Service type assignment and container routing with transit time constraints and empty container repositioning for liner shipping service networks

A decision tool is developed for a liner shipping company to deploy its fleet considering vessel speeds and to find routes for cargos with repositioning of empty containers and transit time constraints. This problem is referred as the simultaneous Service type Assignment and container Routing Problem (SARP) in the sequel. A path-flow based mixed-integer linear programming formulation is suggested for the SARP. A Branch and Bound (BB) algorithm is used to solve the SARP exactly. A Column Generation (CG) procedure, embedded within the BB framework, is devised to solve the linear programming relaxation of the SARP. The CG subproblems arises as Shortest Path Problems (SPP). Yet incorporating transit time requirements yields constrained SPP which is NP-hard and solved by a label correcting algorithm. Computational experiments are performed on randomly generated test instances mimicking real life. The BB algorithm yields promising solutions for the SARP. The SARP with and without transit time constraints is compared with each other. Our results suggest a potential to increase profit margins of liner shipping companies by considering transit time requirements of cargos.     

Game-theoretical models for competition analysis in a new emerging liner container shipping market

This paper develops three game-theoretical models to analyze shipping competition between two carriers in a new emerging liner container shipping market. The behavior of each carrier is characterized by an optimization model with the objective to maximize his payoff by setting optimal freight rate and shipping deployment (a combination of service frequency and ship capacity setting). The market share for each carrier is determined by the Logit-based discrete choice model. Three competitive game strategic interactions are further investigated, namely, Nash game, Stackelberg game and deterrence by taking account of the economies of scale of the ship capacity settings. Three corresponding competition models with discrete pure strategy are formulated as the variables in shipment deployment are indivisible and the pricing adjustment is step-wise in practice. A ɛ -approximate equilibrium and related numerical solution algorithm are proposed to analyze the effect of Nash equilibrium. Finally, the developed models are numerically evaluated by a case study. The case study shows that, with increasing container demand in the market, expanding ship capacity setting is preferable due to its low marginal cost. Furthermore, Stackelberg equilibrium is a prevailing strategy in most market situations since it makes players attain more benefits from the accommodating market. Moreover, the deterrence effects largely depend on the deterrence objective. An aggressive deterrence strategy may make potential monopolist suffer large benefit loss and an easing strategy has little deterrence effect.     

An operational activity-based method to estimate CO2 emissions from container shipping considering empty container repositioning

This paper develops an operational activity-based method to estimate CO₂ emissions from container shipping in contrasts to the traditional aggregated activity-based method. Two case studies investigate the impacts of empty container repositioning policies and port handling capacity on CO₂ emission index. The results show that the aggregated method could well overestimate CO₂ emissions and the operational activity-based method is more appropriate. The paper also demonstrates that high port-handling capacity and efficient empty container repositioning could reduce CO₂ emissions in seaborne container transportation.     

Reversing port rotation directions in a container liner shipping network

Reversing port rotation directions of ship routes is a practical alteration of container liner shipping networks. The port rotation directions of ship routes not only affect the transit time of containers, as has been recognized by the literature, but also the shipping capacity and transshipment cost. This paper aims to obtain the optimal port rotation directions that minimize the generalized network-wide cost including transshipment cost, slot-purchasing cost and inventory cost. A mixed-integer linear programming model is proposed for the optimal port rotation direction optimization problem and it nests a minimum cost multi-commodity network flow model. The proposed model is applied to a liner shipping network operated by a global liner shipping company. Results demonstrate that real-case instances could be efficiently solved and significant cost reductions are gained by optimization of port rotation directions.     

Port choice in container market: a literature review

As a result of the intense changes occurring in port environment over the last decades, new models of competitiveness have been developed, where port authorities try to increase their attractiveness. In this context, one of the most debated issues in this area of research is still the role played by port authorities in defining port competitiveness. The aim of this paper is to provide a review of port choice literature enabling to identify the main port choice’s criteria in order to define the role played by Port Authorities and to point out future lines of research that should be undertaken to fully incorporate current ports’ environment and performance. The results show that although some studies point out the importance of geographical factors in port choice, a larger number of studies defend the increasing role played by port authorities in determining the competitiveness through investing in port infrastructure, improving port efficiency or hinterland accessibility. Despite the existing models contributing on this topic, there are still some gaps in terms of measuring the port performance, including port strategies and studying the port choice for specific industries.     

