Research Article
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Pricing of Contractual Shipments and Slot Allocation in Container Liner Shipping under Stochastic Environment

Year 2023, , 13 - 28, 10.08.2023
https://doi.org/10.26650/JTL.2023.1168649

Abstract

This study aimed to propose an optimization model for slot allocation and contractual pricing that considers spot and contractual shipments and empty container repositioning under a stochastic environment. In that respect, a two-stage stochastic non-linear programming modelwas proposed. The model considers contractual pricing that is overlooked by previous studies. Experimentation results revealed that decreasing market demand and spot market prices could cause serious profit loss while creating a high level of idle capacity.With the increasing market demand, capacity utilization reaches saturation at 90% requiring a capacity increase in the service. In the increasing market, slots allocated to empty containers get reduced while taking advantage of other options for empty container supply. Experimentation of symmetric uncertainty revealed that the range of uncertainty should be minimized since it creates a serious loss in profits and capacity utilization. Calculations also demonstrated that the applications of the stochastic modeling solutions would provide higher profit margins than the solutions of their deterministic equivalents. The model can easily be applied to the real-life situations of container liner services for managing and optimization of their service capacities as well as determining optimum contractual prices.

References

  • Birge, J. R. (1982). The value of the stochastic solution in stochastic linear programs with fixed recourse. Mathematical Programming, 24(1), 314-325. https://doi.org/10.1007/BF01585113 google scholar
  • Birge, J. R., & Louveaux, F. (2011). Introduction to Stochastic Programming. In Springer Series in Operations Research and Financial Engineering. Springer Science & Business Media. https://doi.org/10.1057/palgrave.jors.2600031 google scholar
  • Chang, C. H., Lan, L. W., & Lee, M. (2015). An integrated container management model for optimizing slot allocation plan and empty container repositioning. Maritime Economics and Logistics, 17(3), 315-340. https://doi.org/10.1057/mel.2014.23 google scholar
  • Costa, A., Ng, T. S. S., & Foo, L. X. X. (2017). Complete mixed integer linear programming formulations for modularity density based clustering. google scholar
  • Discrete Optimization, 25, 141-158. https://doi.org/10.1016/j.disopt.2017.03.002 google scholar
  • Feng, C. M., & Chang, C. H. (2008). Optimal slot allocation in intra-Asia service for liner shipping companies. Maritime Economics and Logistics, 10(3), 295-309. https://doi.org/10.1057/mel.2008.6 google scholar
  • Feng, C. M., & Chang, C. H. (2010). Optimal slot allocation with empty container reposition problem for Asia ocean carriers. International Journal ofShipping and Transport Logistics, 2(1), 22-43. https://doi.org/10.1504/IJSTL.2010.029895 google scholar
  • Fu, Y., Song, L., Lai, K. K., & Liang, L. (2016). Slot allocation with minimum quantity commitment in container liner revenue management: A robust optimization approach. International Journal of Logistics Management, 27(3), 650-667. https://doi.org/10.1108/JLM-06-2013-0075 google scholar
  • Lu, H. A., & Mu, W. H. (2016). A slot reallocation model for containership schedule adjustment. Maritime Policy and Management, 43(1), 136-157. https://doi.org/10.1080/03088839.2015.1037371 google scholar
  • Maggioni, F., & Wallace, S. W. (2012). Analyzing the quality of the expected value solution in stochastic programming. Annals of Operations Research, 200(1), 37-54. https://doi.org/10.1007/s10479-010-0807-x google scholar
  • McCormick, G. P. (1976). Computability of global solutions to factorable nonconvex programs: Part I - Convex underestimating problems. Mathematical Programming, 10(1), 147-175. google scholar
  • Ting, S. C., & Tzeng, G. H. (2004). An optimal containership slot allocation for liner shipping revenue management. Maritime Policy and Management, 31(3), 199-211. https://doi.org/10.1080/0308883032000209553 google scholar
  • Ting, S. C., & Tzeng, G. H. (2016). Bi-criteria approach to containership slot allocation in liner shipping. Maritime Economics and Logistics, 18(2), 141-157. https://doi.org/10.1057/mel.2015.12 google scholar
  • Wang, T., Tian, X., & Wang, Y. (2020). Container slot allocation and dynamic pricing of time-sensitive cargoes considering port congestion and uncertain demand. Transportation Research Part E: Logistics and Transportation Review, 144(November), 102149. https://doi.org/10.1016/j.tre.2020.102149 google scholar
  • Wang, T., Xing, Z., Hu, H., & Qu, X. (2019). Overbooking and delivery-delay-allowed strategies for container slot allocation. Transportation Research Part E: Logistics and Transportation Review, 122(January), 433-447. https://doi.org/10.1016/j.tre.2018.12.019 google scholar
  • Wang, Y., & Meng, Q. (2021). Optimizing freight rate of spot market containers with uncertainties in shipping demand and available ship capacity. Transportation Research Part B: Methodological, 146, 314-332. https://doi.org/10.1016/j.trb.2021.02.008 google scholar
  • Wang, Y., Meng, Q., & Du, Y. (2015). Liner container seasonal shipping revenue management. Transportation Research Part B: Methodological, 82, 141-161. https://doi.org/10.1016/j.trb.2015.10.003 google scholar
  • Wong, E. Y. C., Tai, A., & Raman, M. (2015). A maritime container repositioning yield-based optimization model with uncertain upsurge demand. Transportation Research Part E: Logistics and Transportation Review, 82, 147-161. https://doi.org/10.1016/j.tre.2015.07.007 google scholar
  • Zurheide, S., & Fischer, K. (2012). A revenue management slot allocation model for liner shipping networks. Maritime Economics and Logistics, 14(3), 334-361. https://doi.org/10.1057/mel.2012.11 google scholar
  • Zurheide, S., & Fischer, K. (2015). Revenue management methods for the liner shipping industry. Flexible Services and Manufacturing Journal, 27(2-3), 200-223. https://doi.org/10.1007/s10696-014-9192-0 google scholar
Year 2023, , 13 - 28, 10.08.2023
https://doi.org/10.26650/JTL.2023.1168649

