costs with time. (vi) Omission of periods of operation at partial load or with high auxiliary loads. (vii) Failure to examine results for different operating assumptions, e.g. higher fuel prices. Part III - Application To Ship Design - 87Typical prime movers considered in such comparisons include:- Geared steam turbine: oil or coal fired Direct drive slow speed diesel Geared medium speed diesel Gas turbine - industrial type or aircraft type Nuclear reactor plus steam turbine. Alternative transmissions may also be considered, e.g. direct, geared, electric, with or without controllable pitch propellers. Single or multiple propellers may be included. Each alternative may have different: - Specific fuel consumption Type and cost of fuel Mass and volume of machinery Mass and volume of bunkers First cost as installed Running costs: fuel, maintenance etc. Propeller r.p.m. and ship speed which are of particular interest to the naval architect. Other factors of particular interest to the marine engineer include:- Auxiliary power requirements and alternative means of providing same, e.g. shaft driven alternators Degree of automation Manning requirements Noise and vibration Lubricating oil requirements Bunkering arrangements Time out of service for breakdown and repairs (off-hire) Number of models or frame sizes available Availability of construction and repair facilities Slow steaming capability/part load specific fuel consumption. The following example shows how a basic comparison between slow speed and geared medium speed diesel may be carried out for a single screw 15-knot 28,000-tonne deadweight bulk carrier. The slow speed (direct drive) ship is conventional, with diesel alternators providing the electrical power at sea, while the medium speed ship has a gearbox-driven alternator and a controllable pitch propeller. See Figure 22. It should be emphasised that, while the figures used are typical, any conclusion indicated should not necessarily be regarded as @ general one, as the data applicable in any particular case may well differ. Especially in borderline cases, unquantifiable factors like the availability of experienced engineers may affect final decisions. 88 - Engineering Economics and Ship Design| Ku 5 el A wa gooo0g = a en Stow srecoovestu =) ie MEDIUM SPEEO DIESEL Fig.22 Alternative Machinery for Bulk Carrier As with all technical and economic evaluations, the establishment of realistic (rather than precise) data applying to the ship in service is the foundation of a proper evaluation. In some cases, especially where data is uncertain, e.g. price of fuel in the future, it is wise to investigate a range of values to determine the sensitivity of the results to any future change. Note the typical number of significant figures used; not too much spurious accuracy, but enough to reflect the differences between the designs. Part III - Application To Ship Design - 89Comparison of Slow Speed and Medium Speed Diese! Bulk Carrier (Numbers in brackets refer to notes at end of calculation) Technical Data Main machinery One 6-cylinder One 12-cylinder slow speed medium speed direct drive diesel geared diesel to single screv Maximum continuous rating (MCR), kW(HP) 7360 (10,000) 7720 (10,500) Propeller r.p.m. 125 125 Continuous service rating (CSR), kW (1) 87.5% = 6440 85% = 6560 2 660 Power deductions, kW ( 130 Power delivered to propeller, kW(HP) 6310 (8580) 5900 (8020) Corresponding speed: loaded, knots 15.0 14.6 ballast (3) 15.9 15.7 Total weight of machinery, tonnes 650 500 Summer deadweight, tonnes (4) 28,000 28,200 Main engine fuel viscosity, cSt at 50°C 380 (3500) 180 (1500) (Redwood seconds at 100°F) Specific fuel consumption, g/kWh (g/HPh) (5) (6) 182 (134) 197 (145) Main engine fuel at sea, tonnes/day 28.1 31,07 8 Auxiliary fuel at sea, tonnes/day (7) 2.0 0 Port fue], diesel oi], tonnes/day 3.0 3.0 Lub. oi, system, g/kwh (g/HPh) (6) 0.27 (0.20) 1.22 (0.9) Lub. oi], cylinder, g/kWh (g/HPh) (6) 0.68 (0.50) --- Lub. of], system, kg/day 42 192 Lub. of1, cylinder, kg/day 105 mips Economic Data (costs in pounds) [cose of machinery installation (8) 3,400,000 3,000,000 Total cost of ship 12,000,000 11,600,000 Annual cost of machinery maintenance and repair (6) 120,000 150,000 Annual running cost excluding fuel, lub. of1 and port costs 1,000,000 1,030,000 Cost of heavy fuel per tonne (9) 120 122 Cost of diesel fuel per tonne 190 190 Cost of fuel at sea per day 3752 3782 Cost of fuel in port per day 570 570 Cost of system lub. of] per kg. 0.80 0.85 Cosy of cylinder lub. oi] per kg. 0.90 — Cost of main engine lub. oi] per day at sea (10) 128 163 Port costs per round trip 30,000 30,000 90 - Engineering Economics and Ship DesignOperational Data Slow Speed Medium Speed Miles per round trip (11) 11,000 11,000 Proportion of miles in ballast, % (11) 35 35 Average loaded cargo/maximum, % qa) 90 90 Load factor & (11) 58.5 58.5 Average speed, knots (a2) 15.32 14.98 Steaming days per R.T. 29.9 30.6 Port days per R.T. (1) 14.0 14.0 Total days per R.T. 43.9 44.6 Days on-hire per annum (23) 352 350 Round trips per annum 8.02 7.85 Critical draft point (14) Unrestricted Unrestricted Bunkering pattern (14) Loading port for round trip Reserve fuel, days 6 6 Number of steaming days to next bunker port 35.9 36.6 Main engine fuel carried, tonnes (15) 1010 1130 Diesel fuel carried, tonnes 200 150 Total bunker load, tonnes 1210 1280 Other deadweight items, tonnes 350 350. Summer deadweight, tonnes 28000 28200 Cargo deadweight, tonnes (16) 26440 26570 Cargo cubic capacity, grain, cubic metres (16) 35000 35000 Total cost of sea fuel per R.T., £ (17) 112200 115700 Total cost of port fuel per R.T., £ (7) 8000 8000 Total cost of lub. oil per R.T., £ a7) 3800 5000 Annual Results (Mass Limited) Cargo carried per annum, tonnes (38) ~248100 244000 Annual running costs, £ 1000000 1030000 Annual lub. of1 costs, £ (19) 31000 39000 Annual fuel costs, £ (19) 964000 971000 Annual port costs, £ (ig) 241000 236000 Jotal operating costs, £ ¥ 2236000 2276000 Capital recovery factor, (CR-10%-20) (20) 0.1175 0.1175 Annual capital charges, £ 1410000 1363000 otal annual costs, £ 3646000 3639000 Cost per tonne cargo, £ (21) 14.70 14.91 Equivalent timecharter rate £ (22) 7.65 7.61 (Volume Limited) “fargo carried per annum, m? (23) 328400 321500 Cost per cubic metre, £ 11.10 11.32 Alternatively for Known Freight Rate ight rate, £ per tonne 15.00 15.00 haus income, 2 3720000 3660000 Annual surplus before capital charges, £ 1484000 1384000 Surplus/investment (CR) 0.1237 0.1193 Rate of return before tax, % (24) 10.8 10.2 NSPE. 278 (25) + 630000 + 179000 Port III - Application To Ship Design ~ 91Notes on Comparison of Slow Speed and Medium Speed Diesel 1. 