IDEAS home Printed from https://ideas.repec.org/a/eee/transe/v164y2022ics1366554522001727.html
   My bibliography  Save this article

A risk-averse approach for joint contract selection and slot allocation in liner container shipping

Author

Listed:
  • Wang, Yadong
  • Gu, Yuyun
  • Wang, Tingsong
  • Zhang, Jun

Abstract

Liner shipping companies need to satisfy the shipping demand from both the long-term contracts and the spot market. In general, the container shipping demand of the long-term contract has more stable volumes but lower freight rates compared with the spot market demand. It is thus a critical problem for the shipping companies how to provide discriminative shipping services to these two types of shipping demand through contract selection and container slot allocation to simultaneously increase the shipping profit and control its variations resulting from the demand variations. To handle this problem, a two-stage stochastic programming model is constructed in this paper which adopts the Conditional-Value-at-Risk (CVaR) to measure the profit variations. In the first stage, the shipping company selects the long-term contracts from a candidate contract set to sign with customers under the uncertainties in the show-up rates of containers in long-term contracts, and the volumes and the freight rates of the spot market demands. In the second stage, after all uncertainties have been realized, the shipping company determines the slot allocation for both the contract and spot demands. With the introduction of the CVaR, classical Benders decomposition cannot be directly applied to solve the risk-averse model. This paper thus develops a risk-averse Benders decomposition method tailored for the model. Numerical experiments are also conducted to verify the effectiveness of the solution method and provide some meaningful managerial insights.

