Logistics and Operations Management

This document provides information on logistics and operations management. It includes answers to specific tasks related to sailing days, bunker/fuel costs, port distribution charges, and break-even freight rates. The document also discusses the comparison and justification for the choice of the best voyage charter. The subject is Logistics and Operations Management, and the document type is a study material.

Running head: LOGISTICS AND OPERATIONS MANAGEMENT
Logistics and Operations Management
Name of the Student
Name of the University
Author’s Note

1LOGISTICS AND OPERATIONS MANAGEMENT
Table of Contents
Answer to Task a.................................................................................................................2
Answer Task b.....................................................................................................................2
References............................................................................................................................6

2LOGISTICS AND OPERATIONS MANAGEMENT
Answer to Task a
Part a
A
Felixstowe/Port
Klang 18 Days Distance of Felixstowe to Port Klang (5627.5 knots) x (13 x 24)
B
Cape
Town/Genoa 70 Days Given
C
Load Port
(Felixstowe) 5 Days Tonne Scrap metal Loaded/Loading Rate
D
Discharge Port
(Genoa) 3 Days Tonne Scrap metal Loaded/Discharging Rate
Total Duration A+B+C+D 96 Days
While Sailing
E Fuel Oil $ 22,78,600
1 metric ton = 1000 kg
1000 kg / 0.850 kg/L = 1176.47 liters
F Diesel Oil $ 45,43,735
In Port Consumption
G Fuel Oil $ 1,22,977.3
Total Bunker Cost E+F+G $ 69,45,313
Port Distribution
Charges $ 4,300.00
Total Expense
without commission $ 69,49,612.61
Total Commission @
4.5% $ 3,12,733
Total Expense $ 72,62,345
Break Even freight
rate required to
perform this voyage $ 345.8 PMT
Sailing Days Required
Bunker/Fuel Cost
Answer Task b
Part b
Sailing Days Required
A
Felixstowe/Port
Klang 18 Days
Distance of Felixstowe to Port
Klang (5627.5 knots) x (13 x
24)
B
Cape
Town/Genoa 70 Days Given

3LOGISTICS AND OPERATIONS MANAGEMENT
C
Load Port
(Felixstowe) 5 Days
Tonne Scrap metal
Loaded/Loading Rate
D
Discharge Port
(Genoa) 3 Days
Tonne Scrap metal
Loaded/Discharging Rate
Total Duration A+B+C+D 96 Days
Bunker/Fuel Cost
While Sailing
E Fuel Oil
$
22,78,600
1 metric ton = 1000 kg
1000 kg / 0.850 kg/L = 1176.47
litres
F Diesel Oil
$
45,43,735
In Port Consumption
G Fuel Oil
$
1,22,977.3
Total Bunker Cost E+F+G
$
69,45,313
Port Distribution
Charges
$
11,800.00
Total Expense without
commission
$
69,57,112.61
Total Commission @
4.5%
$
3,13,070
Total Expense
$
72,70,183
Break Even freight rate
required to perform this
voyage
$
370.4 PMT
Comparison and Justification for the choice of best Voyage charter

4LOGISTICS AND OPERATIONS MANAGEMENT
The overall recommendation for the widest emission has been made by consideration of
the best combination of required expenses and Break-Even freight rate required to perform this
voyage. Therefore, it is analysed from both options which rate is computed as less based on the
given factors. As per the given background the overall for Task a it can be inferred that MV
Kuntah is seen as a handy -sized bulk carrier owned by Max Shipping company. The details of
the vessel show that in option one the wide charter can carry scrap metal from UK to Malaysia
and in option two it can carry the same material from South Africa to Italy. Based on the details
of task a we have been able to calculate that it will take 18 days to reach the cargo from
Felixstowe to Port Klang. On the other hand, it will take a delivery time of 70 days for the same
delivery at Port Cape Town and redelivery at port Genoa (Arifin et al. 2018).
The computation of sailing days for Task a can be inferred as 96 days. Additionally, the
bunker and full cost have shown that the total sailing cost of bunker is seen to be $ 6822335.
Furthermore, the in-Port consumption cost has been computed as $ 7068290.3. As per the some
of the other details can be seen that the total distribution charges at port is computed as 4300 and
further inclusion of the expense commission, the total expense can be clearly depicted as
$72,62,345 for the entire voyage (Tarovik et al. 2017). The consideration of Break-Even freight
rate required to perform this voyage is identified by dividing the total expense by total tonnes of
scrap metal in bulk (Duru, Mileski and Gunes 2017). This computation is identified as Break-
Even freight rate required to perform this voyage with the cost of $ 345.8 per metric ton.
However, in the second part in case of option one the voyage charterer of has agreed to pay
freight rate equal to the breakeven rate calculated as per the fixture details in Task a plus an
additional 7% (Lu et al. 2015).
In case of the second option the time charter is further willing to hire MV Kuntah at a rate
of USD $ 7500 per day for a total duration of 70 days. This will significantly increase the port

