A risk-cost approach to routing & scheduling crude oil tankers

Maritime transportation, the primary mode for intercontinental movement of crude oil, accounts for 1.7 billion tons annually -bulk of which are carried by via a fleet of large crude oil tankers. These tankers are very expensive to own and manage, and hence the relevant maritime literature has focused only on the cost-effective scheduling of these tankers. We argue that a cost-only approach may not be appropriate for a hazmat such as crude oil, since some of these shipments could lead to oil spills and occasional accidents resulting in significant environmental, social, and economic consequences. We propose a mixed-integer optimization program -with both the operating cost and transport risk objectives -for routing and scheduling a heterogeneous fleet of crude oil tankers. The optimization program was tested on realistic size problem instances to gain managerial insights.