Suggested Citation

  • Wang, Yadong & Gu, Yuyun & Wang, Tingsong & Zhang, Jun, 2022. "A risk-averse approach for joint contract selection and slot allocation in liner container shipping," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 164(C).
    • Handle: RePEc:eee:transe:v:164:y:2022:i:c:s1366554522001727
    DOI: 10.1016/j.tre.2022.102781
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1366554522001727
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tre.2022.102781?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Zhuge, Dan & Wang, Shuaian & Wang, David Z.W., 2021. "A joint liner ship path, speed and deployment problem under emission reduction measures," Transportation Research Part B: Methodological, Elsevier, vol. 144(C), pages 155-173.
    2. Wang, Shuaian & Meng, Qiang, 2012. "Liner ship fleet deployment with container transshipment operations," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(2), pages 470-484.
    3. Jia Shu & Miao Song, 2014. "Dynamic Container Deployment: Two-Stage Robust Model, Complexity, and Computational Results," INFORMS Journal on Computing, INFORMS, vol. 26(1), pages 135-149, February.
    4. Michel Gendreau & Manuel Iori & Gilbert Laporte & Silvano Martello, 2006. "A Tabu Search Algorithm for a Routing and Container Loading Problem," Transportation Science, INFORMS, vol. 40(3), pages 342-350, August.
    5. Richa Agarwal & Özlem Ergun, 2008. "Ship Scheduling and Network Design for Cargo Routing in Liner Shipping," Transportation Science, INFORMS, vol. 42(2), pages 175-196, May.
    6. Dong, Jing-Xin & Lee, Chung-Yee & Song, Dong-Ping, 2015. "Joint service capacity planning and dynamic container routing in shipping network with uncertain demands," Transportation Research Part B: Methodological, Elsevier, vol. 78(C), pages 404-421.
    7. Guillermo Gallego & Garrett van Ryzin, 1997. "A Multiproduct Dynamic Pricing Problem and Its Applications to Network Yield Management," Operations Research, INFORMS, vol. 45(1), pages 24-41, February.
    8. Yang, Ruina & Yu, Mingzhu & Lee, Chung-Yee & Du, Yuquan, 2021. "Contracting in ocean transportation with empty container repositioning under asymmetric information," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 145(C).
    9. L.H. Lee & E.P. Chew & M.S. Sim, 2009. "A revenue management model for sea cargo," International Journal of Operational Research, Inderscience Enterprises Ltd, vol. 6(2), pages 195-222.
    10. Wang, Yadong & Meng, Qiang & Jia, Peng, 2019. "Optimal port call adjustment for liner container shipping routes," Transportation Research Part B: Methodological, Elsevier, vol. 128(C), pages 107-128.
    11. Meng, Qiang & Lee, Chung-Yee, 2016. "Liner container assignment model with transit-time-sensitive container shipment demand and its applicationsAuthor-Name: Wang, Shuaian," Transportation Research Part B: Methodological, Elsevier, vol. 90(C), pages 135-155.
    12. Wang, Yadong & Meng, Qiang, 2021. "Optimizing freight rate of spot market containers with uncertainties in shipping demand and available ship capacity," Transportation Research Part B: Methodological, Elsevier, vol. 146(C), pages 314-332.
    13. Wang, Tingsong & Tian, Xuecheng & Wang, Yadong, 2020. "Container slot allocation and dynamic pricing of time-sensitive cargoes considering port congestion and uncertain demand," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 144(C).
    14. Meng, Qiang & Zhao, Hui & Wang, Yadong, 2019. "Revenue management for container liner shipping services: Critical review and future research directions," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 128(C), pages 280-292.
    15. Christian Va Karsten & Stefan Ropke & David Pisinger, 2018. "Simultaneous Optimization of Container Ship Sailing Speed and Container Routing with Transit Time Restrictions," Transportation Science, INFORMS, vol. 52(4), pages 769-787, August.
    16. Chang, Zhiqi & Song, Shiji & Zhang, Yuli & Ding, Jian-Ya & Zhang, Rui & Chiong, Raymond, 2017. "Distributionally robust single machine scheduling with risk aversion," European Journal of Operational Research, Elsevier, vol. 256(1), pages 261-274.
    17. Bell, Michael G.H. & Liu, Xin & Angeloudis, Panagiotis & Fonzone, Achille & Hosseinloo, Solmaz Haji, 2011. "A frequency-based maritime container assignment model," Transportation Research Part B: Methodological, Elsevier, vol. 45(8), pages 1152-1161, September.
    18. Guericke, Stefan & Tierney, Kevin, 2015. "Liner shipping cargo allocation with service levels and speed optimization," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 84(C), pages 40-60.
    19. Elçi, Özgün & Noyan, Nilay, 2018. "A chance-constrained two-stage stochastic programming model for humanitarian relief network design," Transportation Research Part B: Methodological, Elsevier, vol. 108(C), pages 55-83.
    20. Jae-Gon Kim & Hwa-Joong Kim & Hong Bae Jun & Chong-Man Kim, 2016. "Optimizing Ship Speed to Minimize Total Fuel Consumption with Multiple Time Windows," Mathematical Problems in Engineering, Hindawi, vol. 2016, pages 1-7, October.
    21. Shin-Chan Ting * & Gwo-Hshiung Tzeng, 2004. "An optimal containership slot allocation for liner shipping revenue management," Maritime Policy & Management, Taylor & Francis Journals, vol. 31(3), pages 199-211, July.
    22. Alexander, S. & Coleman, T.F. & Li, Y., 2006. "Minimizing CVaR and VaR for a portfolio of derivatives," Journal of Banking & Finance, Elsevier, vol. 30(2), pages 583-605, February.
    23. Brouer, Berit Dangaard & Desaulniers, Guy & Pisinger, David, 2014. "A matheuristic for the liner shipping network design problem," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 72(C), pages 42-59.
    24. Wang, Yadong & Meng, Qiang & Du, Yuquan, 2015. "Liner container seasonal shipping revenue management," Transportation Research Part B: Methodological, Elsevier, vol. 82(C), pages 141-161.
    25. Philippe Artzner & Freddy Delbaen & Jean‐Marc Eber & David Heath, 1999. "Coherent Measures of Risk," Mathematical Finance, Wiley Blackwell, vol. 9(3), pages 203-228, July.
    26. Christiansen, Marielle & Hellsten, Erik & Pisinger, David & Sacramento, David & Vilhelmsen, Charlotte, 2020. "Liner shipping network design," European Journal of Operational Research, Elsevier, vol. 286(1), pages 1-20.
    27. Wang, Weiqiao & Yang, Kai & Yang, Lixing & Gao, Ziyou, 2021. "Two-stage distributionally robust programming based on worst-case mean-CVaR criterion and application to disaster relief management," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 149(C).
