Bi-criteria approach to containership slot allocation in liner shipping
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Bi-criteria approach to containership slot allocation in liner shipping Shih-Chan Tinga and Gwo-Hshiung Tzengb a
Faculty of Maritime Transport and Management, Department of Transportation Science, National Taiwan Ocean University, No. 2, Pei-Ning Road, Keelung, Taiwan. b Graduate Institute of Urban Planning, National Taipei University, 151, University Rd., San Shia District, New Taipei City, Taiwan.
Abstract
Containership capacity allocation is an important issue since liner companies must avoid unused space on a voyage to maximize their revenue. Therefore, in the face of uncertain cargo demand and fiercely competitive markets, liner carriers build revenue management systems to maximize voyage profits through careful consideration of slot allocation and pricing. A containership slot allocation model is proposed in this article to deal with two conflicting objectives: carrier’s freight contribution and agents’ degree of satisfaction, as well as fuzzy constraints, that is, uncertainties of cargo transportation demand and weight. This model is formulated using fuzzy multi-objective programming for deep-sea liner service containership slot allocation. Interactive fuzzy multi-objective linear programming with fuzzy parameters is applied to solve this problem. The proposed model is applied to an Asia-Europe service route of a liner company to test its efficacy. Results show the model’s applicability and excellent performance in practice.
Maritime Economics & Logistics advance online publication, 4 June 2015; doi:10.1057/ mel.2015.12
Keywords: liner shipping; slot allocation; multi-objective programming
Introduction In the liner shipping industry, containership capacity is a vitally important consideration as there is no revenue derived from unused space. Thus, liner companies should avoid unused space on a voyage in order to derive the highest © 2015 Macmillan Publishers Ltd. 1479-2931 Maritime Economics & Logistics 1–17 www.palgrave-journals.com/mel/
Ting and Tzeng
possible revenue from containership capacity. Most liner companies are still using revenue management (RM) systems that are far from comprehensive, dynamic, computerized and integrated (Ting and Tzeng, 2004). Therefore, a concerted effort is needed to improve liner shipping revenue management by more effectively utilizing RM techniques to enhance operations. RM alternatively known as yield management (YM) can be defined as the integrated management of price and inventory to maximize a company’s profitability. It is also currently defined as the application of disciplined tactics that predict consumer behavior at the micro-market level and optimize product availability and price to maximize revenue growth (Cross, 1998). The effectiveness of RM derives from its focus on revenue and then using the basic techniques of RM to convert market uncertainty to probability, and probability to revenue gain. RM enables airlines to sell the right service to the right customer, at the right time for the right price, thus achieving the highest revenue possible. Most RM rese
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