2. 10. il. 12. 13. 14. 15. 92 Typical service ratings from actual experience. Slow speed diesel : transmission losses only (2%). Medium speed : gearing and transmission losses (4%) plus 400 kW alternator power take-off at sea. Average service speed after allowance for weather, fouling and age. Same propeller diameter and propeller r.p.m., although if a larger diameter propeller could be fitted, the geared medium speed diesel could be better matched in r.p.m. Controllable pitch propeller in medium speed diesel ship gives higher ballast speed relative to loaced. Both ships have same main dimensions and di splacement. Assumed difference in lightship is due to machinery and 50 tonnes extra steel, resulting in increase in medium speed diesel deadweight. Adjusted from manufacturer's figures based on diesel oil for the actual heavy oil used in service (typically about 8% increase). Typical of service conditions, including differences between designs. Diesel fuel for alternators for slow speed diesel ship, gearbox driven in medium speed ship. Higher MCR of medium speed ship and c.p. propeller slightly reduces the usual cost differential in pounds per kW for engine plus gearbox. Price differential between grades of fuel is about 2-3%. Assumed in-port and generator lub. oil consumption not greatly different between the designs and comparatively small. Typical of bulk carrier trading. Load factor = (100 - Ballast percentage) x Cargo percentage/100. Weighted average of loaded and ballast speeds. Medium speed two days more off-hire reflecting greater number of cylinders and slightly more breakdowns in service. If a draft restriction is encountered, whether at load or discharge port or en route, the maximum payload should be calculated by reference to the deadweight at this draft, less fuel and non-cargo items, relative to the last bunkering port. Number of days bunkers carried x tonnes per day at sea. Assumed port fuel comes out of reserve. - Engineering Economics and Ship Design. Maximum deadweight - fuel - other items. A bulk carrier carries a wide range of cargoes like grain, coal, ore etc whose stowage factors are such that the ship is usually limited by deadweight rather than cubic capacity. Twin medium speed diesels may give a slightly shorter engine room, giving slightly more cargo capacity, but in this case there is little difference in machinery length with single engine. If there were a difference in cargo capacity, the corresponding payload in trades with low density cargoes could be calculated, and a weighted average taken. .From earlier lines for daily costs x number of sea or port days for round trip. . Cargo deadweight x number of round trips x load factor x 2 for cargoes potentially both ways. . From earlier lines for round trip costs x number of round trips per annum. . Capital recovery factor for 10% rate of return before tax and 20 year life. Rate of return is implicitly in real terms, since uniform cash flows are assumed. . Total annual costs divided by annual cargo. This is rather higher than recent freight rates, as not only do low freight markets last longer than high, but most existing ships will have been built at lower prices and therefore able to accept lower freight rates, if their technical performance is not greatly inferior. The potential value of secondhand price at early disposal is not taken account of, but could be important if there was a degree of novelty about one of the machinery alternatives. . Total annual costs excluding fuel and port charges divided by (summer deadweight/1.016 for long tons x months on hire (12 x on-hire days/365)). . Appropriate for volume-limited trades such as light grain or packaged timber, although in this case, the order of merit is not changed. ; 24. Solution fori in formula for CR. 25. Annual surplus x SPW - First cost. Thus in both mass-limited and volume-limited trades, the slow speed diesel offers a freighting cost about 2% less, largely due to its lower specific fuel consumption. On some voyages, the ships may not be fully loaded to capacity, and therefore payloads equal, in which case the advantage increases slightly. On timecharter, where freight is paid per ton deadweight per month, the slow speed ship requires a slightly higher rate to compensate for its higher first cost. A change in the assumed oil fuel price would not affect the results significantly, as both designs have much the same specific fuel consumption. If however the designs had much Part III - Application To Ship Design - 93different sfc's, a lower fuel price would have benefitted the design with the higher sfc, e.g. steam or gas turbine, and vice versa. Since the designs are so close in economic performance, it would be desirable to make a full discounted cash flow calculation, over the full lives of the ships, especially if there was a definite Proposal to build. This would take into account the various practical financial factors such as loans, taxation and escalation, as well as any anticipated differences in long term performance, e.g. loss of speed and increase in maintenance and repair costs and time with increasing age. Furthermore, actual shipyard quotations may show a different variation in first cost than thet assumed, depending on market conditions at the time. Different assumptions on for example, fuel price differential, 380 vs 180 cSt, or round trip distance or draft limitations may have a small influence. If propeller diameters and r.p.m. are not equal, there may be a benefit to the lower r.p.m. ship. There may also be other less tangible factors to take into account such as experience of the company's engineering staff and compatibility with existing ships in the fleet. The results of the economic evaluation are useful in reducing the area of uncertainty where