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A freight network planning model in oligopolistic shipping markets

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Abstract

The paper presents a multi-level hierarchical approach which models the oligopolistic behavior of carriers in maritime freight transportation networks. With the merger of the carriers’ industry and some dominant carriers in today’s shipping markets, carrier competition frequently exhibits an oligopolistic nature. This study considers the following three types of carriers; ocean carriers, land carriers, and port terminal operators. The oligopolistic ocean carriers, land carriers, and port terminal operators compete with each other in their pricing and routing decisions. The carriers determine service charges and delivery routes at different parts of the multi-modal freight network, creating hierarchical relationships. When using a game theoretic approach, ocean carriers become the leaders in an oligopoly shipping market. When dealing with individual carrier problems, the Nash equilibrium reveals the optimal decision where each carrier obtains the greatest profit. A three-level model is formulated to capture the interactions among different types of carriers. The validity and capability of the model gets demonstrated through an empirical example.

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Author information

Authors and Affiliations

  1. Environmental Development Institute, Hongik University, 72-1 Sangsu-dong, Mapo-gu, Seoul, 121-791, Korea

    Hyangsook Lee

  2. Hellenic Institute of Transport, Centre for Research and Technology Hellas, 357-359 Mesogeion Ave., Athens, 15231, Greece

    Maria Boile

  3. e-POS S.A., 656 G. Lambraki Ave., Keratsini, Piraeus, 18758, Greece

    Sotirios Theofanis

  4. Department of Urban Design & Planning, Hongik University, 72-1 Sangsu-dong, Mapo-gu, Seoul, 121-791, Korea

    Sangho Choo

  5. Department of Packaging, Yonsei University, 1 Yonseidae-gil, Wonju, Kangwon-do, 220-710, Korea

    Kang-Dae Lee

Authors
  1. Hyangsook Lee
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  2. Maria Boile
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  3. Sotirios Theofanis
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  4. Sangho Choo
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  5. Kang-Dae Lee
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Corresponding author

Correspondence to Kang-Dae Lee.

Appendix

Appendix

Table 7 Parameters in the ocean carrier demand function
Full size table
Table 8 Parameters in the transpiration cost function of ocean carrier o
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Table 9 Parameters in the average port service cost function
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Table 10 Parameters in the land carrier demand function
Full size table
Table 11 Parameters in the transportation cost function of land carrier l
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Lee, H., Boile, M., Theofanis, S. et al. A freight network planning model in oligopolistic shipping markets. Cluster Comput 17, 835–847 (2014). https://doi.org/10.1007/s10586-013-0314-3

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  • DOI: https://doi.org/10.1007/s10586-013-0314-3

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