Air cargo logistics: designing a forwarder's shipment plan model and issues.

Wong Wai Hung.Thesis (M.Phil.)--Chinese University of Hong Kong, 2004.Includes bibliographical references (leaves 102-103).Abstracts in English and Chinese.LIST OF TABLES --- p.iiiLIST OF FIGURES --- p.vABSTRACT --- p.viiChapter Chapter 1. --- Introduction --- p.1Chapter 1.1 --- Goals and Significance --- p.1Chapter 1.2 --- Thesis Organization --- p.2Chapter Chapter 2. --- Review on Air Cargo Industry --- p.3Chapter 2.1 --- The Position of Air Cargo Logistics --- p.3Chapter 2.2 --- General Air Cargo Practice --- p.3Chapter 2.3 --- Hong Kong Air Cargo Practice - An Example --- p.1Chapter Chapter 3. --- Air Cargo Cost Analysis --- p.12Chapter 3.1 --- Shipping Costs --- p.12Chapter 3.1.1 --- International Shipping Costs --- p.12Chapter 3.1.2 --- Local Shipping Costs --- p.14Chapter 3.2 --- Shipment Categorization --- p.15Chapter 3.2.1 --- Illustrative Examples - Hong Kong --- p.18Chapter 3.3 --- Analysis of shipping cost --- p.27Chapter 3.4. --- Freight Forwarders' means for freight forwarders' success --- p.29Chapter 3.4.1 --- Consolidation --- p.31Chapter 3.4.2 --- Integration --- p.42Chapter 3.4.3 --- Cooperation among freight forwarders to combine the cargos --- p.44Chapter 3.5 --- Summary --- p.44Chapter Chapter 4. --- A Mixed 0-1 LP Model of Air Cargo Logistics integration & consolidation --- p.47Chapter 4.1 --- Statement of the Problem --- p.47Chapter 4.2 --- Literature Review --- p.49Chapter 4.3 --- Objective Function --- p.51Chapter 4.4 --- Logical Constraints --- p.52Chapter 4.5 --- Resources Constraints --- p.54Chapter 4.6 --- The Model --- p.55Chapter 4.7 --- Properties of the Model --- p.56Chapter Chapter 5. --- Solution Process --- p.58Chapter 5.1 --- Tabu Search --- p.59Chapter 5.2 --- Tabu Search Algorithm --- p.62Chapter 5.3 --- Illustrative Example --- p.64Chapter 5.4 --- Implementation and Results --- p.70Chapter Chapter 6. --- Extensions --- p.73Chapter 6.1 --- Different approaches as the initial solution --- p.73Chapter 6.2 --- Risk or Reliability Limit --- p.75Chapter 6.3 --- Consolidation with inventory penalty --- p.78Chapter 6.4 --- Two Phase Method --- p.79Chapter Chapter 7. --- Sensitivity Analysis --- p.81Chapter 7.1 --- Delivery time --- p.81Chapter 7.2 --- Charging price and cost --- p.85Chapter 7.3 --- Resources allocations --- p.92Chapter 7.4 --- A series of good solutions --- p.95Chapter Chapter 8. --- Conclusion --- p.98Chapter 8.1 --- Future Work --- p.98Chapter 8.2 --- Future Research --- p.100LIST OF REFERENCES --- p.102Appendix --- p.104Simulation results --- p.104Pseudo code --- p.107Program Coding --- p.11

A Lagrangian Approach for The Airfreight Consolidation Problem Under Pivot-weight

International airfreight forwarders are faced with the problem of consolidating ship- ments for efficient transportation by airline carriers. The use of standard unit loading devices (ULDs) is a solution adopted by the airfreight industry to speed up cargo loading, increase safety, and protect cargo. We study the airfreight consolidation problem from the forwarders perspective where a decision on the number of ULDs used and the assignment of shipments to ULDs is optimized. The cost of using a ULD consists of a fixed charge and depends on the weight of the cargo it contains. A ULD is charged at an under-pivot rate if the total weight is below a threshold limit, called the pivot-weight. Additional weight is charged at the over-pivot rate. We propose a solution methodology based on Lagrangian relaxation that is capable of providing high quality solutions in reasonable computational times. Besides, a high-quality lower bound, we propose three heuristics to generate feasible solutions, all based on the solution of the subproblems. The first, takes the solution of one of the subproblems and solves a restricted version of the original problem (LagHeur). The other two heuristics are a heuristic based on solving two knapsack problems (2knap) and a best-fit greedy heuristic (bestfit). Problems with up to 100 ULDs and 1000 shipments are solved to within an average of 1%, 2%, 2% of optimality in less than 51.05s, 50.57s and 589.16s by bestfit, 2knap and LagHeur, respectively

