Network design and alliance formation for liner shipping

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Agarwal, Richa
Ergun, Özlem
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In maritime transportation, liner shipping accounts for over 60\% of the value of goods shipped. However, very limited literature is available on the study of various problems in liner shipping. In this thesis we focus on problems related to this industry. Given a set of cargo to be transported, a set of ports and a set of ships, a common problem faced by carriers in liner shipping is the design of their service network. We develop an integrated model to design service network for the ships and to route the available cargo, simultaneously. The proposed model incorporates many relevant constraints, such as the weekly frequency constraint on the operated routes, and emerging trends, such as obtaining benefits from transshipping cargo on two or more service routes, that appear in practice but have not been considered previously in literature. Also, we design exact and heuristic algorithms to solve the integer program efficiently. The proposed algorithms integrate the ship scheduling problem, a tactical planning level decision, and the cargo routing problem, an operational planning level decision, and provide good overall solution strategy. Computational experiments indicate that larger problem instances, as compared to the literature, can be solved using these algorithms in acceptable computational time. Alliance formation is very common among global liner carriers however a quantitative study of liner alliances is missing from literature. We provide a mathematical framework for the quantitative study of these alliances. For the formation of a sustainable alliance, carriers need to agree on an overall service network and resolve issues concerning distribution of benefits and costs among the members of the alliance. We develop mechanisms to design a collaborative service network and to manage the interaction among the carriers through the allocation of profits in a fair way. The mechanism utilizes inverse optimization techniques to obtain resource exchange costs in the network. These costs provide side payments to the members, on top of the revenue generated by them in the collaborative solution, to motivate them to act in the best interest of the alliance while satisfying their own self interests.
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