A multi-criteria fleet deployment model for cost, time and environmental impact

Abstract

Most conventional models in maritime logistics focus uniquely on cost-minimization, whereas the supply chain management literature and practice emphasize customer time-performance and delivery reliability. In addition, the environmental perspective, in particular carbon dioxide (CO2) reductions, is highly relevant. This paper addresses this issue by formulating a bi-criterion fleet deployment model, which minimizes shipping costs and transit time under an environmental constraint. The model identifies the Pareto optimal frontier of cost, transit time and CO2 emissions, in terms of generalized costs for the importer as well as the impact of potential delays. The approach is tested empirically on a network of maritime and railway routes connecting China and US East/West coast ports, which simulates the weekly containerized China-USA traffic. The US West Coast ports act as transshipment gateways/hubs via both the intermodal US rail system and the coast-to-coast domestic maritime routes traversing the Panama Canal. Customer preferences are represented through an opportunity cost of flow time. The numerical results show a convex operational cost curve as a function of time reductions, i.e., increasing marginal cost for time. However, given the correlation of slow steaming and line cost reductions, the results for emission restrictions show that the impact primarily affects shippers in the form of longer lead times, not liners that benefit from lower costs. Both results suggest that resolution of the conflict between liners and shippers will involve addressing difficult issues in market, regulatory and technological development.