Routing, ship size, and sailing frequency decision-making for a maritime hub-and-spoke container network

Abstract

This study formulates a two-objective model to determine the optimal liner routing, ship size, and sailing frequency for container carriers by minimizing shipping costs and inventory costs. First, shipping and inventory cost functions are formulated using an analytical method. Then, based on a trade-off between shipping costs and inventory costs, Pareto optimal solutions of the two-objective model are determined. Not only can the optimal ship size and sailing frequency be determined for any route, but also the routing decision on whether to route containers through a hub or directly to their destination can be made in objective value space. Finally, the theoretical findings are applied to a case study, with highly reasonable results. The results show that the optimal routing, ship size, and sailing frequency with respect to each level of inventory costs and shipping costs can be determined using the proposed model. The optimal routing decision tends to be shipping the cargo through a hub as the hub charge is decreased or its efficiency improved. In addition, the proposed model not only provides a tool to analyze the trade-off between shipping costs and inventory costs, but it also provides flexibility on the decision-making for container carriers. (c) 2006 Elsevier Ltd. All rights reserved.