Abstract

References

  • Birge, J. R. (1982). The value of the stochastic solution in stochastic linear programs with fixed recourse. Mathematical Programming, 24(1), 314-325. https://doi.org/10.1007/BF01585113 google scholar
  • Birge, J. R., & Louveaux, F. (2011). Introduction to Stochastic Programming. In Springer Series in Operations Research and Financial Engineering. Springer Science & Business Media. https://doi.org/10.1057/palgrave.jors.2600031 google scholar
  • Chang, C. H., Lan, L. W., & Lee, M. (2015). An integrated container management model for optimizing slot allocation plan and empty container repositioning. Maritime Economics and Logistics, 17(3), 315-340. https://doi.org/10.1057/mel.2014.23 google scholar
  • Costa, A., Ng, T. S. S., & Foo, L. X. X. (2017). Complete mixed integer linear programming formulations for modularity density based clustering. google scholar
  • Discrete Optimization, 25, 141-158. https://doi.org/10.1016/j.disopt.2017.03.002 google scholar
  • Feng, C. M., & Chang, C. H. (2008). Optimal slot allocation in intra-Asia service for liner shipping companies. Maritime Economics and Logistics, 10(3), 295-309. https://doi.org/10.1057/mel.2008.6 google scholar
  • Feng, C. M., & Chang, C. H. (2010). Optimal slot allocation with empty container reposition problem for Asia ocean carriers. International Journal ofShipping and Transport Logistics, 2(1), 22-43. https://doi.org/10.1504/IJSTL.2010.029895 google scholar
  • Fu, Y., Song, L., Lai, K. K., & Liang, L. (2016). Slot allocation with minimum quantity commitment in container liner revenue management: A robust optimization approach. International Journal of Logistics Management, 27(3), 650-667. https://doi.org/10.1108/JLM-06-2013-0075 google scholar
  • Lu, H. A., & Mu, W. H. (2016). A slot reallocation model for containership schedule adjustment. Maritime Policy and Management, 43(1), 136-157. https://doi.org/10.1080/03088839.2015.1037371 google scholar
  • Maggioni, F., & Wallace, S. W. (2012). Analyzing the quality of the expected value solution in stochastic programming. Annals of Operations Research, 200(1), 37-54. https://doi.org/10.1007/s10479-010-0807-x google scholar
  • McCormick, G. P. (1976). Computability of global solutions to factorable nonconvex programs: Part I - Convex underestimating problems. Mathematical Programming, 10(1), 147-175. google scholar
  • Ting, S. C., & Tzeng, G. H. (2004). An optimal containership slot allocation for liner shipping revenue management. Maritime Policy and Management, 31(3), 199-211. https://doi.org/10.1080/0308883032000209553 google scholar
  • Ting, S. C., & Tzeng, G. H. (2016). Bi-criteria approach to containership slot allocation in liner shipping. Maritime Economics and Logistics, 18(2), 141-157. https://doi.org/10.1057/mel.2015.12 google scholar
  • Wang, T., Tian, X., & Wang, Y. (2020). Container slot allocation and dynamic pricing of time-sensitive cargoes considering port congestion and uncertain demand. Transportation Research Part E: Logistics and Transportation Review, 144(November), 102149. https://doi.org/10.1016/j.tre.2020.102149 google scholar
  • Wang, T., Xing, Z., Hu, H., & Qu, X. (2019). Overbooking and delivery-delay-allowed strategies for container slot allocation. Transportation Research Part E: Logistics and Transportation Review, 122(January), 433-447. https://doi.org/10.1016/j.tre.2018.12.019 google scholar
  • Wang, Y., & Meng, Q. (2021). Optimizing freight rate of spot market containers with uncertainties in shipping demand and available ship capacity. Transportation Research Part B: Methodological, 146, 314-332. https://doi.org/10.1016/j.trb.2021.02.008 google scholar
  • Wang, Y., Meng, Q., & Du, Y. (2015). Liner container seasonal shipping revenue management. Transportation Research Part B: Methodological, 82, 141-161. https://doi.org/10.1016/j.trb.2015.10.003 google scholar
  • Wong, E. Y. C., Tai, A., & Raman, M. (2015). A maritime container repositioning yield-based optimization model with uncertain upsurge demand. Transportation Research Part E: Logistics and Transportation Review, 82, 147-161. https://doi.org/10.1016/j.tre.2015.07.007 google scholar
  • Zurheide, S., & Fischer, K. (2012). A revenue management slot allocation model for liner shipping networks. Maritime Economics and Logistics, 14(3), 334-361. https://doi.org/10.1057/mel.2012.11 google scholar
  • Zurheide, S., & Fischer, K. (2015). Revenue management methods for the liner shipping industry. Flexible Services and Manufacturing Journal, 27(2-3), 200-223. https://doi.org/10.1007/s10696-014-9192-0 google scholar
There are 20 citations in total.

