Holistic tactical-level planning in liner shipping: an exact optimization approach

Abstract

AbstractEffective liner shipping is important for the global seaborne trade. The volume of cargoes transported by liner shipping has been increasing over the past decades. Liner shipping companies face three levels of decision problems, including strategic, tactical, and operational problems. The tactical-level decisions are commonly made every three to 6 months. These decisions include: (1) port service frequency determination; (2) fleet deployment; (3) sailing speed optimization; and (4) vessel schedule design. Most of the concurrent liner shipping studies have addressed the tactical-level decision problems separately. Even though a few studies have proposed joint planning models that capture multiple decision problems at the same time, none of the conducted studies has integrated all the four tactical-level decision problems. To address this gap in the state-of-the-art, this study presents a holistic optimization model that addresses all the tactical-level liner shipping decision problems, aiming to maximize the total profit obtained from liner shipping services. The key route service cost components, found in the liner shipping literature, are considered in this study, which include: (1) vessel operational cost; (2) vessel chartering cost; (3) port handling cost; (4) port late arrival cost; (5) fuel consumption cost; (6) container inventory costs in sea and at ports of call; and (7) emission costs in sea and at ports of call. An exact optimization approach is adopted for the developed mathematical model. The computational experiments, conducted for a set of Asia-North America liner shipping routes, showcase the efficiency of the proposed approach and offer some important managerial insights.