Liner Shipping Services Research Articles

Dynamic Pricing and Competition of Container Liner Shipping Services in a Duopoly Spot Market

Dynamic Pricing and Competition of Container Liner Shipping Services in a Duopoly Spot Market

Maximization of container slot booking profits for carriers in the liner shipping industry

In the liner shipping industry, if a shipper wants to transport its cargo by container ships, it first needs to contact a carrier to book container slots based on the estimated transportation demand. However, one problem in the booking process is that the actual demand is uncertain, resulting in mismatch between the required demand and the booked quantity. To address this issue, this study develops a Newsvendor model to find the optimal order quantity of container slots for the shipper. In addition, uncertainties in the quantity of container slots booking made by the shipper might cause revenue loss to the carrier and low utilization of ship capacity in the daily operations of liner shipping services. Therefore, this study suggests that the shipper should pay reservation fee when booking container slots. This study also aims to find the maximum profit for the carrier under the optimal order quantity of the shipper. In sensitive analysis, how different prices per container slot offered by the carrier would influence the reservation fee, the optimal order quantity of the shipper, and the expected profit of the carrier are explored and discussed. This study can help to manage and promote the online container booking systems in the liner shipping industry.

Is the weekly service frequency constraint tight when optimizing ship speeds and fleet size for a liner shipping service?

Weekly service frequency is often maintained in liner shipping. The previous studies present two kinds of the weekly service frequency constraints. For a single liner shipping service, the two kinds of the weekly service frequency constraints can be described by using an equation and inequality, respectively. In order to explore whether the weekly service frequency constraint is tight or not in different cases, this paper addresses the optimization of ship speeds and fleet size for a single liner shipping service. According to realistic ship speeds at different legs in practice, we introduce different minimum and maximum allowable sailing speeds at various legs into our studied problem. Our problem can be formulated as a mixed-integer nonlinear programming model. By using the Karush-Kuhn-Tucker conditions, our analytical results show that, when considering the optimization of ship speeds, the weekly service frequency constraint is tight in most cases. Without considering the effect of the minimum and maximum allowable sailing speeds, we find that, the weekly service frequency constraint is always tight and ships would sail at the average speed. When considering the effect of the minimum and maximum allowable sailing speeds at various legs, the optimal ship speed at each leg should be selected from three options, based on which we further propose a ship speed choice problem. The proposed ship speed choice problem is also formulated as a mixed-integer nonlinear programming model, which can be efficiently solved by using the outer approximation method. Finally, a number of numerical experiments are carried out to account for the effectiveness of our analytical results, models and methods.

The Role of Liner Shipping Services in Small and Medium Sized

The Liner services provides regular shipments of goods between ports within the set timeframe. A fixed route, the obligation of receiving cargo and to go to sea with established schedule distinguishes line service from the sea transportation of bulk cargo. Containerization, establishment and improvement of routes and infrastructure helped liner shipping to become the driving force of Global economy, which supports the growth of international trade, development of different business forms such as mainly small and medium sized businesses. The shipment volume of containerized cargo was 37.1 M.TEU in 1994, by 2020 the figure reached up to 143.3 M.TEU. This indicator was growing at a high rate on East-West route during 1990-2016; In terms of North-South, South-South and intraregional route same measure was high between 1990-2004 years. Afterwards, Abovementioned growth has become more stable. Containerization changed the structure of Liner fleet. If general cargo vessels deadweight was growing during 1970-2010 (From 40.5M Dwt to 99.7M Dwt), in the latest 10 years, the tonnage has been decreasing and as for 2020 it was 74.6M Dwt. In exchange for this the number of container ships have been growing consistently and in 2020 it consisted of 274.7M Dwt. Maersk became the largest line operator since 2001 (with a market share of 9.4%) and by 2020 it’s share of the business has grown to 17%. The company owns container terminals worldwide, including the Poti container terminal. MSC is on second place (9.4% market share), COSCO is on third place (12.4%) and CMA CGM takes forth place (11.8%). Keywords: Liner Shipping Services, Containerization, East–West routes, North–South routes, Intraregional routes, General cargo ship, Containership, Liner operator, Container port.

Robust container slot allocation with uncertain demand for liner shipping services

Robust container slot allocation with uncertain demand for liner shipping services

A two-stage stochastic nonlinear integer-programming model for slot allocation of a liner container shipping service

In this study, we propose a container slot allocation problem for a liner shipping service. A liner containership provides a regular shipping service with a fixed itinerary and schedule. In practice, the liner containership may not be fully loaded, which results in a loss of revenue. We therefore segment shippers into two classes: contract shippers and spot shippers. A contract shipper has a contract with the shipping company and negotiates a fixed minimum quantity, so that the shipping company can secure a steady revenue. The remaining containership slots are open to spot shippers, allowing the shipping company to obtain ad hoc revenue. The container slot allocation problem is investigated in this study using a two-stage stochastic mixed-integer nonlinear programming model. We use the sample average approximation based on Lagrangian relaxation and dual decomposition techniques to effectively solve the model. Finally, we conduct a case study to evaluate the applicability and effectiveness of the proposed model and the solution algorithm.