    28. David F. Koza & Guy Desaulniers & Stefan Ropke, 2020. "Integrated Liner Shipping Network Design and Scheduling," Transportation Science, INFORMS, vol. 54(2), pages 512-533, March.
    29. He, Fang & Chaussalet, Thierry & Qu, Rong, 2019. "Controlling understaffing with conditional Value-at-Risk constraint for an integrated nurse scheduling problem under patient demand uncertainty," Operations Research Perspectives, Elsevier, vol. 6(C).
    30. Ming Yin & Zheng Wan & Kap Hwan Kim & Shi Yuan Zheng, 2019. "An optimal variable pricing model for container line revenue management systems," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 21(2), pages 173-191, June.
    31. Meng, Qiang & Wang, Shuaian, 2012. "Liner ship fleet deployment with week-dependent container shipment demand," European Journal of Operational Research, Elsevier, vol. 222(2), pages 241-252.
    32. Wang, Shuaian & Meng, Qiang, 2012. "Sailing speed optimization for container ships in a liner shipping network," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(3), pages 701-714.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Liu, Baoli & Li, Zhi-Chun & Wang, Yadong, 2023. "A branch-and-price heuristic algorithm for the bunkering operation problem of a liquefied natural gas bunkering station in the inland waterways," Transportation Research Part B: Methodological, Elsevier, vol. 167(C), pages 145-170.
    2. Liang, Jinpeng & Li, Liming & Zheng, Jianfeng & Tan, Zhijia, 2023. "Service-oriented container slot allocation policy under stochastic demand," Transportation Research Part B: Methodological, Elsevier, vol. 176(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wang, Yadong & Meng, Qiang, 2021. "Optimizing freight rate of spot market containers with uncertainties in shipping demand and available ship capacity," Transportation Research Part B: Methodological, Elsevier, vol. 146(C), pages 314-332.
    2. Zhao, Shuaiqi & Yang, Hualong & Zheng, Jianfeng & Li, Dechang, 2024. "A two-step approach for deploying heterogeneous vessels and designing reliable schedule in liner shipping services," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 182(C).
    3. Liang, Jinpeng & Li, Liming & Zheng, Jianfeng & Tan, Zhijia, 2023. "Service-oriented container slot allocation policy under stochastic demand," Transportation Research Part B: Methodological, Elsevier, vol. 176(C).
    4. Wang, Yadong & Wang, Shuaian, 2021. "Deploying, scheduling, and sequencing heterogeneous vessels in a liner container shipping route," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 151(C).
    5. Wang, Hua & Wang, Shuaian & Meng, Qiang, 2014. "Simultaneous optimization of schedule coordination and cargo allocation for liner container shipping networks," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 70(C), pages 261-273.
    6. Zhen, Lu & Wu, Yiwei & Wang, Shuaian & Laporte, Gilbert, 2020. "Green technology adoption for fleet deployment in a shipping network," Transportation Research Part B: Methodological, Elsevier, vol. 139(C), pages 388-410.
    7. Wang, Tingsong & Meng, Qiang & Tian, Xuecheng, 2024. "Dynamic container slot allocation for a liner shipping service," Transportation Research Part B: Methodological, Elsevier, vol. 179(C).
    8. Wang, Tingsong & Meng, Qiang & Wang, Shuaian & Qu, Xiaobo, 2021. "A two-stage stochastic nonlinear integer-programming model for slot allocation of a liner container shipping service," Transportation Research Part B: Methodological, Elsevier, vol. 150(C), pages 143-160.
    9. Sun, Qinghe & Li, Wei & Meng, Qiang, 2024. "Single-leg shipping revenue management for expedited services with ambiguous elasticity in transit-time-sensitive demand," Transportation Research Part B: Methodological, Elsevier, vol. 180(C).
    10. Moussawi-Haidar, Lama & Nasr, Walid & Jalloul, Maya, 2021. "Standardized cargo network revenue management with dual channels under stochastic and time-dependent demand," European Journal of Operational Research, Elsevier, vol. 295(1), pages 275-291.
    11. Wang, Shuaian, 2014. "A novel hybrid-link-based container routing model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 61(C), pages 165-175.
    12. Xi Jiang & Haijun Mao & Yadong Wang & Hao Zhang, 2020. "Liner Shipping Schedule Design for Near-Sea Routes Considering Big Customers’ Preferences on Ship Arrival Time," Sustainability, MDPI, vol. 12(18), pages 1-20, September.
    13. Lai, Xiaofan & Wu, Lingxiao & Wang, Kai & Wang, Fan, 2022. "Robust ship fleet deployment with shipping revenue management," Transportation Research Part B: Methodological, Elsevier, vol. 161(C), pages 169-196.
    14. Yadong Wang & Qiang Meng & Haibo Kuang, 2019. "Intercontinental Liner Shipping Service Design," Transportation Science, INFORMS, vol. 53(2), pages 344-364, March.
    15. Ksciuk, Jana & Kuhlemann, Stefan & Tierney, Kevin & Koberstein, Achim, 2023. "Uncertainty in maritime ship routing and scheduling: A Literature review," European Journal of Operational Research, Elsevier, vol. 308(2), pages 499-524.
    16. Akyüz, M. Hakan & Lee, Chung-Yee, 2016. "Service type assignment and container routing with transit time constraints and empty container repositioning for liner shipping service networks," Transportation Research Part B: Methodological, Elsevier, vol. 88(C), pages 46-71.
    17. Balakrishnan, Anantaram & Karsten, Christian Vad, 2017. "Container shipping service selection and cargo routing with transshipment limits," European Journal of Operational Research, Elsevier, vol. 263(2), pages 652-663.
    18. Dong, Jing-Xin & Lee, Chung-Yee & Song, Dong-Ping, 2015. "Joint service capacity planning and dynamic container routing in shipping network with uncertain demands," Transportation Research Part B: Methodological, Elsevier, vol. 78(C), pages 404-421.
    19. Lee, Chung-Yee & Song, Dong-Ping, 2017. "Ocean container transport in global supply chains: Overview and research opportunities," Transportation Research Part B: Methodological, Elsevier, vol. 95(C), pages 442-474.
    20. Wang, Yadong & Meng, Qiang & Jia, Peng, 2019. "Optimal port call adjustment for liner container shipping routes," Transportation Research Part B: Methodological, Elsevier, vol. 128(C), pages 107-128.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transe:v:164:y:2022:i:c:s1366554522001727. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600244/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.