Essential elements in tactical planning models for container liner shipping

Tactical planning models for liner shipping problems such as network design and fleet deployment usually minimize the total cost or maximize the total profit subject to constraints including ship availability, service frequency, ship capacity, and transshipment. Most models in the literature do not consider slot-purchasing, multi-type containers, empty container repositioning, or ship repositioning, and they formulate the numbers of containers to transport as continuous variables. This paper develops a mixed-integer linear programming model that captures all these elements. It further examines from the theoretical point of view the additional computational burden introduced by incorporating these elements in the planning model. Extensive numerical experiments are conducted to evaluate the effects of the elements on tactical planning decisions. Results demonstrate that slot-purchasing and empty container repositioning have the largest impact on tactical planning decisions and relaxing the numbers of containers as continuous variables has little impact on the decisions.     

The impact of competition on container port (in)efficiency

There are many studies on container port efficiency and that seek to understand what factors, such as technical and scale efficiency, private versus public terminal management or macro-economic factors, play on the efficiency score of a given port. There are fewer studies that focus on the role played by the inter-port competitive environment. This role remains difficult to assess. In fact, on the one hand, a port subject to high inter-port competition may record higher efficiency scores due to the pressure from the competitive environment. On the other hand, a port subject to high competition may be forced to over-invest and could therefore records a lower efficiency score. This article investigates this issue and examines how the degree of competition measured at different levels (local, regional and global level) impacts the efficiency score of a given container port. To do so, we implement a truncated regression with a parametric bootstrapping model. The model applied to information gathered for 200 container ports in 2007 and 2010 leads to the following conclusions: port efficiency decreases with competition intensity when measured in a range of 400–800 km (regional level); and the effect from competition is not significant when competition is measured at a local (less than 300 km) or at a global (more than 800 km) level. Estimates also show a tendency for ports who invested from 2007 to 2010 to experience a general decrease in efficiency scores, an element which could be explained by the time lag between the investment and the subsequent potential increase in container throughput.     

Relationships between fares, trip length and market competition

This paper analyses equilibrium fares that arise from Collusion, Cournot, Stackelberg, Bertrand and Sequential Price Competition when two profit maximising transport firms produce symmetrically differentiable services and have identical costs. Special focus is placed on how different equilibrium fares are linked to trip length. Higher operator costs and higher demand from the authorities regarding the quality of transport supply result in steeper relationships (larger rate of change) between all fares and travel distance. Also, a higher degree of substitutability between the services will in most cases make these relationships steeper. The competitive situation has less influence on fares, both absolutely and relatively, the longer routes the operators compete on.     

Case studies of shipping along Arctic routes. Analysis and profitability perspectives for the container sector

Arctic sea routes have for long attracted interest from observers and shipping companies because of their shorter distances between the Atlantic and the Pacific. The prevalence of sea ice prevented the real development of a significant traffic, but did not prevent research from trying to assess the economic viability of these routes. With the actual present melting of sea ice in the Arctic, this effort at modeling the profitability of Arctic shipping routes received a new impetus. However, the conclusions of these studies vary widely, depending on the chosen parameters and their value. What can be said of these models, from 1991 until 2013, and to what extent can a model be drawn, capitalizing on twenty years of simulations?     

