Inventory Routing for Ammonia Supply in German Ports

Abstract

Following the International Maritime Organization (IMO), in order to safeguard the realization of the Paris Agreement on climate protection, greenhouse gas (GHG) emissions have to be reduced by 50% by the year 2050. This objective shall be reached by decarbonization of maritime traffic, which is why ship operators currently increasingly search for alternative fuels. Moreover, since the start of the Ukrainian war in February 2022, this issue of alternative fuels has gained central importance in political agendas. A promising candidate for clean shipping that meets the IMO goals is ammonia since it is a carbon-free fuel. Ammonia (NH3) shows good advantages in handling and storage, and it ensures long sea voyages without any significant loss in cargo space for a reasonable price. Hence, ammonia has the potential to improve the environmental footprint of global shipping enormously. Induced by the introduction of stricter regulations in the so-called emission control areas (ECAs) in Northern Europe in 2015 as well as the renewed global sulfur cap, which entered into force in 2020, ship operators had to decide between different compliance methods, among which the most popular solutions are related to the use of expensive low-sulfur fuel oils, newbuilds and retrofits for the usage of liquefied natural gas (LNG) or the installation of scrubber technology. A change to ammonia as a marine alternative fuel represents an additional novel future option, but the successful implementation depends on the availability of NH3 in the ports, i.e., on the installation of the maritime NH3 infrastructure. Currently, the single German NH3 terminal with maritime access is located in Brunsbüttel, the western entrance to Kiel Canal. The distribution of NH3 from the existing NH3 hub to other German ports can be analyzed by the mathematical model of an inventory routing problem (IRP) that is usually solved by combinatorial optimization methods. This paper investigates the interrelated research questions, how the distribution of marine NH3 fuel can be modeled as an IRP, which distribution mode is the most economic one for the German ports and which modal mix for the NH3 supply leads to the greenest distribution. The results of this paper are empirically validated by data that were collected in several EU projects on sustainable supply chain management and green logistics. The paper includes a special section that is dedicated to the discussion of the economic turbulences related to the Ukrainian war together with their implications on maritime shipping.