Port clusters as an opportunity for optimizing small-scale LNG distribution chains: an application to the Mediterranean case

Small-scale LNG logistics chains have become more important for delivering LNG via shipping from large supply terminals to customers via satellite terminals. An ideal application of small-scale LNG logistics chains is in the Mediterranean basin, where the maximum distance between two ports is always less than two thousand miles. Focusing on a Tyrrhenian application case, this study develops a modeling tool capable of defining the optimal configuration for a small-scale LNG distribution network serving a set of Tyrrhenian ports organized as a cluster. The aim is to minimize total network costs, including both port entry costs and travel costs. The problem is modelled as a Vehicle Routing Problem with Draft Limits and Heterogeneous Fleet (VRPDLHF). Different network configurations are being tested to explore the transportation cost savings that could result from systemic and integrated management of LNG supply if ports were organized in a cluster. Computational results show that, by acting as an organized cluster, LNG port depots can potentially leverage their increased bargaining power during negotiations to seek reasonable import prices that can benefit from reduced transportation costs and guaranteed volume of LNG to purchase.