Airline network choice and market coverage under high-speed rail competition

While the existing literature has focused on the short-term impacts, this paper investigates the long-term impacts of high-speed rail (HSR) competition on airlines. An analytical model is developed to study how an airline may change its network and market coverage when facing HSR competition on trunk routes. We show that prior to HSR competition, an airline is more likely to adopt a fully-connected network and cover fewer fringe markets if the trunk market is large. Under HSR competition, the airline will, for a given network structure, have a greater incentive to cover more fringe (regional or foreign) markets if the trunk market is large, or the airline network is close to hub-and-spoke. Further, the airline will, for any given market coverage, move towards a hub-and-spoke network when the trunk market is large, or the number of fringe markets covered by the airline network is large. Both effects are more prominent when the decreasing rate of airline density economies is large. We further show that HSR competition can induce the airline to adopt network structure and market coverage that are closer to the socially optimal ones, thereby suggesting a new source of welfare gain from HSR based on its long-term impacts on airlines. Implications for operators, policy makers and specific countries (such as China) are also discussed.     

Comparing the unit emissions of daily frequency and slow steaming strategies on trunk route deployment in international container shipping

This study examines NO_x, SO₂, CO₂, HC, and PM reductions for international container shipping carriers from slow steaming and from making use of daily frequency strategies. The options are examined using activity-based methods for surveys on Far East-Europe routes. It is found that both strategies examined are effective in reducing emissions, with daily frequency more effective in reducing emission levels when slow steaming is not employed.     

An analysis of institutional pressures,green supply chain management,and green performance in the container shipping context

This paper presents a study which utilized a conceptual framework with institutional theory as its base to empirically evaluate the impact of institutional pressures, internal green practices, and external green collaborations on green performance. Factor analysis was employed to identify the key institutional pressures (i.e. coercive, normative and mimetic pressures), internal green practices (i.e. green shipping practices and green operations), external green collaborations (i.e. green collaboration with supplier, green collaboration with partner, and green collaboration with customer), and green performance (i.e. reduction of pollutants, and perceived green brand) dimensions. We collected data from surveyees employed by 129 container shipping companies and agencies in Taiwan, and applied a structural equation model (SEM) to test the research hypotheses. The findings revealed that institutional pressures have positive effects on internal green practices; internal green practices positively influence external green collaborations; internal green practices and external green collaborations positively influence green performance but institutional pressure is not positively associated with external green collaborations. Theoretical contributions and managerial implications are presented to help container shipping operators improve green performance.     

Container vessel fleet deployment for liner shipping with stochastic dependencies in shipping demand

The problem of optimal container vessels deployment is one of great significance for the liner shipping industry. Although the pioneering work on this problem dates back to the early 1990s, only until recently have researchers started to acknowledge and account for the significant amount of uncertainty present in shipping demand in real world container shipping. In this paper, new analytical results are presented to further relax the input requirements for this problem. Specifically, only the mean and variance of the maximum shipping demand are required to be known. An optional symmetry assumption is shown to further reduce the feasible region and deployment cost for typical confidence levels. Moreover, unlike previous work that tends to ignore stochastic dependencies between the shipping demands on the various routes (that are known to exist in the real world), our models account for such dependencies in the most general setting to date. A salient feature of our modeling approach is that the exact dependence structure does not need to be specified, something that is hard, if not simply impossible, to determine in practice. A numerical case study is provided to illustrate the proposed models.     

An analysis of rail freight operational efficiency and mode share in the British port-hinterland container market

The growth in container shipping poses considerable challenges to efforts to reduce the negative externalities associated with freight transport. There are particular concerns about the impacts of the associated port-hinterland freight flows. Through empirical research, this paper examines trends in the operational efficiency of the British port-hinterland container rail freight market and to assess the impacts of any changes on the overall sustainability of this market. Original survey work conducted in 2007 and 2015 has allowed longitudinal and cross-sectional analysis of the characteristics of this market.The survey findings reveal that rail’s mode share of port container throughput (in TEU) has increased from 14.7% in 2007 to 16.6% in 2015 and it is likely that its share of the associated hinterland activity has also risen. Rail was carrying 25% more TEU by 2015 without an increase in train service provision. Increases in mean train capacity and mean load factor were observed, leading to growth in the mean train load from 44 TEU in 2007 to 55 TEU in 2015. This considerable improvement in operational efficiency is expected to have reduced the negative externalities per unit of transport activity associated with the rail-borne hinterland container flows, though scope is identified for further improvements in sustainability.     