judgement has to be applied in making the final decision, rather than in automatically determining that decision. Sensitivity, Uncertainty and Trade-offs The previous examples indicate that the results may be sensitive to changes in the data, because there may be uncertainty about many of the technical and economic parameters. For example, it is not possible to predict exactly over the life of a ship fuel prices, maintenance costs, port time etc. The simplest way of investigating such uncertainties is to repeat the calculation with different values of key parameters, and assess how sensitive the results are to such changes. Figure 23 shows a typical presentation of such calculations (which might be for alternative fuel saving designs), with the economic measure of merit plotted against the key parameters (see page 117 for the most important parameters). Where the curves for alternative designs do not cross, the ranking is not changed, but where there is a crossover, the decision to be made is whether the operating situation is likely to be to the left or right of the crossover. 94 - Engineering Economics and Ship DesignDESI ON A WIG FUEL PRICE OESIGM 8 A Low ‘ ' INTERWAL RATE OF RETURN REQUIRED FREIGHT RATE SPEED FUEL PRICE DESIGN A 8 DESION WP REQUIRED FREIGHT RATE 1 ‘ font FIRST COST DAYS AT SEA PER ANNUM Fig.23 Typical Presentation of Results It is also possible to use the results of sensitivity calculations to make trade-offs, e.g. how much extra in first cost can.one afford to pay to obtain a reduction of fuel consumption. - The decrease in NPV from say a 10% increase in first cost can: be compared with the percentage decrease in fuel consumption needed to generate a corresponding increase in NPV. The second edition of this book gives some examples of such trade-offs, for example whether better materials with lower maintenance costs justify higher first cost. There are more elaborate techniques for incorporating uncertainty into technical and economic calculations. Ref.2.30.2 reviews such techniques which take account of probabilities. These may be ata basic level of assigning mean values and variances to,.for example, costs or weights, or more complex simulation models, using either Monte Carlo methods or analytical functions. The more complex methods require more data, time and effort for analysis, and are therefore better reserved for later stages of development, once the simpler methods have indicated that the Proposed design looks economically promising. The advantage of such techniques is that point value results are no longer produced (e.g. implying 100% certainty that the internal rate of return will be, say, 12.5% in money terms), but a range of values, e.g. Part III - Application To Ship Design - 95hat there is 15% probability that the IRR will be between 10 and , 22% between 11 and 12% etc., which gives a better feel for the \certainty inherent in all techno-economic problems. / » THE OPTIMAL SHIP e position has now been reached when the factors involved in electing the optimal size and speed for a ship can be examined. | Dptimal Ship Size for a Given Speed for a bulk cargo trade where there are no restrictions on ship size or cargo availability, the economies of scale in building and sperating costs indicate that the optimal ship is in general the largest. possible, offering the lowest transport costs. The situation is shown diagramatically in Figure 24. The top half shows a typical curve of freighting costs per tonne, FC, against ship size; one particular freight rate, FD, is shown. The lower 1alf shows the annual cost (or present worth), i.e. multiplying the unit cost curve by the payload at each ship size. Maximum NPV is obtained at CD with the maximum permissible size of ship for the ade. This size may be determined by a number of physical strictions, particularly depth of water, such as:- : Loading or.discharging e.g. harbour entrances, locks, ports turning basins, berth limitations, air draught, storage facilities, cargo handling equipment. Shallow water en route Canals Repair dry docks Shipbuilding berths and docks here may also be limitations on cargo availability. In this case, n upper bound is set on freight income, G'E', after all the cargo as been lifted. Here the maximum return occurs at A'B'; any ncrease above this optimal size merely increases expenditure ubiehenchides capital charges), while income remains constant ong . i - Engineering Economics and Ship Designcost PER TONNE FREIGHT ANNUAL costs SHIP SIZE ai sue size Fig.24 Optimal Ship Size A similar effect is obtained if the loading or discharging rate is slow compared with the size of ship. Port time increases with size, reducing the number of voyages per annum and hence restricting income. Figure 7 illustrates this effect, and also shows how the optimal size reduces if shore costs increase with size of ship. The effect is also seen with tankers where the "shore cost' line might include dredging costs, tankage costs, additional tugs or special anti-pollution measures (Reference 3.13.1 and 2.22). E The more general case of limited cargo availability is well illustrated by Benford in Ref.3.2.3. Ship size depends on: forecasts of cargo tonnage offering, inbound and outbound. Physical limitations may apply as above, e.g. entrance lock sizes. The value of the cargo may also be significant in relation to the ship: e.g. general cargo at £500-5000 per tonne cargo, ship © £600-1200 per tonne d.w. (Compare bulk cargo £15-150 vs. £200-400). Hence optimisation should be based on economic calculations of ship plus the cargo in transit, unless the operation is such that inventory costs do not fall on the shipowner, e.g. timechartered ship (Ref.3.2.2). Part III - Application To Ship Design - 97factors and their effect on ship size include:- _ Greater annual flow of cargo: larger Faster cargo handling or port turnaround: larger Anticipated port improvements: larger Longer voyage distance: larger High frequency of service: smaller Higher value cargoes: smaller Reduced cargo handling and stockpiling costs: larger Cargo available one way only: larger Increasing long term availability of cargo: larger Large seasonal fluctuations: larger High interest rates: smaller Increased unit costs of