CHOSEN ECONOMICAL ASPECTS OF VESSEL’S

OPERATIONAL SPEED
Kajetan Jackowski
Department of Ship Operation
Gdynia Maritime University
Poland

ABSTRACT
Determination of ship’s operational speed for various conditions of a voyage is dealt with in this
paper. Major economical criteria of speed optimization are considered and analysed, as well as their
modification due to occurence of speed limitation in a seaway. Examplary calculations of
economically justifiable operational speed are given and graphs of costs and profits, as the
functions of speed, are presented. The last paragraph of the paper contains a few practical remarks
about dependance of optimal solutions on some external factors.

1. INITIAL REMARKS

Usually, by an operational speed there is meant full sea speed, which is so designed
that the working point of ship’s main engine at this speed is technically most
advantageous.
However, the scope of the notion “operational speed” may also comprise many other
aspects of ship operating, including the main task, that is carriage of cargo for profits.
Maximization of profits is an obvious goal. There are periods, however, (for instance
ballast trips), when ship operating does not bring any profit. Therefore, in practice,
maximization of profits may at times be replaced by minimization of costs, although
the goal of increasing profits has always higher priority than keeping the costs down.
Also in circumstances, when vessel’s speed should be adjusted according to the
changeable requirements (of safety, of punctuality, or of the altered rotation), those
adjustments may be treated as temporary modifications of operational speed.
At such approach the operational speed can be defined as the speed which is optimal
for the task being performed – optimal in the meaning of assumed criteria and in
accordance with alternant priorities attributed to these criteria (depending on
prevailing conditions).

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2. OPERATIONAL SPEED AND ECONOMICAL SPEED

In standard conditions of a voyage (if there is no call for extra measures to ensure
safety of ship and cargo, or because of an altered rotation of the vessel), the
operational speed (VO) can be deemed identical with economical speed (VE ), which is
most profitable for the ship operator. (In other words VE is the most effective speed
from an economical point of view). Also in non-standard conditions, while special
measures are taken to ensure safety of ship, or to adapt ship’s speed to new and urgent
necessities, they may be deemed the absolute but transient constrains (until perils or
emergencies persists) superimposed on the assumed function of economical
optimization of the voyage.

3. MAJOR CRITERIA FOR DETERMINING

AN ECONOMICAL SPEED

As it was mentioned before, in order to determine properly ship’s operational speed

for the given stage of voyage there must be considered two basic economical rules to
be applied, that is m i n i m i z a t i o n of cost of a voyage and m a x i m i z a t i o n
of profit – as well as possible interrelations between those rules. (Laytime in ports will
not be taken into account).

3.1. Minimum cost criterion

The total cost (Z ) of a voyage can be expressed as

Z = n ⋅ Z1 , (1)
where Z 1 is total daily cost and n = d ⋅ (24 V ) −1 is the number of days needed to
cover the whole distance d (from departure to destination), with a constant speed V.
The total daily cost ( Z 1 ) is the sum
Z 1 = z1 + Δz1 , (2)
of daily cost of fuel z1 and other permanent daily costs Δz1 (i.e. expenses for crew
sustenance and wages, for running ship’s electricity plant, for maintenance, etc).
If fuel consumption is proportional to squared speed of vessel, then
z1 = c1 ⋅ V 2 (3)

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where coefficient c1, for a known cost z1 of daily fuel consumption at full ahead
speed VFA , that is z1 (VFA), can be ascertained as

c1 = z1 (VFA) · (VFA) –2 (3a)

With regard to equations (2) & (3) the equation (1) can be transformed as follows:

Z (V ) = n · (c1 · V 2 + Δz1 ) = d24 ⋅ ( c1 ⋅ V + Δz1 ⋅ V –1), (4)

where d24 = d ⋅ (24) –1.

The total cost, as the function of speed Z (V ) for 0 ≤ V ≤ VFA, reaches its minimum Z E,
at the point where first derivative d Z / dV = 0, that is for d24 ⋅ c1 – d24 ⋅ Δz1 ⋅ V –2 = 0,
and then finally
V 2 = c1 ⋅ ( Δz1 ) –1 = (VE)2 (4a)

Therefore the economical speed VE ensuring minimal cost Z E satisfies equation

½
VE = [c1 ⋅ ( Δz1 )–1] (5)

