Scheduled service network design with revenue management considerations and an intermodal barge transportation illustration

The objective of the paper is to study the integration of revenue management considerations into service network design models targeting the tactical planning of intermodal consolidation-based freight transportation carriers. Revenue management strategies and mechanisms are broadly used within passenger transportation. Although identified as a desirable feature for freight transportation, interest growing within the industry, few contributions have addressed the topic. Moreover, almost none of those target the challenging issue of the interactions between the planning of the carrier’s services and operations, on the one hand, and the revenue-management strategy it could implement, on the other hand. We propose a new scheduled service network design model with resource and revenue management model, which selects the services and schedule to be repeatedly operated over the next season, allocates and routes the main resources supporting the selected services, and routes the demand flows between their respective origins and destinations. The objective of the model is the maximization of the expected net revenue of the carrier when several customer categories, with specific service requirements, as well as several tariff and operation classes are considered. Our interest goes beyond the modeling challenges raised by the problem setting, to exploring the impacts of this new approach on the decision types and on the structure of the service network solutions obtained. The results of extensive experiments, in terms of demand distribution, network topology, fare class and quality-of-service, provide a proof of concept of the proposed modeling framework and its capability for insightful analyses. Experimentation was conducted using an off-the-shelf software to solve the corresponding mixed-integer linear programming formulation for realistically dimensioned barge intermodal transportation instances.