building ships: smaller The influence of several of these factors can be seen when comparing the large size of container ships with break-bulk cargo vessels. The first seven factors are the most significant. A dynamic view should be taken of physical restrictions, weighing up the possibility of changes during the ship's life. This is particularly so in the case of draft: it may be worth paying a little more for a deeper drafted ship, even though it may not be able to use all this draft on more than a small proportion of the voyages in its life. If there are no restrictions on length or breadth, a larger ship at reduced draft may well have a greater payload and offer lower freighting costs per tonne than a smaller ship down to her marks. Choice of optimal size is then a trade-off between the known costs of greater size against the chances of being able to use the size sufficiently often over the ship's life to justify this cost. Optimal Speed for Ship Size In transport situations, there is often demand for the greatest practicable speed to be adopted. Figure 25 illustrates diagramatically the effect of ship speed on total costs and total income. Broadly speaking, increasing ship speed does not have a great effect on hull first cost (apart from an influence through reducing the block coefficient, so increasing dimensions to keep payload constant). Likewise, crew costs, and many of the other operating costs are not much affected by speed. Installed power does, however, increase roughly as the cube of speed, so total fuel ‘consumption and fuel cost go up roughly as the cube, while machinery first cost goes up roughly as the square of the speed. Meantime, however, transport capability, even with zero port turnaround time, can only increase directly proportional to the speed. Thus as indicated in Figuce 25, there is an optimal speed for ships, which is a function of both technical and economic factors: at what point the increased capital and operating costs outweigh the increased revenue. It is possible to show, making simplifying assumptions, that speed is in theory an optimum when fuel costs amount to half the total of other operating costs, excluding cargo expenses, but in practice more detailed calculation is necessary. 98 - Engineering Economics and Ship DesignFuge | | | i | MACHINERY. 1 we ee CREM, INSURANCE Ere. CapiTaL Cuaeaes Mut sereo Optimum spree Fig.25 Optimal Speed of a Ship The case of ships is complicated by practical effects of port time and machinery performance at reduced powers, as well as by the relationship between hull fullness and speed-length ratio. Bulk ' carriers have relatively low speed, partly because of the need for large deadweight and high block coefficients, but mainly because of the low value and "repeatability" of the cargo, i.e. they can often be considered as interrupted pipelines delivering to buffer stores. General cargoes, particularly manufactures, are of much higher value, implying high interest charges and are often unique consignments which are needed for specific use on delivery (inventory costs). Freight costs are only around 5-10 per cent of c.i.£. costs, and thus general cargo not only needs higher speed, but can afford to pay for it without increasing delivered price relatively as much as with bulk cargoes. The heavy lines in Figure 26 illustrate the typical case. The optimal speed occurs where there is the greatest difference between the annual income and annual expenditure. The 'lens': shape indicates that the curve of maximum profit is shallow in the<.) region of the optimum; 'flat laxity’ is a phenomenon frequently found in such situations. The effect of three other factors is= also illustrated: increased freight rates increase the slope of the income line, so increasing the optimal speed; similarly, reduced fuel costs (or reduced power requirements) swing: the, expenditure line down, increasing optimal speed; while increasing cargo value and inventory costs also increase optimal speed. Part III - Application To Ship Design - 99Fig.26 Factors Influencing Optimal Speed Some general factors which encourage higher speeds of ships are summarised below. The converses are also generally true. Economic High value cargoes as described above. Note the converse: low value cargoes cannot afford to travel at high speeds. High freight rates: the ship carries greater amounts of high-earning cargo over a period. Note the Converse: when freights are low, ship speeds are often reduced, e.g. tankers in times of surplus. Cheaper fuel (or fuel costs rising slower than other items of income and expenditure). , Short port turnaround time: increasing the proportion pt time at sea when the higher speed canbe used. = Competition: especially where freight rates are fixed, e.g. liner conferences, so non-price factors become more important. High interest rates: so that high capital charges on the ship are spread over more voyages. High daily operating costs, e.g. crew: increasing productivity per unit time. Increased trade: but larger ships would be a better solution, which themselves permit higher speeds (speed-length ratio). Shortage of building funds or building capacity: greater transport capability per unit investment. 100 - Engineering Economics and Ship DesignTechnical - Lower specific fuel consumption: fuel weight and cost reduced. - Availability of machinery of requisite high power. - Reduced cost of main machinery: e.g. from economies of scale in manufacturing, improved materials etc. - Reduced volume or weight of machinery plant or bunkers: effect not very marked. - Improved hull form design: reduced power requirements. - Improved propulsive performance: reduced power requirements. - Smoother hulls: both when new and in service, e.g. better coatings. - Improved sea performance: reduced speed loss due to ship motions, weather routing etc. Studies of nuclear-powered container ships demonstrate a number of these points; their optimal speed will be higher than conventionally-powered container ships, although their maximum rate of return may be lower depending on assumptions about building costs, fuel prices, etc., as indicated in Figure 27. As the curves such as those in Figure 27 are usually quite flat in the region of