1The Logistic Institute – Asia Pacific

Cargo Selecting Problem

Abstract

The work describes a mathematical programming model for a cargo selection problem, obtained from a Singapore shipping company (APL).

Our model helps in evaluating whether a forecast demand should be selected or not.

Given the forecasting and a finite set of candidate routes, the model calculates the number of containers transported between port pairs, according to specific customer, equipment type and size and service requirement.

This model also concerns the empty container reposition.

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Cargo Selecting Problem

Background Introduction

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Cargo Selecting Problem

Demand Forecasting

A joint work of demand planner, sales manager and trade manager.

Demand forecasting is carried out at three different levels:

Background Introduction

– Long term forecasting– Median term forecasting– Short term forecasting

Long term forecasting

Median & short term forecasting

For the strategic decisions, such as the design of fleets, the design of sea transport systems and long term revenue management

Mainly focus on the tactical and operational planning respectively. The selection of origin-destination pairs, selection of costumers, fleet deployment and so on are dependent on the data.

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Cargo Selecting Problem

A High Degree of Uncertainty

It is possible that not all the forecast demands can be shipped in a period because of the bad weather.

From time to time, there are also many extra profit opportunities offered by the variable markets.

Background Introduction

Two Examples:

It is critical for shipping company to manage revenue based on the cargo selection.

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Cargo Selecting Problem

Empty Container Reposition

A major component of a shipping company's total operating cost Due to the imbalance of the international trading

Background Introduction

In light of the above, it is necessary to have an efficient policy to manage the movement of forecast demand (including laden containers and empty containers) in order to maximize the total profit in a specific planning horizon, and at the same time, to make best use of the existing facilities.

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Cargo Selecting Problem

Problem Description

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Cargo Selecting Problem

Forecast Demand Record

loading port, i.e., origin discharging port, i.e., destination customer equipment type and size, ETS service requirement

Problem Description

Each forecast demand record is characterized by:

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Cargo Selecting Problem

Equipment Type and Size

Equipment type and size or ETS is the value denoting the type and size of containers which is used for moving cargoes. For example, `D40H' means dry container with the size of 40 feet high cube. The different equipment type and size are shown in the following table:

Problem Description

Equipment Types Available Size

Dry Containers 20’, 40’, 40’ High Cube, 45’, 48’

Refrigerated Containers 20’, 40’, 40’ High Cube

Specialty Equipment 20’, 40’, Flat Rack, Open Top

Chassis 20’, 40’, Extendable 40’ – 48’

Note: This table is copied from APL website

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Cargo Selecting Problem

Service Requirement

The liner shipping company provides regular service among major ports on a determined schedule basis.

A service depends upon a number of factors, such as seasonal fluctuations, market requirements, company policy etc.

Customer may have specific service requirement.

Problem Description

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Cargo Selecting Problem

Route Definition

In practice, most of shipping companies use concept route, which differs from the service, for operation convenience.

There is a fact that only services are visible for customers or shippers. Service leg.

Problem Description

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Cargo Selecting Problem

Forecast Demand Conclusion

(i,j,k,m,n) represents the value for forecast demand dimension, i.e., origin-destination pairs, customer, ETS and service requirement.

We label this forecast demand dimension (i,j,k,m,n) as f and simply call df a laden cargo demand flow from port i to port j.

Empty container reposition demand e can be characterized by origin-destination pairs and ETS, notated as e:(i,j,m).

Another flow from port i to port j.

Problem Description

We assume that shipping company has all the required demand forecasts for any markets they plan to serve.

Laden Cargo Demand Empty Container Reposition Demand

We want to assign each cargo demand forecast f and e to some mix of routes r among a finite set of candidate routes considered by the shipping company, to optimize our objective.

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Cargo Selecting Problem

Valid Route

Not all the routes in candidate set will be appropriated to each demand: Cargo between i and j can only be transported if the ship sails from i to j,

directly or indirectly. Service requirement should be satisfied.

Problem Description

Definition:

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Cargo Selecting Problem

Problem Description

The decision making problem is to assign cargo demands to each route in the `best possible' way.

The objective is to maximize the revenue of optional cargoes minus the variable cost, under a set of different constraints such as demand constraint, network balance constraint, vessel capacity constraint etc.

There are two decisions should be made:

Problem Description

– To decide which cargo demand should be moved;– To decide to move the cargo demand on which route.

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Cargo Selecting Problem

Assumptions

All the ships available during the planning horizon are known and fixed. The forecast demand of cargo, i.e., number of containers from port i to port

j over the planning horizon is deterministic, known and occurs uniformly during the horizon.

There are sufficient empty container relocation demand, i.e., de is a big number. It seems more practical to give this assumption since the shipping company only makes the empty container reposition planning.

The managers of the shipping company can suggest a finite set of candidate routes for their liner fleet, derived from common sense, their past experience or their view of future main cargo flows.

Problem Description

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Cargo Selecting Problem

Related Problem

Ship routing and scheduling problem: to find optimal route for each ship and the cargo it carries for any port pair whereas the frequency of service are also calculated.

In our model, the concept of route is expanded and one route can be fulfilled by one or more ships to satisfy the cargo demand, and so most of the approaches for ship routing problem are not applicable in our problem.

Problem Description

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Cargo Selecting Problem

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