Сирийские морские порты и их глобальные показатели

The article considers the role of the seaport in the economy and politics of the state. There are listed the main functions of seaports: trade, transportation, employment, industrial, fiscal, and political functions. The important role of the seaports of Syria in improving the quality of transport support for foreign trade activities was noted. The favorable geographical position of the Syrian ports on the Mediterranean coast determines a significant role in international maritime trade between European and Oriental countries. The statistical data on the seaports of the Syrian Arab Republic in the cities Latakia and Tartus have been analyzed. The dynamics of the volumes of containers transshipped through the seaport of Latakia, as well as through the seaport of Tartus is considered. A comparative analysis of the dynamics of the traffic volumes between both ports was carried out. The pace of development in the work of the Syrian ports is being studied on the basis of the GCI (The Global Competitiveness Index) and the liner shipping service index. Comparison of the liner shipping service index between Syrian ports and ports of neighboring countries has been made. The international rating of Syrian ports is presented in comparison with the rating of the nearest ports in the region by infrastructure. Conclusions are made about the low rating of Syrian ports in comparison with competing countries and international ports in general. There has been found the necessity of a detailed study of the reasons for the low competitiveness of the Syrian ports, including the crisis of 2011, rupture of relations between Syria and many countries of the world, economic sanctions against Syria, etc., in order to further develop measures to increase the competitiveness of Syrian seaports.

Do Foldable Containers Enhance Efficient Empty Container Repositioning under Demand Fluctuation?—Case of the Pacific Region

This study considers the empty container repositioning problem of shipping companies that use standard and 3-in-1 foldable containers with more advanced designs. A mathematical model is developed to compare the total management costs of container repositioning of various patterns in different cargo shipping demand scenarios. Numerous scenario analyses and simulations of empty container repositioning were conducted, focusing on a liner shipping service in the Pacific Islands where empty containers are likely to be present because of the imbalance between inbound and outbound flows of containers, including static analysis and consecutive analysis with demand fluctuation in different approaches. Results show that with the introduction of foldable containers, depending on the growth rate of container cargo shipping demand, the total management costs of empty container repositioning can be reduced. However, introducing a large number of foldable containers may increase the total management costs of container repositioning. Moreover, the cost reduction effect of adding another containership increases in cases where future cargo shipping demand increases substantially. Furthermore, the introduction of foldable containers not only effectively reduces the management costs of empty containers, but also makes costs more stable and predictable.

Optimal Global Liner Service Procurement by Utilizing Liner Service Schedules

For global shippers (i.e., multinational manufacturers or retailers), strategic sourcing of container liner shipping services from ocean carriers is an important element of successful global supply chain management. We study how to utilize information about different ocean carriers’ liner service schedules so that shippers can optimize their sourcing decisions over the selection of carriers to transport container cargoes around the world through multiple shipping lanes. We first introduce a deterministic optimization problem, where cargo demands are given in advance and in which inventory holding costs are included to capture the impacts of liner service schedules on the total operating cost. We formulate the deterministic optimization problem as a mixed integer linear program, which can be simplified by exploiting a totally unimodular property, and can thus be solved directly by a general optimization solver. To further capture the impact of liner service schedules on shippers’ resilience to the uncertainties in cargo demands, we then introduce a two‐stage robust optimization counterpart of the deterministic problem based on a probability‐free demand uncertainty set. As the two‐stage robust optimization problem is challenging to solve, we derive some novel reformulations that can enable us to develop an effective solution method. By exploiting the information about liner service schedules, we show how our proposed models and solution method can help shippers to optimize their liner service procurement decisions.

Liner Shipping Service Planning Under Sulfur Emission Regulations

Air emissions from ships have become an important issue in sustainable shipping because of the low quality of the marine fuel consumed by ships. To reduce sulfur emissions from shipping, the International Maritime Organization has established emission control areas (ECAs) where ships must use low-sulfur fuel with at most 0.1% sulfur or take equivalent emission-reduction measures. The use of low-sulfur fuel increases the costs for liner shipping companies and affects their operations management. This study addresses a holistic liner shipping service planning problem that integrates fleet deployment, schedule design, and sailing path and speed optimization, considering the effect of ECAs. We propose a nesting algorithmic framework to address this new and challenging problem. Semianalytical solutions are derived for the sailing path and speed optimization problem, which are used in the schedule design. A tailored algorithm is applied to solve schedule design problems, and the solutions are used in fleet deployment. The fleet deployment problem is then addressed by a dynamic programming-based pseudo-polynomial time algorithm. Numerical experiments demonstrate that considering the effect of ECAs in liner shipping operations management can reduce over 2% of the costs, which is significant considering that the annual operating cost of a shipping company’s network can be as high as several billion dollars.