The effectiveness of a European speed limit versus an international bunker-levy to reduce CO2 emissions from container shipping

In the fight to reduce CO₂ emissions from international shipping, a bunker-levy is currently under consideration at the International Maritime Organization (IMO). Faced with the inability of the IMO to reach an agreement in the short term, the European Commission is now contemplating a unilateral measure of a speed limit for all ships entering European Union (EU) ports. This paper argues that this measure is counterproductive for two reasons. Firstly, because it may ultimately generate more emissions and incur a cost per ton of CO₂ which is more than society is willing to pay. Secondly, because it is sub-optimal compared to results obtained if an international bunker-levy was to be implemented. These elements are illustrated using two direct transatlantic services operated in 2010.     

Hub location in the South-Atlantic airline market: A spatial competition game

The paper analyzes the airlines’ hub location problem through a spatial competition game played in two stages. First, airlines sequentially choose the location of their hub and second, they compete offering direct or connecting services between each city-pair. Different outcomes in the first stage will affect competition in the second, and as a consequence, the market share that airlines can obtain.Given actual demand patterns, results of the model are applied to the South-Atlantic airline market. We study the subgame perfect equilibriums obtained as a result of competition in each city-pair to anticipate where airlines will probably locate their hubs once an “open skies” policy is adopted in this market.     

Liner container assignment model with transit-time-sensitive container shipment demand and its applications

This paper proposes a practical tactical-level liner container assignment model for liner shipping companies, in which the container shipment demand is a non-increasing function of the transit time. Given the transit-time-sensitive demand, the model aims to determine which proportion of the demand to fulfill and how to transport these containers in a liner shipping network to maximize the total profit. Although the proposed model is similar to multi-commodity network-flow (MCNF) with side constraints, unlike the MCNF with time delay constraints or reliability constraints that is NP-hard, we show that the liner container assignment model is polynomially solvable due to its weekly schedule characteristics by developing two link-based linear programing formulations. A number of practical extensions and applications are analyzed and managerial insights are discussed. The polynomially solvable liner container assignment model is then applied to address several important decision problems proposed by a global liner shipping company.     

Routing and fleet deployment in liner shipping with spot voyages

The routing, scheduling and fleet deployment is an important integrated planning problem faced by liner shipping companies which also lift load from the spot market. This paper is concerned with coordinating the decisions of the assignment of ships to contractual and spot voyages, and the determination of ship routes and schedules in order to maximize profit. We propose a new model for representing voyages as nodes of a directed graph which is used to build a mixed integer programming formulation. Besides contractual and spot nodes, another type of node is put forward to represent a combination of a contractual voyage with one or more spot voyages. In addition, the concept of dominated nodes is introduced in order to discard them and reduce the effort of the search for an optimal solution. A set of test problems has been generated taking into account real world assumptions. The test problems are solved by an optimization software and computational results are reported. The results show the potential of the approach to solve test problems of moderate size.     

Airline competition and market frequency: A comparison of the s-curve and schedule delay models

We compare two common ways of incorporating service frequency into models of airline competition. One is based on the so called s-curve, in which, all else equal, market shares are determined by frequency shares. The other is based on schedule delay—the time difference between when travelers wish to travel and when flights are available. We develop competition models that differ only with regard to which of the above approaches is used to capture the effect of frequency. The demand side of both models is an approximation of a nested logit model which yields endogenous travel demand by including not traveling in the choice set. We find symmetric competitive equilibrium for both models analytically, and compare their predictions concerning market frequency with empirical evidence. In contrast to the s-curve model, the schedule delay model depicts a more plausible relationship between market share and frequency share and accurately predicts observed patterns of supply side behavior. Moreover, the predictions from both models are largely the same if we employ numerical versions of the model that capture real-world aspects of competition. We also find that, for either model, the relationship between airline frequency and market traffic is the same whether frequency is determined by competitive equilibrium, social optimality, or social optimality with a break-even constraint.