An Epsilon Bargaining Game-Theoretic Formulation Between Carrier and Container Terminal Operators for Servicing Vessels During Unloading Operations

Abstract

Due to globalization trends and the increasing competition between ports, the maritime policy for container shipments has witnessed a change in operations that resulted in less reliance on direct freight flows and higher transshipment operations. Motivated to investigate a soft intelligent decision-making approach using game theory in the context of servicing vessels during unloading operations in transshipment, we propose an epsilon bargaining approach between the carrier and the container terminal operator (CTO). The objective of the game is to maximize the carrier service level while minimizing operation costs for the CTO. The players' utilities, which depend on the service level and the fees for the carrier, as well as the revenues generated and the cost incurred for the CTO, are uniquely formulated and evaluated in a bargaining scenario using an ordinal ranking approach. The negotiation process is further improved between the two players based on our proposed Epsilon Bargaining Equilibrium, which to the best of our knowledge has not been used in maritime transportation problems. Results from a risk aversion case illustrate the value of the soft computing mathematical model that we formulated and motivate follow-up research.