Danaos Corporation: Operational Research AND Analytics in Ship Management

The Problem

From the days of celestial navigation to our own, where we navigate by satellite, the voyage-planning dilemma has remained the same: Should planners plan the least expensive or the fastest voyage? Should they save money or time?

The Analytics Solution

At the beginning of 2011 the Danaos Corporation together with and the professional expertise of Danaos Shipping Co. and the creative thinking of Danaos Management Consultants SA, the worldwide leader in maritime enterprise information systems, took on this problem and set an objective of maximum revenue routing. The resulting program, ORISMA (Operations Research in Ship Management), provided a solution based on whole-fleet utilization. It combined financial data, hydrodynamic models, and weather forecasting to enrich, upgrade, and transform existing conventional maritime information systems to provide decision support and expert ontologies. The project focused on improvement of fleet utilization, scheduling optimization, intelligent voyage planning, and bunkering. ORISMA employs dynamic, linear, and nonlinear programming, as well as artificial neuron networks.

The Value

ORISMA realized a return of millions of dollars in a single year, due to achieving optimum solutions in operational, tactical, and strategic decision making. It led to the identification and elimination of nonproductive costs, increase of revenue, improvement of quality of services, and improvement of customer satisfaction. An average increase of 8% of net profit—approximately $1 million per vessel annually—was realized.

ORISMA was welcomed with enthusiasm by large shipping companies, including Anangel, TEN, Euroseas, and Target. It is already utilized by hundreds of vessels. An anticipated $500 million cost savings to ORISMA clients is estimated for 2012, with further significant increases expected in coming years. Companies also realized additional, equally significant, qualitative positive impacts in social responsibility, environmental awareness, and customer satisfaction.