the optimum, in many cases practical and commercial considerations may be allowed to dictate the selection of exact size or speed, e.g. the stepwise availability of diesel engines. Thus the penalty for departing from the true optimum may be quite small. The optimum may, of course, move during the ship's life, e.g. with changing fuel prices, so it is generally preferable to err on the side of sizes and speeds somewhat greater than the theoretical, optimum; this tendency is often reinforced by competition’ and the desire to offer potential charterers an attractive|ship, and a general desire to reduce capital investment per annual§tonne-mile, even at the cost of increased operating expenses over the ship's life. 4 x REQUIRED FREIGHT Rate MUELEAR CONTAINER sue ou Finca ' Srcaceoue | Tous rime! tance Su | Heowramee | ‘Saw | ' ' ' sPceo Fig.27 Comparison of Diesel and Nuclear Propelled Cargo Ships Part III - Application To Ship Design - 101The optimal speed for an existing ship under various conditions of fuel price and freight rate is different from and may well be higher than that of a new ship. In comparison with,Fig.25, the capital charges on both hull and machinery are fixed (‘sunk costs'), while there is also an upper limit, of course, on maximum speed. In general, it can be said that the optimal speed for an existing ship is its design speed, unless fuel prices are very high and/or freight rates very low - a situation common over many of the years 1974-85. Reference 3.10 discusses these factors in more detail. Speed, as such, may not always be the appropriate design parameter, especially on short distance scheduled services, when transit time may be used, in association with port turnaround time, e.g. 24-hour frequency may be required for ferries. Nevertheless, it is still possible to calculate the schedule giving the optimal speed, but usually in the context of a fleet of vessels providing a service, as discussed on page 107. Overall Optimisation of a Single Ship The separate optimisation of ship size and speed has been discussed to illustrate some general points, but in practice they must be combined to yield an overall optimal design. Figure 28 illustrates the general situation where ship size and speed can “vary over a.wide range. A section through AA would indicate the effect of optimal speed for a given size. Closing the contours as “shown in the dotted portions normally requires that some “increasing constraints are placed as ship sizes increase, e.g- _ that load factors decrease as large vessels find it increasingly “difficult to obtain full cargoes, or that shore costs rise steeply the effects shown in Figs.24 and 7 respectively. Figure 28 also Shows contours of equal transport capacity, so it can be seen that ‘the line of minimum cost for any specified cargo quantity follows sthis tangent line rather than the lowest points of the equal cost “contours. Reference 2.19 discusses this aspect in more detail. Be --> Bore x > sue sree -Fig.28 Optimal Combination of Size and SpeedThe simplest case to consider in overall optimisation is that of a single ship, particularly participating in general worldwide trading where the ship does not have to be too closely tailored to cargo availability and fleet requirements. The majority of bulk carrying vessels fall into this category, where a design is sought which maximises return at any given level of freight rates. In general, this is achieved by the design offering minimum RFR, given a particular sector of the market and an assumed range of trades in which the ship might participate, and where the addition of one single ship is not sufficient to influence the transport requirements of any particular trade. The problem is then one of unlimited cargo availability as far as any particular shipowner is concerned, or an open competitive system rather than a closed system. (Ref. 2.34). Of course, before thinking about an actual ship design, an operator will have decided on the general market within which he assesses the best prospects to lie, e.g. because of increasing demand and limited supply. In effect he decides from his market research to operate in one particular sector of Fig.28 with constraints associated with that trade, e.g. large combination carriers, reefers, or offshore supply vessels. Optimisation of any particular ship type, especially well-defined types such as bulk carriers or tankers, then involves the fjnding of that combination of design variables which gives the highest value of the selected economic measure of merit, e.g. RFR, subject to various constraints such as dimensional limitations, strength and stability standards. For most specific ship types, carrying or earning capacity, whether deadweight, cubic capacity or deck area, is largely a function of the principal dimensions, length, breadth, depth and draft. The last two are usually closely related through the freeboard rules. In addition, block coefficient and speed are required to define the ship more exactly, even though speed, length and block coefficient are often closely related (maximum block coefficient is usually a function of Froude number). Thus, for any given ship type, there are only a few primary design variables which very largely define the size and speed, as shown below, although a rather greater number of secondary and tertiary variables. 