ABSTRACT
In this paper, we propose a model for quantifying the value of operational agility in shipping, i.e., the value of being able to exploit possible profitable market opportunities quickly. For a system operating in a dynamic context, the ability to be able to adapt and change is essential. However, for real-world applications, exploiting this flexibility comes with a time delay. If we are not taking the time delay into account, we may be biased towards estimating a higher value of flexibility than what is realizable, as well as failing to properly design the system to be able to change within an adequate time span. A real option valuation model based on Monte Carlo simulation is proposed, where we consider the time delay as a model parameter. The proposed methodology is applied to a bulk shipping case. Bulk fleet capacity expansion is currently achieved mainly through newbuilding or the 2nd hand market, but designing versatile and reconfigurable ships and fleets are also an alternative. The results indicate that significant value can be enabled by being agile, and potential design solutions enabling agility are proposed, both for fleets and single ship cases.
