Abstract
This paper considers the maritime container assignment problem in a market setting with two competing firms. Given a series of known, exogenous demands for service between pairs of ports, each company is free to design liner services connecting a subset of the ports and demand, subject to the size of their fleets and the potential for profit. The model is designed as a three-stage complete information game: in the first stage, the firms simultaneously invest in their fleet; in the second stage, they individually design their services and solve the route assignment problem with respect to the transport demand they expect to serve, given the fleet determined in the first stage; in the final stage, the firms compete in terms of freight rates on each origin–destination movement. The game is solved by backward induction. Numerical solutions are provided to characterize the equilibria of the game.
Highlights
Over the last 50 years, containerization has grown to account nowadays for roughly 70% of total deep sea trade and it is a key component of the global economy
This paper presents a sequential game-theoretic model to analyze service network design, container assignment and service provision of shipping firms both when they operate in a set of ports as a monopolist and when they compete with a rival firm
The model takes into account exogenous demands for container transport among ports of origin and destination which reacts to the total cost of transport, including the travel fee that is paid to the shipping firm and the opportunity cost of time for the shipper
Summary
Over the last 50 years, containerization has grown to account nowadays for roughly 70% of total deep sea trade (by value) and it is a key component of the global economy. The resulting optimization algorithms remain linear in nature, are built around the frequencybased structure of liner shipping services and seek to minimize aggregate container travel durations or costs, respectively Both techniques are capable of simultaneously addressing full and empty container flows – in the past the latter have mostly been examined in isolation and as part of the empty container repositioning problem (Song and Carter, 2009). The key actors of the model are two firms (i.e., shipping lines or alliances) that seek to maximize their weekly profits by operating in a given region with known transport demands for full containers among a set of ports.
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