1. Primary Design Variables - Number of ships in fleet - Length - Breadth - Draft - Depth to principal deck - Speed - Block coefficient 2. Secondary Design Variables - Number and arrangement of cargo and equipment spaces - Number and height of decks - Type and capacity of cargo handling gear - Machinery type and location - Number and type of propellers and r.p.m. - Fuel, if not oil - Structural configuration and material Part III - Application To Ship Design - 103 |- Hull form characteristics - Superstructure arrangement - Tankage allocation: water ballast, oil fuel etc. 3. Tertiary Design Variables - Number, dimensions and type of hatches - Crew number and accommodation - Auxiliary machinery - Location and arrangement of specific equi - Appendages PI ae segs - Manoeuvring devices - Extent of automation - Types of coatings. Note that other important features of the design depend on the above variables. These include: - Maximum and cargo deadweight or payload - Cargo cubic capacity - Fuel consumption, at sea and in port - Lightship masses - Hydrostatics - Longitudinal strength - Trim and intact stability - Damaged stability - Freeboard - Tonnage - Vibration. Thus ‘check’ calculations are made of these features and if a Besa GAeNEY, is found, one or more of the design variables must be altered. There are a number of mathematical techniques for finding the minimum of a function of several variables, e.g. RFR as a function of some of the above design variables. Reference 3.26 discusses techniques of non-linear optimisation for use in computer-aided ship design while References 3.9, 3.13.1, and 3.15 are examples of their application. Most of the practical techniques of constrained optimisation work best with a moderate number of variables. Therefore, it may sometimes be desirable to separate some of the secondary and tertiary variables to later stages of the optimisation process (multi-stage optimisation). In some cases the range of choice of the variable itself is small; the conclusions from a separate study are therefore likely to be valid over all the range of choice of the variables being studied, e.g. choice of machinery type or coatings. In such cases, the coupling between primary and the other design variables is small, and sub-optimisation is valid. Of course, such alternatives still need to be evaluated economically by the normal methods. Other variables may be more subjective in their choice, and not easily quantified, so that the currently preferred solution can simply be adopted as standard, e.g. superstructure arrangement. The general approach then is to interpret the ship's trading pattern in terms of cargo volumes, distances and port or other restrictions, and select ranges of possible dimensions, block coefficients and speeds for the first cycle of the design spiral. 104 - Engineering Economics and Ship DesignSeveral hundred designs may be generated either by automatic search routines or by straightforward parametric studies. Some of the designs are likely to be eliminated on purely technical grounds, e.g. inadequate stability, but most will require the use of an economic criterion to reduce the number of possible designs. If freight rates can be predicted, the criterion would normally be maximum NPV, but it is often found that minimum RFR is more realistic if comparing different sizes and speeds, as actual market freight rates vary with the ship size and speed in a not very predictable manner. The optimal region of combinations of length, breadth, depth, draft, speed and block coefficient may then be 'magnified' on the second and third cycles of the spiral by increasing the level of complexity of design, using the initial results as first approximations. The final cycle based on perhaps a single ship is, primarily, to develop the technical design and cost estimate in more detail, but economic evaluations can be applied to make detailed trade-offs of, say steelmass against fabrication cost, or additional equipment against reduced operating costs. Deere oF ware (9) ww Facron Caece re sew Omart (7) Sue peart (1) « 1) Fig.29 Selection of Optimal Design Draft It is undesirable to apply too many absolute constraints on variables in the early cycles, as it is usually found that the most economic solution is simply to build to that constraint. This particularly applies to draft limitations in the bulk trades, but also to breadth limitations, e.g. for any large ship using the Panama Canal. Unless a vessel is being designed to operate all its life on a given route with fixed limits (e.g. canals or locks), it is essential to recognise the probabilistic nature of ship operations; there is always a chance that extra dimensions may be usable at some stage in a ship's life. The distribution of available depths of water in ports throughout the world where the he: Part III - Application To Ship Design - 105 {ship is likely to call might be as shown in Figure 29A. A very deep draft ship will only be able to call at very few ports, while a shallow drafted ship may not be taking full advantage of the water depths available. With planned port improvements, it might be postulated that the 1995 situation may be different, as shown by the broken line. Either distribution may be converted into a cumulative probability curve as shown in Fig.29B. The corresponding load factors are shown in Fig.29C; very deep draft ships are likely to have longer ballast steaming times and more part cargoes than smaller ships which are more flexible. Fig.29D shows how the economies of scale in operating costs (including capital charges) may be offset by declining income per tonne cargo resulting from lower load factors. The optimal draft for a range of port and cargo availabilities can then be estimated (higher for 1995 as indicated) by simulating the operation of a range of possible ship designs through a chosen spectrum of possible ports and cargoes. The selection of design draft therefore requires an assessment of the probabilities of being able to use the extra draft sufficiently often to pay for its extra cost. Figure 30 shows the results of one such study, which takes into account both port and cargo availability. It can be seen that the optimal ship is not neccessarily the biggest deepest draft vessel. The limited depths of water available and some high stowage factor cargoes combine to reduce the value of extra deadweight and draft. 8 +6 js = oh aS DRAFT WPY, é Mn = (em). 42 12m f) ye é 2 Jim = 15m ah! Abn 0000 60000 700 0000 OWT Fig.30 Optimal Deadweight with Limited Cargo Availability and Water Depth The incorporation of such probabilistic considerations in a practical design process requires a broader approach - the systems approach as discussed in Section 4. 