Estimating international trade status of countries from global liner shipping networks.

Maritime shipping is a backbone of international trade and, thus, the world economy. Cargo-loaded vessels travel from one country's port to another via an underlying port-to-port transport network, contributing to international trade values of countries en route. We hypothesize that ports that involve trans-shipment activities serve as a third-party broker to mediate trade between two foreign countries and contribute to the corresponding country's status in international trade. We test this hypothesis using a port-level dataset of global liner shipping services. We propose two indices that quantify the importance of countries in the global liner shipping network and show that they explain a large amount of variation in individual countries' international trade values and related measures. These results support a long-standing view in maritime economics, which has yet to be directly tested, that countries that are strongly integrated into the global maritime transportation network have enhanced access to global markets and trade opportunities.

Probability estimation model for the cancellation of container slot booking in long-haul transports of intercontinental liner shipping services

The intercontinental liner shipping services transport containers between two continents and they are crucial for the profitability of a global liner shipping company. In the daily operations of an intercontinental liner shipping service, however, container slot bookings from customers can be freely cancelled during a booking period, which causes loss of revenue and low utilization of ship capacity. Though a pain-point of the liner shipping industry, the container slot cancellation problem has not yet been well investigated in the literature. To fill this research gap, this study aims to estimate the probability for the cancellation of container slot booking in the long haul transports of the intercontinental liner shipping service by considering the primary influential factors of cancellation behavior. To achieve the objective, a container slot booking data-driven model is developed by means of a time-to-event modeling technique. To incorporate the effect of booking region on the cancellation probability, we introduce the frailty term in the model to capture the regionality of the container shipping market. Our case study with real slot booking data shows that the developed model performs well in forecasting the loaded containers of the slot booking requests. In addition, we shed light on how the internal factors of slot booking and external factors of shipping market influence the probability of cancellation.

Holistic tactical-level planning in liner shipping: an exact optimization approach

Effective liner shipping is important for the global seaborne trade. The volume of cargoes transported by liner shipping has been increasing over the past decades. Liner shipping companies face three levels of decision problems, including strategic, tactical, and operational problems. The tactical-level decisions are commonly made every three to 6 months. These decisions include: (1) port service frequency determination; (2) fleet deployment; (3) sailing speed optimization; and (4) vessel schedule design. Most of the concurrent liner shipping studies have addressed the tactical-level decision problems separately. Even though a few studies have proposed joint planning models that capture multiple decision problems at the same time, none of the conducted studies has integrated all the four tactical-level decision problems. To address this gap in the state-of-the-art, this study presents a holistic optimization model that addresses all the tactical-level liner shipping decision problems, aiming to maximize the total profit obtained from liner shipping services. The key route service cost components, found in the liner shipping literature, are considered in this study, which include: (1) vessel operational cost; (2) vessel chartering cost; (3) port handling cost; (4) port late arrival cost; (5) fuel consumption cost; (6) container inventory costs in sea and at ports of call; and (7) emission costs in sea and at ports of call. An exact optimization approach is adopted for the developed mathematical model. The computational experiments, conducted for a set of Asia-North America liner shipping routes, showcase the efficiency of the proposed approach and offer some important managerial insights.

Canal effects on a liner hub location problem

The Panama Canal and the Suez Canal are two key canals around the world, both of which have a great number of connections with other ports because of various liner shipping service routes. Liner carriers can facilitate container transshipment operations by opening hub ports around the canal. This paper aims to investigate canal effects on hub location in liner shipping. Different from the conventional hub location problem with fixed costs, our hub location problem with fixed costs can be reduced to a p-median problem, while addressing the research issue considered in the conventional hub location problem with fixed costs. In order to describe canal effects, besides its geographic location, this paper mainly considers three aspects: canal toll, canal congestion, and ship capacity limitation when passing through a canal. Several binary linear programming models are mainly developed for our hub location problem considering canal effects. Moreover, a theoretical analysis is also developed for simplified hub location around a canal. Numerical results show that ship capacity limitation has a bigger impact on hub location around a canal, as compared with canal toll and canal congestion. Such phenomenon can be partly supported by the theoretical analysis. This insight to some extent justifies the recent canal expansion projects to widen or add a new lane waterway for the Panama Canal and the Suez Canal, respectively.