Optimal Shipping Decisions in an Airfreight Forwarding Network

This thesis explores three consolidation problems derived from the daily operations of major international airfreight forwarders. First, we study the freight forwarder's unsplittable shipment planning problem in an airfreight forwarding network where a set of cargo shipments have to be transported to given destinations. We provide mixed integer programming formulations that use piecewise-linear cargo rates and account for volume and weight constraints, flight departure/arrival times, as well as shipment-ready times. After exploring the solution of such models using CPLEX, we devise two solution methodologies to handle large problem sizes. The first is based on Lagrangian relaxation, where the problems decompose into a set of knapsack problems and a set of network flow problems. The second is a local branching heuristic that combines branching ideas and local search. The two approaches show promising results in providing good quality heuristic solutions within reasonable computational times, for difficult and large shipment consolidation problems. Second, we further explore the freight forwarder's shipment planning problem with a different type of discount structure - the system-wide discount. The forwarder's cost associated with one flight depends not only on the quantity of freight assigned to that flight, but also on the total freight assigned to other flights operated by the same carrier. We propose a multi-commodity flow formulation that takes shipment volume and over-declaration into account, and solve it through a Lagrangian relaxation approach. We also model the "double-discount" scheme that incorporates both the common flight-leg discount (the one used in the unsplittable shipment problem) and the system-wide discount offered by cargo airlines. Finally, we focus on palletized loading using unit loading devices (ULDs) with pivots, which is different from what we assumed in the previous two research problems. In the international air cargo business, shipments are usually consolidated into containers; those are the ULDs. A ULD is charged depending on whether the total weight exceeds a certain threshold, called the pivot weight. Shipments are charged the under-pivot rate up to the pivot weight. Additional weight is charged at the over-pivot rate. This scheme is adopted for safety reasons to avoid the ULD overloading. We propose three solution methodologies for the air-cargo consolidation problem under the pivot-weight (ACPW), namely: an exact solution approach based on branch-and-price, a best fit decreasing loading heuristic, and an extended local branching. We found superior computational performance with a combination of the multi-level variables and a relaxation-induced neighborhood search for local branching

Carrier and Freight Forwarders Strategies to Utilize the Immobile Shipping Capacity of Freight Forwarders and Maximize Profits

Carriers and freight forwarders (FFs) play several roles in ensuring the effective flow of goods delivery. They are tasked with accommodating the shippers’ needs in transporting goods via containers, following the carrier’s ship destination plan. In practice, FFs often experience overbook and underbook capacity toward the capacity limit for shipping goods. This has consequently increased FF costs. However, for the carrier, this will increase profits. The aim of this study is to develop strategies for carriers and FFs using a mathematical model approach to obtain the optimal quantity of booking shipping capacity; thus, overbooks or underbooks can be minimized. More broadly, this study also proposes several strategies to increase the profits of all parties, both for FFs through collaboration and for carriers by directly selling marketing shipping capacity to shippers. Optimum booking quantity for goods delivery from each FF is performed through the particle swarm optimization (PSO) approach. Using four FF collaboration scenarios, the model test results yield a profit of $121,270, 2.14$119,169. The carrier generated an average profit of $39,926 when the FF did not collaborate. Conversely, when the FFs collaborated, the carrier experienced a decline of –1.88 on average profit, which was$39,175. However, if the carrier responds with direct selling, the profit will increase by 9.36%, which is $42,840. It is concluded that collaboration can increase the profits of FFs but reduce the profits of carriers, while direct selling can increase the carrier’s profits

Optimal consolidation of air freight for an international cargo carrier

Air cargo carriers consolidate the freight in order to avoid extra handling e ort and holding cost during transfers among the international hubs. We consider planning problems associated with the consolidation process of an international air cargo carrier. At the operational level of planning, the cargo carrier is concerned with optimal consolidation decisions given the locations and capacities of gateways with consolidation capability along with the ight network information. An optimal consolidation maximizes the savings due to transfer and transport of freight in a consolidated manner. We develop a set covering type linear programming problem formulation for this consolidation and routing problem; we also propose a column generation method to solve large-scale instances. At the tactical level, we study the expansion of gateway capacities keeping the gateway network and ight network as it is. The problem formulation is extended to cope with capacity expansion decisions and the solution method is enhanced appropriately. At the strategical level, we consider decisions associated with selecting new locations for gateways. In order to solve this problem, the column generation method is employed as a subroutine in a heuristic algorithm. For our computational experiments, we use real-life data set from a European-based international air cargo carrier