106 - Engineering Economics and Ship Design4. THE WIDER SCENE Fleet Transport Capabilities While many ships are designed to trade to a wide range of ports with a wide range of cargoes, e.g. vessels such as bulk carriers likely to be chartered out for most of their lives, others can be designed for a more specific trade, especially owner-operated ships. In such situations, the quantities and types of cargo moving on particular route(s) can usually be estimated at the design stage. The problem is then of limited cargo availability. It is then possible to explore the range of - ship types - number of ships in fleet - ship cargo capacities - ship speeds - terminal facilities which will together provide the required transportation capability. There is a very large number of potential solutions, even before considering the range of detailed design characteristics of individual elements, e.g. ship dimensions. There will however usually be a number of considerations which will limit the range of practical solutions. For example, technical and economic factors usually combine to limit speed toa range of about 10 to 25 knots, while frequency of service may be an important marketing factor, limiting the possible combinations of speed and size of ship. Furthermore, the possible number of ships may only take an integer value - usually identical ships (or nearly so) will be required - and operational flexibility may demand a certain minimum number, e.g. not a single ship. It is therefore often not too difficult to define a more limited spectrum of feasible fleets which all have the required transportation capacity, in terms of, say, tonne-miles per annum, and to select a smaller number of them for more detailed study. Example It is required to find the number, capacity and speed of the various fleets of bulk carriers which could transport 2.5 million tonnes of mineral ore 1500 miles between mine and smelter, with no return cargo. 2.5 x 1500 Annual transportation capacity 3750 million tonne-miles. A quick appreciation of the possible range of ship sizes and numbers can be gained by using an approximate annual productivity figure from Table 11 which relates to typical ship voyages and speeds. The potential productivity of a bulk carrier is say 45,000 tonne-miles per annum per tonne deadweight. (Note that actual productivities may be appreciably less in poor markets, when less cargo is available). Approximate tonnage of fleet required = piste = 83,300 Part III - Application To Ship Design - 107This might be made up of: one ship of about 84,000 dwt two ships of about 42,000 dwt three ships of about 28,000 dwt four ships of about 21,000 dwt five ships of about 17,000 dwt six ships of about 14,000 dwt seven ships of about 12,000 dwt ete. It might therefore be decided to investigate in more detail fleets of up to eight ships, with speeds ranging from say 10 to 18 knots (the cargo is implicitly of low value so very high speeds are likely to be uneconomic). It is also necessary to take into account the terminal facilities for loading and discharging, and if these do not already exist, the cost of their construction relative to ship size. Each ship's capability can now be investigated in greater detail Page 84 shows that: Annual cargo per ship = 2 x Maximum cargo payload x Average load factor x Round trips per annum Assuming no return cargo, cargo payload as 95% of maximum deadweight and N ships in the fleet:- 2 x (0.95 x DW) x 0.50 x RTPA x N 2,500,000 0.95 x DW x RTPA x N or DW 2 630 000/(N x RTPA) (1) RTPA = (365-offhire days)/(sea days + port days) Annual capacity, tonnes Assuming 15 days offhire and speed V, RTPA = 350/(1500 x 2/(24 x V) + port days) As a first step to estimate port days, either a typical value for bulk carrier time in efficient ports could be assumed, say 2-3 days per call, or more realistically a possible cargo-handling rate, say 1000-2000 tonnes per hour for bulk cargo. Such rates would correspond to about 1 day in port for the smaller ships and about 3 days for the larger. Assuming for simplicity that loading and discharging port time are each 2 days, ship size can now be recalculated for a range of possible number of ships and speeds. Only three combinations are shown to indicate the process, but Figure 31 shows the range of possible fleets. Number of ships 2 4 4 Speed, knots 16 16 12 €2a vime 3000 miles, days 7.8 7.8 10.4 Port time, 2 calls, days 4.0 4.0 4.0 Round trip days 11.8 11.8 14.4 RTPA (350 days) 23.7 29.7 24.3 Ship DW from (1) 44300 22100 27000 Frequency of service, days 5.9 3.0 3.6 108 - Engineering Economics and Ship Designnto |e aes are EES TER | I 4 | 1 bay _iaeguency, “crt be ESSE ee eee :™ [at ] £ | 8 ieee | | saat o MLL LL } Jee aes ola peaoweraur ° « 2” “ ry « ” . SPEED, KNOTS. Fig.31 Spectrum of Possible Bulk Carrier Fleets Note that for fixed annual cargo capacity and fixed port time, frequency and capacity are related and independent of speed, because: ~ Round trip days prequency, (cays) ~'jcnbargotastitzs Annual capacity in one direction = Average ship capacity x “Gate “i. Shiga 4 SEER Average ship capacity = Annual capacity , Round trip days Number of ships Annual capacity x frequency Part III - Application To Ship Design - 109It might be considered too risky to have a single ship fleet, and operationally inconvenient to have less than one ship per week (7 @ay frequency). Similarly a frequency of less than 2 days would require more than one berth, as port time is 2 days. The remaining combinations of size, speed and number of ships all look feasible, with between 2 and 6 ships, 15,000 to 50,000 dwt, 10 to 18 knots, frequency 2 to 7 days. More detailed studies would then be put in hand for exploring the design parameters of ship and shore installations for fleets of 2, 3, 4, 5 and 6 ships, at an appropriate level of detail, evaluating the comparative economics and finding the overall optimum of ships plus shore installations, usually in terms of minimising transport cost per‘tonne cargo (RFR). TABLE 11 Average Voyages and Potential Productivities of Typical Ships Ship type Large tenker|Buik carrier[Products carrier|container ship|Cargo |iner|RoRo ferry| Coast Suaer desdveight, tonnes|250 000 60 000 Wo 000 36 000 17 000 [6000 2500 Maximun cargo payioad, [244 000 57 000 37 000 26 000 12.000 | 4000 2300 tonnes. {erude oft) | (ary butk) | (refined (2300 (generat | (100 (Dulh) products) Containers) | cargo) | tratiers) Average speed, knots wy 15 % 21 16 16 n Yotal-alies per round —|16 000 14 000 5-000 12 000 15 000 {2 000 1000 trip Tots! wiles per annum {106 000 79 000 88 000 124 000 To 000 {97 000 — | u5 om» Port calls per round trip|2 3 3 6 9 2 tes Average days per call [2.5 6.0 2.0 1.7 4.0 1.0 2.0 Port days per round trip |5 18 6 10 36 2.0 uso Per cent port time 9 37 30 29 ug 2 54 Sea days per round trip [us u Ww 20. 