Intermodal hub-and-spoke logistic network design with differentiated services: The case of China Railway Express

Abstract

Designing the hub-and-spoke logistic network, a powerful structure in resource integration and cost reduction, has aroused ever-growing interest from scholars. Considering that, for realistic scenarios, customers’ demands must take on greater diversity, in this paper, a hub-and-spoke network with differentiated services is developed, allowing clients to choose their preferred service levels, while considering multiple transportation modes, with environmental parameters and economies of scale incorporated into the modeling process. Further, to solve the derived optimization problem effectively, an improved tabu search algorithm is proposed, in which an appropriate memory function is included to strengthen its adaptability. The improved algorithm is found to have outstanding efficiency when compared to arithmetic software and the genetic algorithm, for both small and large size instances. Finally, the theoretical findings are applied to the case of China Railway Express, to redesign the logistic network in a road-rail intermodal transportation mode and support decision-making over hub location and allocation. Our findings offer important practical insights that can aid contributions to evidence-informed policy formulation and implementation.