If all permanent daily costs Δ z1 and daily cost of fuel z 1 are expressed in some
arbitrarily defined covenant financial units [cfu], (for instance: 1 cfu = present price of
1 ton of fuel), ship’s speed V in knots [kn] and the length d of ship’s route in nautical
miles [Nm], then dimension of coefficient c1 is [cfu]·[kn]2.
Fig. 1 shows an exemplary graph of function Z (V ) for following values: z1 (VFA) =
= 22.5 cfu, VFA = 15.0 kn, Δ z1 = 7.5 cfu and d = 2400 Nm.
For these values: c1 = 0.1 [cfu]·[kn] 2, Z1 (VFA) = z1 (VFA) + Δ z1 = 30.0 cfu and total
cost function Z (V ) = 10 · V + 750 · V –1.
Minimum of cost function, Z E = 173.2 cfu, is achieved at the speed VO ≡ VE = 8⅔ kn.

3.2. Maximum profit criterion

From the economical point of view the minimization of total cost of voyage,
discussed in subparagraph 3.1, should be considered an ancillary criterion – the
principal one is always maximization of profits.

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 Fig. 1. An example of a voyage cost Z as a function of ship’s speed V
Z1 = Z (V = 1 kn) = 760 [cfu] Z9 = Z (V = 9 kn) = 173⅓ [cfu]
Z 2 = Z (V = 2 kn) = 395 [cfu] Z10 = Z (V = 10 kn) = 175 [cfu]
Z 4 = Z (V = 4 kn) = 227½ [cfu] Z12 = Z (V = 12 kn) = 182½ [cfu]
Z 6 = Z (V = 6 kn) = 185 [cfu] Z14 = Z (V = 14 kn) = 193.6 [cfu]
Z8 = Z (V = 8 kn) = 173¾ [cfu] Z15 = Z (VFA = 15 kn) = 200 [cfu]
Z E = Z (VE = 8⅔ kn) = 173.2 [cfu] Z 20 = Z (V = 20 kn) = 237½ [cfu]

The total profit ΔΣ (i.e. net income) gained in a voyage can be calculated by
deducting the voyage costs Z from the total income, that is from the sum Σ of all
freight revenues:
ΔΣ = Σ − Z (6)

Maximization of total profit ΔΣ by minimizing the cost Z would be a right solution

for a single voyage, had it not been for the prospects of freight incomes in next
voyages. The analysis of function Z (V) in subparagraph 3.1 indicates however that
minimization of total voyage cost can only be achieved in a way of adequate

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reduction of operational speed – and that means a loss of time because of prolonged
spell of a voyage, time that could be used to earn freight dues in the next voyage. This
drawback can be prevented by applying modified criterion of daily profit
maximization, that is the profit (Δσ ), which is the difference:
Δσ = σ1 − Z 1 (7)
between total income per day
σ1 = n −1 ⋅ Σ = (d24 ) −1 ⋅ V ⋅ Σ , (7a)
and total daily cost Z 1.
With the allowance for (2) & (3) it is possible to express the daily profit (7) as the
following function of vessel’s speed:
−1
Δσ (V ) = 24 · d ⋅ Σ · V − c1 ⋅ V 2 − Δ z1 (8)
Equation (8) describes a second-degree curve, that reaches its maximum at the point
where first derivative d(Δσ) / dV = 0, that is for 24 · d –1 · Σ − 2 · c1 · V = 0,
which means that economical speed VE satisfying criterion of maximal daily profit is
VE = 12 · d −1 · Σ · (c1) −1 (8a)
It is obvious that, in order to bring a profit Δσ, the daily income σ1 must overcome
total daily cost Z1 at any operational speed VO, that is any one between economical
speed VE given by (5) and full sea speed VFA. This requirement is tantamount to
satisfying inequity:
σ1 > c1 · (VFA) 2 + Δ z1 (9)
For the same data as in case of function Z (V ) presented in Fig. 1, inequity (9) takes
the form
σ1 > 0.1 · 15 2 + 7.5 = 30 [cfu]
and spell of the voyage (at full speed VFA = 15kn), in days, is n = 6 ⅔.
It means that shipment of cargo shall be profitable for freight rates ensuring total
income
Σ > n · Z1 (VFA) = 200 [cfu], (9a)
where daily profit is defined by relationship:
2
Δσ (V ) = 0.01 · Σ · V − 0.1 · V − 7.5 (9b)
Graphs of function (9b), for five various cases of total income Σ [cfu]: (1) for
Σ = 100 cfu, (2) for Σ = 200 cfu, (3) for Σ = 300 cfu, (4) for Σ = 400 cfu and (5) for
Σ = 500 cfu, (where income is expressed in covenant financial units [cfu]), are shown
in Fig. 2.