Details

Primary Language English
Subjects Operation
Journal Section Research Article
Authors

Ercan Kurtuluş 0000-0003-0585-9319

Publication Date August 10, 2023
Submission Date August 30, 2022
Acceptance Date March 12, 2023
Published in Issue Year 2023

Cite

APA Kurtuluş, E. (2023). Pricing of Contractual Shipments and Slot Allocation in Container Liner Shipping under Stochastic Environment. Journal of Transportation and Logistics, 8(1), 13-28. https://doi.org/10.26650/JTL.2023.1168649
AMA Kurtuluş E. Pricing of Contractual Shipments and Slot Allocation in Container Liner Shipping under Stochastic Environment. JTL. August 2023;8(1):13-28. doi:10.26650/JTL.2023.1168649
Chicago Kurtuluş, Ercan. “Pricing of Contractual Shipments and Slot Allocation in Container Liner Shipping under Stochastic Environment”. Journal of Transportation and Logistics 8, no. 1 (August 2023): 13-28. https://doi.org/10.26650/JTL.2023.1168649.
EndNote Kurtuluş E (August 1, 2023) Pricing of Contractual Shipments and Slot Allocation in Container Liner Shipping under Stochastic Environment. Journal of Transportation and Logistics 8 1 13–28.
IEEE E. Kurtuluş, “Pricing of Contractual Shipments and Slot Allocation in Container Liner Shipping under Stochastic Environment”, JTL, vol. 8, no. 1, pp. 13–28, 2023, doi: 10.26650/JTL.2023.1168649.
ISNAD Kurtuluş, Ercan. “Pricing of Contractual Shipments and Slot Allocation in Container Liner Shipping under Stochastic Environment”. Journal of Transportation and Logistics 8/1 (August 2023), 13-28. https://doi.org/10.26650/JTL.2023.1168649.
JAMA Kurtuluş E. Pricing of Contractual Shipments and Slot Allocation in Container Liner Shipping under Stochastic Environment. JTL. 2023;8:13–28.
MLA Kurtuluş, Ercan. “Pricing of Contractual Shipments and Slot Allocation in Container Liner Shipping under Stochastic Environment”. Journal of Transportation and Logistics, vol. 8, no. 1, 2023, pp. 13-28, doi:10.26650/JTL.2023.1168649.
Vancouver Kurtuluş E. Pricing of Contractual Shipments and Slot Allocation in Container Liner Shipping under Stochastic Environment. JTL. 2023;8(1):13-28.



The JTL is being published twice (in April and October of) a year, as an official international peer-reviewed journal of the School of Transportation and Logistics at Istanbul University.