In this post, I will try to flesh out the perspective of a shipping company whose goal is to reduce its carbon footprint.
Let us say there a shipping company that owns and operates deep sea bulk carriers. The following areas are of concern, from the greatest to the least:
- Fuel-related cost (FC): purchase, distribution, operating and maintenance
- Cost of converting/retrofitting a vessel (VC): engine and propulsion system, fuel space
- Port infrastructure to support fueling (IC)
So a spreadsheet model can be readily set up to compute those costs.
A total cost of ownership (TCO) model can be set up to model a 30-year total cost:
TCO = FC + VC + IC
The key here is not to get into the details, but provide a big-picture of possible options moving forward. The interesting thing is how to allocate the entire fleet of ships, knowing that the technology will evolve. My intuition is to allocate the ships according to the distribution of market share.