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 Fig. 2. An examplary graph of daily profit Δσ as a function of operational speed VO
Maximal levels of daily profit:
function (1) for Σ = 100 [cfu] → max(Δσ) = – 5 [cfu] (minimal loss), at VE = 5kn
function (2) for Σ = 200 [cfu] → max(Δσ) = +2.5 [cfu] (max. profit), at VE = 10kn
function (3) for Σ = 300 [cfu] → max(Δσ) = +15.0 [cfu] (max. profit), at VE = 15kn
function (4) for Σ = 400 [cfu] → max(Δσ) = +32.5 [cfu] (max. profit), at VE = 20kn
function (5) for Σ = 500 [cfu] → max(Δσ) = +55.0 [cfu] (max. profit), at VE = 25kn

3.3. Hazard factors and speed modifications

Prevailing weather or other external factors (for instance, shallow water effects) can
cause that ship’s speed decreases considerably (even with the engine set full ahead),
though fuel consumption remains on the same level. Such constrain entails an
adequate adaptation of daily profit criterion, which is attained by modification of
function Δσ (V ).

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 Fig. 3. An examplary graph of daily profit Δσ as a function of operational speed VO
with the constrain: Vmax = 10kn = ⅔VFA
function (1) for Σ = 100 [cfu] → max(Δσ) = – 6.4 [cfu] (minimal loss), at VE = 2.2(2)kn
function (2) for Σ = 200 [cfu] → max(Δσ) = – 3.1 [cfu] (minimal loss), at VE = 4.4(4)kn
function (3) for Σ = 300 [cfu] → max(Δσ) = +2.5 [cfu] (max. profit), at VE = 6.6(6)kn
function (4) for Σ = 400 [cfu] → max(Δσ) = +10.3 [cfu] (max. profit), at VE = 8.8(8)kn
function (5) for Σ = 500 [cfu] → max(Δσ) = +20.3 [cfu] (max. profit), at VE = 11.1(1)kn

Fig. 3 presents the graphs of daily profit Δσ (V ) for the same data as in the case of
Fig. 1 and Fig. 2, but in a situation, where due to prevailing external conditions the
maximal speed drops, despite setting full ahead, to Vmax = ⅔ VFA = 10kn (or to
proportionally slower speeds for lower telegraph settings). Making allowance for it
means multiplying coefficient c1 by (VFA ⁄Vmax)2 and then the general equation (8) takes
the form:
Δσ (V ) = 24 · d −1 · Σ · V − c1 · (VFA ⁄ Vmax) · V 2 − Δ z1 , (10)
The application of multiplier (VFA ⁄ Vmax) 2 to formerly adopted data gives
the coefficient: c1 = 0.1 · (1.5) 2 = 0.225, (10a)

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and profit function: Δσ (V ) = 0.01 · Σ · V − 0.225 · V 2 − 7.5 (10b)
It must be noted, however, that if the reduction of speed is not forced by external
factors, but is a result of navigator’s decision due to imminent perils (for example fog,
or risk of collision), then the assumed daily profit function is given by (8), but within
limited range of admissible operational speeds.

4. CONCLUDING REMARKS

Comparison of function (9b) with (10b) indicates, that externally forced limitations
of speed are essential for the choice of optimal operational speed of a vessel.
(To set an example: for total freight income Σ = 300 cfu and no forced speed limitations,
the economical speed VE = VFA = 15.0kn = Vmax; in the case of restriction Vmax = ⅔ VFA =
10kn the economically optimal speed will change to VE = 6.6(6)kn ≠ VFA = 10.0kn = Vmax).
Of key importance is also ratio of total income (Σ) to the sum of all voyage costs ( Z ).
The higher the income level in comparison to the level of cost, the more profitable is
time saving instead of cost reduction. In this question an important indication ensuing
from (8a) is the value of economical speed, VE, which maximizes daily profit Δσ.
If VE is greater than VFA, then the maximum of daily profit, max(Δσ), is attained at the
highest possible speed Vmax and thus the operational speed should be VO = Vmax.
However, in the case of total income only several per cent greater than the sum of
incurred costs (i.e. slightly above the level of profitability) the economical speed VE is
lower than attainable maximal speed (Vmax) − and this means that maximization of
profit, to get max(Δσ) per each day of the voyage, is simultaneous with some
reduction of daily cost of fuel consumption.

REFERENCES

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