39 5.2 3.8 Sea days per annus 37 221 2u5 eur 192 253 in Tote! Gays per round trip|53 49. 20 34 % 12 7.8 RTPA (350. days} 6.60 Taw 17.5 10.3 467 48.6 icy Average per cent wiles |50 60 50 100 95 100 60 oad Per cent full of cargo 196 90 90 70 75 50 90 Qverali toad factor ig 54 5 70 n 50. 54 per cent Tonnes cargo per annum |} 546 000 | ‘440 000 583 000 375 000 20,000 {194 000 }122 ati Tonnes per annum per dvt 16.2 1.3 tW6 10.4 4.7 32 45 Yonne-miies per annum (M)| 12370 2ii20 1460 2250 600, 198, 56 Tonne-miles per ove 45 500 fo" Soo 36 400 62 500 32/300 __|22 300 (97) = 2x(2)«(13)x(16)/100 Line (19) = (17 )<(4)72 10 - Engineering Economics and Ship DesignGeneral Cargo Ships The position with general cargo ships is similar in principle, but there are more considerations to take into account. In particular the performance of fleets of unitised cargo ships is markedly different from that of break-bulk ships. Unless there is a clearly defined type appropriate for the trade, it may thus be necessary to compare fleets of one or more of the following types:- - Container ships - Roll-on/roll-off ships (RoRo) - Pallet carriers - Barge carriers - Break-bulk multi-deck cargo vessels - Combination types, e.g. container/RoRo, multi-purpose tween-decker, container/barge carrier. As most cargo liners operate in Conferences, there may be restrictions on the number of a company's ships or minimum frequency of port calls for a particular service. Furthermore, as freight rates are fixed within each Conference, competition tends to take the form of higher speeds or better performance in handling particular cargoes. Higher speeds are also encouraged by the higher average value of general cargo compared with bulk, which adds potential inventory costs. The cargo movements will also fluctuate with the state of trade, as well as seasonal effects. Even with unitised cargo,- there are nearly always more than two ports served. An adequate margin is therefore necessary in fleet capacity, taken in conjunction with an appropriate load factor. Where cargoes of a wide range of stowage factor are being carried, allowance must‘be made to provide adequate cubic capacity, and if necessary deck stowage. Figure 32 shows how sea transport cost per container varies for a particular trade route with number of ships, size and speed. Since several combinations all offer virtually the same freighting cost, other factors would be then considered before undertaking detailed design studies e.g. competition, physical limitations on ship dimensions, machinery requirements etc. Part III - Application To Ship Design - 11178900 CONTAINERS PER ANNUM 200 MILES EACH WAY | ima, = SePHLEET 8 T480 nky aS 8 Ts wrk PEs teas enna | tra = SME ee tty ants rousr- * casts necro) race amie 2059100 \ suns srs " Mon yt Weta o % seep the em. Sree U0 Fig.32 Container Ship Fleets Transport Cost The Systems Approach Much has been written on the subject of the systems approach to design but, in essence, it can be regarded as an integrated quantified approach to problem solving using appropriate tools. It reduces the complexity of a real-life system to manageable proportions, yet still retains the essential features which affect performance and economics. Systems Analysis is used to define the problem: The system under study, e.g. crude oil transport system The relevant sub-systems, e.g. machinery system The objectives of the system, e.g. to minimise transport costs The gathering of basic information. 112 - Engineering Economics and Ship DesignSystem Design is concerned with: - Forecasting, e.g. the demand for oil - Model building, i.e. a simplified representation of the real system, such as a mathematical model - Simulation of the system or replication of the essential features of operating a complex system - Optimisation of the system, e.g. selection of the design variables, i.e. those under the control of the designer, such as ship main dimensions. At the ship design level, the systems approach encompasses stages such as set out in Table 12. At the supra-system level, the problem of looking at alternative transport concepts rather than conventional tankers might be studied, e.g. pipelines, towed flexible containers etc. At the sub-system level, alternative cargo handling systems might be studied - the results of which could be fed back at the ship design level. System boundaries need to be considered, particularly by reference to financial and contractual commitments at various stages. Part III - Application To Ship Design - 113TABLE 12 The Systems Approach to Ship Design STEP EXAMPLE Formulate problem and Find optimal design of bulk carrier objective for a given trade route with minimum transportation cost. 2. Construct conceptual mode! Sketch flow diagram: showing logical relationships | e.g. R.F.R Charges + op. costs emer Las aa ‘AC: cargo OW, RTPA, load factor etc. CC: first cost, req'd rate of return OC: daily, fuel, port etc. costs 3. Identify independent Cargo quantities and characteristics, variables port facilities, route restrictions, fuel price etc. 4. Identify dependent variables First cost: steel, outfit, mach'y cost mass power dimensions speed Op. costs: power, crew number, OW etc 4.1 Design vartables L, B,D, T, Cg, V, type of machinery, hold geometry, etc. 5. Collect data Cargoes, ports, costs, masses etc. 5.1 Establish constraints Canals, berth depths, cargo handling rate, freeboard, stability etc. 6. Construct mathematical model - usually computer program 6.1 Technical design Set up relationships, equations etc. Power = f(dimensions, V, Cy ete.) Steelmass = f(dimensions, arrgt. et 6.2 Economic aspects First cost, operating costs, annual carg R.F.R. = annual costs/annual cargo 6.3 Optimisation procedure Search process to find combination of design variables giving min. R.F.R. 7. Test modet Check results against actual ships 8. Adjust model As necessary 8. Run model for real Given route, unit costs etc. 10. Make decision Choose final design parameters, L, B, T, Vete. 114 - Engineering Economics and Ship Design