Minimizing the Total Liner Shipping Route Service Costs via Application of an Efficient Collaborative Agreement

Increasing size of vessels and formation of alliances are the common strategies, which have been widely used by liner shipping companies over the last years, aiming to serve the growing demand for the international seaborne trade efficiently. However, without a proper design of vessel schedules liner shipping companies may incur substantial monetary losses. This paper proposes a novel collaborative agreement, according to which multiple vessel arrival time windows, start and end times for each time window, and multiple handling rates during each time window are offered by the marine container terminal operator to the liner shipping company at each port of the given liner shipping route. The vessel scheduling problem is formulated as a mixed integer nonlinear programming model, where the total liner shipping route service cost is minimized. A set of linearization techniques are applied to the original model, and the linearized model is solved using CPLEX. A number of computational experiments are performed for the Pacific Atlantic 1 liner shipping route, served by the NYK liner shipping company. Results showcase effectiveness of the adopted solution methodology. Moreover, the proposed collaborative agreement outperforms the existing collaborative agreements, where either vessel arrival time windows or handling rates are offered to the liner shipping company at ports, in terms of the total route service cost on average by 10.9% and 6.6%, respectively. Therefore, the proposed collaborative agreement can be considered as an efficient alternative for improving the liner shipping operations.