5LOGISTICS AND OPERATIONS MANAGEMENT
distribution charges. Therefore, despite of similar computations for the sailing days required and
bunker cost there will be a surge in the overall discharge cost at the destination port. This
computation can be clearly seen as increase in the port distribution charges from $ 4300 to $
11800 (Otsuka et al. 2016). As it is stated that pay freight rate equal to the breakeven rate
calculated as per the fixture details in Task a plus an additional 7%, this amount has further
increased the Break-Even freight rate required to perform this voyage. A clear comparison of the
overall expense in the previous option shows that the total operating expense of the voyage was
$72,62,345 which was significantly increased to $72,70,183. At the same time, Break Even
freight rate required to perform the first voyage was 345.8 PMT with significantly increased to
$370.4 PMT (Da Costa Simões, Caixeta-Filho and Palekar 2018). This consideration has led to
the overall increment in the cost of the company. Therefore, MV Kuntah needs to employ more
expenses in case the voyage charter is willing to pay freight rate equal to the breakeven rate
calculated as per fixture details in Task a. In addition to this, in case of option to the time
charterer is seen to be willing hiring of MV Kuntah at USD 7500 per day which is also
increasing the overall discharge cost at the port (Duru, Mileski and Gunes 2017).
In order to optimise the cost associated with the final voyage MV Kuntah it needs to
consider the factors which were provided in the initial setting. This will enable the charterer in
accomplishing the best output in tonnes and at the same time keep the cost to the minimum level
possible (Alessandrini et al. 2017). Furthermore, it needs to be seen that the total amount of
commission is present in both options. Therefore, this is not fulfilling the objective of reducing
the overall expenses which would have been made it favourable to opt for the second scenario.
Therefore, it can be stated that it would be a wise decision to proceed with the voyage fixture as
per including the network port from Felixstowe/Port Klang, Cape Town/Genoa, Load Port
(Felixstowe) and Discharge Port (Genoa) (Back 2017).

6LOGISTICS AND OPERATIONS MANAGEMENT
References
Alessandrini, A., Guizzardi, D., Janssens-Maenhout, G., Pisoni, E., Trombetti, M. and Vespe,
M., 2017. Estimation of shipping emissions using vessel Long Range Identification and Tracking
data. Journal of Maps, 13(2), pp.946-954.
Arifin, M.D., Hamada, K., Hirata, N., Ihara, K. and Koide, Y., 2018. Development of Ship
Allocation Models using Marine Logistics Data and its Application to Bulk Carrier Demand
Forecasting and Basic Planning Support. Journal of the Japan Society of Naval Architects and
Ocean Engineers, 27, pp.139-148.
Back, P.M., 2017. Virtual fuel flow estimation in shipping: how to formulate and validate a
model for time-dependent momentary fuel flow estimation by combining high-frequency GPS
and meteorological data with low-frequency noon reports-a case study.
Chen, H., Ballou, P.J., Deng, L. and Elkin, J.D., Boeing Co, 2015. Estimating probabilities of
arrival times for voyages. U.S. Patent 9,109,895.
Da Costa Simões, D., Caixeta-Filho, J.V. and Palekar, U.S., 2018. Fertilizer distribution flows
and logistic costs in Brazil: changes and benefits arising from investments in port
terminals. International Food and Agribusiness Management Review, 21(3), pp.407-422.
Duru, O., Mileski, J.P. and Gunes, E., 2017. Performance obligations for “revenue from
contracts with customers” principle in the shipping industry. Maritime Business Review, 2(3),
pp.211-223.
Duru, O., Mileski, J.P. and Gunes, E., 2017. Performance obligations for “revenue from
contracts with customers” principle in the shipping industry. Maritime Business Review, 2(3),
pp.211-223.

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Lu, R., Turan, O., Boulougouris, E., Banks, C. and Incecik, A., 2015. A semi-empirical ship
operational performance prediction model for voyage optimization towards energy efficient
shipping. Ocean Engineering, 110, pp.18-28.
Mallidis, I., Iakovou, E., Dekker, R. and Vlachos, D., 2018. The impact of slow steaming on the
carriers’ and shippers’ costs: The case of a global logistics network. Transportation Research
Part E: Logistics and Transportation Review, 111, pp.18-39.
Otsuka, N., Imai, K., Nagakawa, K. and Furuichi, M., 2016, February. Northern Sea Route
transport scenarios for various cargoes. In The 31th International Symposium on Okhotsk Sea &
Sea Ice. Mombetsu Japan.
Tarovik, O.V., Topaj, A., Bakharev, A.A., Kosorotov, A.V., Krestyantsev, A.B. and
Kondratenko, A.A., 2017, June. Multidisciplinary Approach to Design and Analysis of Arctic
Marine Transport Systems. In ASME 2017 36th International Conference on Ocean, Offshore
and Arctic Engineering (pp. V008T07A005-V008T07A005). American Society of Mechanical
Engineers.