Liner Ship Routing with Speed and Fleet Size Optimization

Abstract

The shipping route network design is a strategic decision issue for shipping lines because liner ships operate along routes and timetables published months ahead. This paper considers an Integrated Planning Problem (IPP) of determining the speed, route, and number of ships deployed (fleet size) of a ship type. The objective is to maximize a carrier’s profit, which is the revenue minus Cargo Handling Charge (CHC), bunker consumption cost, port charge, cargo inventory cost and ship time cost. We present a nonlinear shortest-path model to represent the considered problem and suggest a Simulated Annealing (SA) algorithm with some analytic methods. Performance evaluation experiments demonstrate that the proposed algorithm works well for small test problems. A number of scenario analyses are further performed with the heuristic algorithm to investigate the effect of exogenous factors, including bunker price, chartering cost, revenue (sea freight rate) and ship size. The analysis results show that strategic decisions for determining the route, fleet size and ship speed can be affected by changes in the factors. The performance tests and scenario analyses show that the heuristic algorithm can be utilized as an efficient and effective planning tool for the liner service in both the current environment and feasible future situations.