The dynamic programming model for optimal allocation of laden shipping containers to Nigerian seaports

Abstract

In highly competitive shipping market environment, container network operators-Freight forwarders, shipping companies etc. are concerned about design, development and deployment of optimized allocation model to achieve cost savings through improved container storage yard operations, crane productivity, outbound container allocation/distribution to seaport terminals and hence reduction in ships’ waiting times. In this paper, we developed two models, the Dynamic programming model and optimal allocation policy (model), for the optimal allocation of units of outbound laden cargo containers of sizes: 20ft and 40ft to six (6) major seaports in Nigeria. The distributions of the laden containers were allocated as follows: Port-Harcourt, Tincan Island, Onne, and Calabar seaports were allocated with 1,064 units of stuffed containers each. Apapa seaport was allocated with 2,128 units of laden containers, and zero allocation was made to Warri seaport. These results were arrived at through the implementation of the optimal allocation policy. The zero units allocation made to Warri seaport could be attributed to poor shipper patronage and hence the low frequency of ship visits. Apapa seaport was allocated double the number of containers moved to the remaining ports because it attracted more shipper patronage and hence more ship visits. Hence, freight forwarding companies will be assured of cargo spaces and make more profit by allocating more containers. Policy implications of the developed models were discussed.