Strategies for capacity utilisation in RoRo shipping

Journal article, 2009

In waterborne transportation, an increase in fleet size involves long-term planning and heavy investments. Institutional features; trade imbalances and demand variations; and customer demands for high frequency, create a situation where liner shipping companies tend to operate with a high level of unutilised vessel capacity. This paper examines vessel capacity utilisation and is based on a study of seven RoRo services in Northern Europe. The purpose is to analyse capacity utilisation strategies and examine measures aimed at enhancing vessel capacity utilisation. Capacity utilisation strategies are influenced by route specific characteristics, such as trade imbalances and demand variations, competitive situation, state of the market, and types of customers and cargo. The analysis here concludes that two extreme strategies are followed: a) Cut peaks, that is, to keep capacity limited so as to increase short run revenue per transported unit, and b) Never say no, which allows a higher level of unutilised capacity in order to maintain a high service level, good flexibility, and the possibility to grow in the market. This paper also describes long-term and short-term measures to enhance vessel capacity utilisation.