A Study Of Chartering Decisions Of Domestic LPG Shippers Based On System Dynamics

LPG shipping is an economical and safe mode of transport, its high-volume, long distance, low-cost advantages make it one of the main mode of inter-regional LPG transportation. Compared with other domestic shipping market, the scale of LPG shipping market is smaller. The shippers are mainly CNPC (China National Petroleum Corporation), Sinopec Group and local refineries. Domestic LPG shipping companies are generally small and the transport market is not up to standard. Due to the blind development of the capacity these years, the current capacity supply is far greater than the capacity requirements.LPG shipping business in China remained the offshore sales model, ship owners can choose the port of loading freely based upon the purchase price, profitability and other factors which limits the influences of cargo owners and their ability to control logistics resources. In order to change this situation, CNPC, Sinopec Group and other cargo owners decide to control LPG shipping capacity by chartering, and gradually change the business model, reduce operating costs, improve logistics efficiency to ensure smooth transportation.However, due to the small size of domestic LPG shipping market, the change of shippers’charter decisions will undoubtedly cause changes in the demand of transport, thereby exacerbate price competition which makes it more difficult to predict the market trends. For cargo owners, the optimal charter decision made at some point may not be sustained optimal. And how to make the best charter decision becomes worthy to study.By the qualitative and quantitative way, this thesis firstly qualitatively analyzes the domestic LPG trade market, as well as LPG shipping market. Secondly, a system dynamic model is proposed to analyze the operation and response mechanisms of the shipping market. Through simulating different chartering decisions of shippers, the paper finally finds the best number of chartering ships for the cargo owners which will give them some references and also contribute to the development of LPG shipping market.