Bi-level optimization programming for the shipper-carrier network problem

Abstract

The paper presents a bi-level modeling approach that captures hierarchical relationships between shippers and carriers in maritime freight transportation networks. Ocean carriers, land carriers and port terminal operators provide transportation services at different parts of the multimodal network. Port terminal operators are regarded as a special type of carrier due to their behavior. The carriers determine service charges and delivery routes (port services) through competition and interactions among themselves. Shippers are users of the transportation services. Shippers choose a sequence of carriers, based on the carriers' pricing and routing decisions. These relationships are captured in a bi-level model where carriers are the leaders and shippers are the followers. The paper focuses on the behavior of shippers having the transportation service information with spatial price equilibrium. A numerical example is used to demonstrate the validity of the developed model.