Efficient inter-port cooperation considering port congestion and port charge

Abstract

This paper discusses the efficiency of cooperation among ports under congested conditions and determines an approach for strategic cooperation between ports through model analysis. We develop a bilevel optimization model based on the benefit maximization problem of port authorities and cost minimization problem of cargo carriers. We consider several port cooperation scenarios in the numerical computation. From the computation results, the following conclusions are derived: (1) when each port authority prioritizes its own profit, port cooperation in a congested port would be successful because the cooperation can be beneficial for the carrier; (2) when each port authority considers the benefit of its local customers in terms of shipping costs related to both economies of density and port congestion, port cooperation in a congested port would rarely be successful because the cooperation cannot be beneficial for the carrier and the carrier cannot support it.