Abstract The International Maritime Organization (IMO) rolled out a set of new regulations that limit the sulfur content in the fuel oil used by ships, which came into effect from 2020. This study aims to explore the operational decisions of vessels inside and outside emission control areas (ECAs) under uncertain weather conditions and scrutinizes the economics of two types of ships: fuel-switching and scrubber installation. Such operational decisions include speed, trim, and path decision. We construct a navigation grid system, in which each grid contains weather parameters and sea condition. This navigation grid system can be applied to other type of ships due to the well-established cost structure. To improve fuel consumption estimation, we train fuel consumption estimation functions with respect to weather parameters, sea conditions, and operational decisions. This study then develops a stochastic dynamic programming model to optimize the path decisions, vessel speed, and trim. To evaluate the efficiency of the developed stochastic dynamic programming model, we further conduct a case study on a Post-Panamax container vessel that operates westbound from Hamburg to Houston. We identify the path decision, speed and trim under ECAs and the uncertain weather conditions. Surprisingly, this case study demonstrates that the ship utilizing fuel-switching takes a detour trip; in contrast, the ship with a scrubber chooses the shortest path by maximizing the speed. Additionally, we observe a knock-on effect — scrubber installation lifts carbon dioxide emissions due to increased vessel speed outside the ECA region. Rich managerial insights and potential policy implications are discussed.

Highlights • This study considers a joint optimization of speed, trim, and path decisions. • The model accounts for uncertain weather conditions. • A navigation grid system is to model routes between any two ports of a voyage. • This study draws managerial insights by exploring fuel-switching and scrubber installation.