Revenue management for container liner shipping services: Critical review and future research directions

The purpose of revenue management (RM) is to maximize revenue growth for a company by optimizing product/service availability and prices based on micro-level forecasting of customer behavior. Seat/cargo capacity control and air ticket/cargo pricing are two primary RM research topics that have yielded fruitful models and solution methods for air transportation, which have been used by airlines for around 50 years. However, the RM studies for container liner shipping services and their application are scant although the operations of airlines and container shipping lines are quite similar. We therefore introduce the fundamental RM models developed for air transportation, namely, capacity control and pricing models. Based on these models, we proceed to critically review the RM studies for container liner shipping services. Finally, we identify valuable future research directions in container shipping RM.

Bunker fuel cost and freight revenue optimization for a single liner shipping service

This paper aims to maximize the freight revenue minus bunker fuel cost for a single liner shipping service. This optimization contains the determination of the sailing speeds, bunkering strategy, and shipment strategy. We first formulate this optimization problem as a mixed-integer nonlinear programming model and then make some transformations to linearize the nonlinear terms. The transformed model is a mixed-integer linear programming model and provides an upper bound for the original model. We then construct another mixed-integer linear programming model and prove that its any optimal solution can be transformed into a feasible solution of the original model. In case studies, the proposed models are applied to two real liner service routes and the computational results demonstrate the efficiency and effectiveness of our solution method. Some insights from numerical experiments are provided in the end.

Intercontinental Liner Shipping Service Design

Intercontinental liner container shipping service connects trades between different continents in the global logistic system. This paper proposes a single intercontinental service design problem that aims to jointly determine the optimal serviced ports from a set of candidate ports, the port rotation, the ship sailing speed on each voyage between adjacent serviced ports and the number of containers transported for each type of shipping demand. A mixed integer linear programming model is formulated for the proposed problem based on mild assumptions to maximize the service profit, which is calculated as the freight revenue minus the total operating cost that includes port stay cost, container handling cost, bunker consumption cost, and other ship operating costs. The formulated model is also able to produce a service route with a more general topological structure than the simple cycle or butterfly cycle routes considered in most current studies. In view of the unique features of the model, a tailored and exact branch-and-cut algorithm is developed based on Benders decomposition to expedite the model solution. Numerical experiments demonstrate the efficiency of the developed branch-and-cut algorithm and show the applicability of the proposed model for designing the intercontinental liner shipping services. The e-companion is available at https://doi.org/10.1287/trsc.2018.0831 .

Mediating effects of service recovery on liner shipping users

Offering appropriate service recovery is important for service providers to retain their existing customers. Given that service failures are both common and inevitable when using liner shipping services, in this study, a model was established by which to examine the impact of service recovery on customer loyalty. An empirical questionnaire survey was conducted, and structural equation modeling (SEM) was applied to test the hypotheses proposed in this study. The results showed there to be a significant positive impact from service recovery on the customer loyalty of liner shipping users, which was found to be mediated via customer satisfaction and satisfaction after recovery.

Liner shipping service scheduling and cargo allocation

Tactical service scheduling and operational cargo allocation are two interdependent problems in liner shipping. The schedules and sailing speeds of individual liner shipping services and the synchronization among all services determine the transit times of containers through a liner shipping network. On the other hand, the market demand in terms of container volume and expected transit times between origin and destination ports drive the schedule design of liner shipping services. We present a graph-based model and a branch-and-price algorithm to solve the combined problem. The goal is to minimize the difference between fuel consumption costs and revenues from transporting containers under consideration of transit time limits. Fuel consumption is modeled as a function of both speed and payload. Results are presented for 12 liner shipping networks and emphasize the importance of explicitly modeling schedules in large networks; transshipment times and thus transit times may be severely miscalculated otherwise. The results further show that neglecting payload in the fuel consumption function can result in suboptimal service schedules and cargo routing decisions.

Joint Ship Schedule Design and Sailing Speed Optimization for a Single Inland Shipping Service with Uncertain Dam Transit Time

Inland shipping has received extensive attention in practice and is a high energy-consuming service sensitive to the river streamflow speed and the uncertain lock traversing time of dams. In this study, we propose a joint ship schedule design and sailing speed optimization problem for a single inland shipping service by incorporating the effects of nonidentical streamflow speed and the uncertain dam transit time. A bi-objective programming model is developed for the proposed problem to simultaneously minimize the total bunker consumption and the ship round-trip time with service level constraints. The service level at each port call is captured by the punctual arrival probability of the ship not less than a predefined value. By introducing the term of buffer times, we analytically derive the Pareto optimal solutions of the ship sailing speeds and schedule. The theoretical method is extended to the case with an arbitrary number of dams and the uncertain port service and leg voyage time. We also examine the relationship between the Pareto optimal solution in this study and the solutions of the previous joint sailing speed and schedule optimization problems in the liner shipping service design. Numerical experiments based on the Yangtze River are conducted. The online appendix is available at https://doi.org/10.1287/trsc.2017.0808 .