Managing River Logistics with Simulation

Managing River Logistics with Simulation

Inland waterway logistics have their own special aspects that include high seasonality due to weather conditions, long delivery times, restricted door-to-door delivery capabilities, and more. On the other hand, river transport is cheap, environmentally friendly, and allows large amounts of goods to be carried. Barges are widely used to carry both bulk cargo and containers.

Simulation can help companies justify switching to river logistics by comparing water transportation to other means in terms of costs, throughput, or shipping time. Shipping operators can use simulation to optimize routing and fleet management policies, taking into account uncertainties, breakdowns, bottlenecks, weather conditions, and water level. The following is a success story of river transport simulation-based optimization in South America.

InterBarge, a first-class waterway operator, affiliated with SCF Marine (a part of Seacor Holding Group), operates freight along the HPP Waterway (Hidrovia Parana Paraguay, located in Argentina, Paraguay, Brazil, and Uruguay) on a dedicated contract carriage. Both push boats and barges are preassigned to these contracts. During certain seasons of the year, these resources are free of contract commitment and have free convoy capacity on certain trips.

The company's challenge was to use this free capacity as a fleet, maximizing net voyage revenue, and deliver the dedicated contract freights by choosing the best convoy sizes and vessel allocation.

The managers questioned how to schedule all of their operations through this new fleeting mode, where there is complete independence between push boats, barges, and nondedicated contracts, while still including the dedicated contracts in the system. They wanted to analyze the behavior of the system where each push boat would decide, in an intelligent way, when arriving at a port or fleeting point, which is the best route to follow, and which barges they could use to build up temporary convoys. To do this, they utilized a simulation model.

The model included push boat and barge operations during five years, simulating their trips, with loading/unloading, and calculated net voyage revenue. The factors taken into account in the model included:

  • Push boat and barge characteristics
  • Push boats' pulling capacity and speed when navigating upstream or downstream, and loading/unloading times
  • Bunker consumption
  • Water level by month and route restrictions caused by it
  • Flag restrictions
  • Demand by month
  • Operation costs and timings of fleet usage and ports' operations

The model serves as a decision support instrument to maximize net voyage revenue, helps evaluate risks of new vessel acquisition, and negotiate contract freight price.

Read more in the Success Stories section of our website.