Reefer logistics and cool chain transport

Reefer logistics is an important part of the cool chain in which reefer containers are involved as the packaging for transporting perishable goods. Reefer logistics is challenging, as it deals with cost and time constraints as well as the product quality and sustainability requirements. In many situations, there is a trade-off between these factors (e.g., between transportation time and the quality of fresh products). Furthermore, considering the high value of reefers, the efficient logistics of is as important as the efficient cargo flows. This causes technical complications and the conflict of interests between actors, especially, between cargo owners (or shippers) and the asset owners (or transport/terminal operators). Improving the efficiency of reefer logistics calls for a thorough understanding of the trade-offs and complexities. This paper aims to help develop such an understanding using a systematic literature review and a socio-technical system analysis. The results can be used to provide managerial insights for actors involved in a cool chain to design tailored solutions for reefer

CAPM-β of Carriers and Consolidators in Liner Shipping: Volume Contracts under the Rotterdam Rules in Perspective

Liner shipping, which provides transportation by ships operating on a regular schedule between specified ports in accordance with publicly available timetables of sailing dates, is now a mature industry. The various players which are part of the liner shipping industry, namely, ocean carriers, port operators, freight forwarders or consolidators, customs, hinterland haulage carriers, inland navigation carriers, market regulators, etc., are increasingly interdependent on each other leading to inter-industry partnership. The recent global financial crisis has led to better vertical and horizontal cooperation among the ocean carriers and the nodal service providers in the liner shipping industry. However, some of the major liner carriers are yet to post profits as the freight rates were severely affected during the crisis. Amidst this evolving market environment, the liner shipping industry which used to be highly regulated through the conference system has witnessed the emergence of the contract paradigm of free bargaining norms where there is in place a service contract as promulgated under the Shipping Act of 1984 and the Ocean Shipping Reform Act of 1998 in the United States (US). The uniqueness of individual contracts between shippers and carriers has now been recognized in the US through these Acts for almost three decades. This uniqueness, it would appear, has influenced the development of the volume contract concept in the newly adopted convention called the Rotterdam Rules and has provided the impetus for introducing bargaining freedom in carriage of goods wholly or partly by sea. The thesis analyses the various economic and financial implications associated with the bargaining freedom under volume contracts through estimation and drawing the time-varying systematic risk, β in the liner shipping industry by using Kalman filters and relate the estimated path of β to market changes during 1980–2013, depending on availability of data. To interpret the market environment in the liner shipping industry, the focus is on two points. The first is that the introduction of policies for promoting competition increases β, and the second is that an increase in market power due to cooperation and concentration among firms reduces β. The result of the analysis is varied across jurisdictions showing a certain degree of dependence on the position of national or regional legislation in which the liner shipping company is operating. The thesis also attempts to view the volume contract concept from a particular vantage point, namely, the perspective of the shipper, who in the present world trade scenario is often a non-traditional entity such as a logistics service provider, freight forwarder or consolidator. Global players in the consolidation business like DHL and UPS along with a section of the liner shipping carriers, equipped with state of the art information technology, has opened up a new era of cooperation in the liner shipping business with capacity-based pricing, time-based pricing, and service-based pricing. It is submitted that the introduction of volume contracts will enable these consolidation companies to take advantage of the freedom of contract in expanding their business within the mature liner shipping industry thereby creating value for themselves as well as for small and medium shippers. It is notable in this context that consolidators licensed in the US were allowed service contract parity through the NVOCC Service Arrangements (NSA) rule in December 2004, when dealing with their shipper-customers. However, there were certain tariff publication requirements which did not allow consolidators to reap the full benefit of the NSA rule. In February 2010, the publication requirements were relaxed creating a new wave of opportunity for consolidators. The financial analysis therefore includes estimation and drawing the β in the consolidation business by using Kalman filters and relate the estimated path of β to market changes during the period 1988–2013, depending on availability of data, depicting the growing business opportunity for these nodal service providers who are an important part of the liner shipping industry. The commercial viability of volume contracts with regard to the liner shipping industry is presented in conclusion which also reflect the viewpoints of the authors

PRICING DECISIONS BY FREIGHT FORWARDERS

Ph.DDOCTOR OF PHILOSOPH