International Conference on Advanced Computer Control

A Nonlinear Goal Programming Model for Slot Chartering & Allocation under Containerized Liner Shipping Alliance
CHEN Ji-hong, ZHEN Hong CHEN Ji-hong(1981-), Male, PhD Candidate, College of Transport and Communications, Shanghai Maritime University, China. Email: cxjh2004@163.com ZHEN Hong(1958-), Male, PhD, Professor, Doctor Advisor, College of Transport and Communications, Shanghai Maritime University, China. Email:shzhenhong@gmail.com Abstract
Shipping Alliance developed particularly rapidly these years. Alliance members can cooperate with each others in the form of slot chartering, to take the advantages of economies of scale and provide good services to enhance their competitiveness and obtain greater benefits. This paper will establish a nonlinear goal programming model applied to decision-making for slot chartering and allocation under containerized liner shipping alliance. The results showed that, slot chartering under shipping alliance has outstanding advantages for shipping companies to lower their system costs, offset route capacity, ensure the completion of freight tasks, and so on. shipping companies, optimization for liner shipping route has become more and more complicated. Domestic and foreign scholars have paid more attention to optimizing research for shipping alliance[11]-[13].

2. The Goal Programming Model

2.1. Model
Nonlinear Goal Programming Model for Slot Chartering & Allocation under Containerized Liner Shipping Alliance is as follows (Model). Min P= s.t. Min Z=

p i[
i =1 k =1

ik

+ + d k + ik d k ]

(1)

1. Introduction
Shipping alliance, and shipping issues such as the sharing of resources has become a concern. By alliance, shipping companies can achieve the goal of their shipping routs further optimization by means of slot chartering from the alliance members. Slot chartering is a specific way for the shipping alliance members to share their shipping resources[6]. It means that according to the alliance agreement, both parties cooperate by the sale of container slot, that is one party to sell, and another to buy. In this way, shipping companies do not invest their own ships, but do their shipping business by means of leasing part of a fixed number of container slots from other member of the shipping alliance[2][6]. So that a new transport network structure will be formed through container slots chartering among shipping companies [13]. Previous studies have showed many models for optimization for the liner shipping route[8][11], fleet planning[5][12][13], transportation network planning[1][7], and so on. There are also some defects in the models for practical applications, each model should be improved for practical applications with specific issues[2][4][5]. With the merger and alliance among
978-0-7695-3516-6/08 $25.00 2008 IEEE DOI 10.1109/ICACC.2009.35 502 500

i=1
n j = 1

c ij x

ij

j=1

kj

ju

j = 1
d 1 d 1 Z0

k = 1

kj

(2) Min

z
m

=
n

k =1

c k j x kj
kj

j=1

u
j

j = 1

k = 1

kj

d 2 d

+ 2

Z0 (3)

j = 1

j =1

kj

+d 3 d 3

x kj

(4) (5)

j =1

i
n

d 4 d 4 0

j = 1

1 x n ij

ij

(6) (7)

j =1

1 x k j m k n k j

N ix

ij

i=1
m

m i=1

q kj w

kj

= Q

i=1

(8)
i=1

N k x kj - q kj w

kj

u j = Q j
(9) (10) (11) (12) (13) (14) (15)

qkj qk N k ; integer 0 kj xkj ; integer

xij 0; uj 0; integer
+ d i

x ij 0; u j 0; integer
0 ; integer

di

Ztotal cost of the system, including transportation cost, slot chartering cost, and opportunity cost; Knumber for cooperative ship kinds; inumber for ship kinds; jnumber for routs kinds; xij decision variable, number of consecutive voyages for ship i in route j in a quarter; xkj decision variable, number of consecutive voyages for cooperative ship k in route j in a quarter; cijcost of a consecutive voyages for ship i in route j; c kj cost of a consecutive voyages for cooperative ship k in route j; j and j opportunity cost for each TEU(twenty equivalent unit ) in rout j; uj and u j un-carried TEU in rout j; nijeach ship i s maximum consecutive voyages in route j in a quarter; nkj each cooperative ship k s maximum consecutive voyages in route j in a quarter; Nicapacity of ship i (TEU);

k =12 mi ; i =12m; j =12n (Set: p 1 >>p 2 >> p 3 >> p 4 >>p k )

In model , Z0 and Z0 will be confined with the following model (Model ): Min Z= s.t.

c x + 1 u j=
ij ij

(16)

i =1

j =1

j =1

1 x n ij

Nk capacity of cooperative ship k (TEU)

ij

m
+

(17) (18) (19)

minumber of ship i; m inumber of cooperative ship i; Qj and

N i x ij

uj = Q

j=1

xij 0; uj 0; integer; i =1,2m; j =1,2n

2.2. Parameter explanation for models

Formula (1) means positive and negative deviation should be minimized; formula (2) means the cost of shipping system should be optimized, which should be not more than Z0 ; formula (3) shows that the revenue for cooperative shipping company should not more than Z0; formula (4) shows that the total sequences of voyages for cooperation should be not more than k (

kj decision variable, number of cooperative consecutive voyages for cooperative ship k in route j in a quarter; ejslot charting cost of one TEU in route j; qkjdecision variable , number of charting slot of cooperative ship k in route j for each consecutive voyages (TEU).

Qj forward shipment in route j (TEU);

2.3. Algorithm for the model

Genetic Algorithm (GA) is effective for Nonlinear Goal Programming [14][15]. When the model involves more variables, manual computation will bring too muck work, moreover, its easy to make a mistake. Therefore we often quotes the related computer software to deal with these issues, for example MATLAB or LINGO software. The paper will process this kind of example using the MATLAB software to give the example result.

x kj ); formula (5) means that the

j =1

shipping company should try her best to carry goods for route i; formula (6) and (7) show that the ship and cooperate ship numbers should be separately not more than numbers of that kind of ships; formula (8) and (9) means ships should finish the carrying tasks; formula (10) to (15) is non-negativity or integral or other restrictions. Explanation for model is almost the same as model .

3. Application for models

Shipping company A and B cooperate in 4 container shipping route. According to the alliance agreement,

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Corporation A can rent container slot from Corporation Bs ship for each voyage. Specific data can be got from Table1~3. Table 1 Freight volume (TEU) for each company in the planning period (a quarter)

Table 2 Largest number of voyages for each ship in each rout in a quarter

From Table 4, we know that without Slot Chartering between the alliance members, their shipping system total cost are as follows: Z0=9770 (for Company A); Z0 =3105(for Company B).

3.2. Decision-making for Slot Chartering & Allocation

For cooperative voyages, obviously there are three conditions: (1) 0
n

kj xkj ; (2)

kj

Table 3 Different kinds of costs for one consecutive voyage or one TEU (ten thousand USD)

k x kj ; (3) 0 qkj qk Nk ;Simply we

can set

j =1

qk =1/2 N k .For the target

m

j =1

function set

p i[

i=1

ik

+ ik

+ k

we

should

k =1

p 1 >>p 2 >> p 3 >> p 4 >>p k .Using model and

3.1. Planning and routing for ships

Before using model for cooperation under shipping alliance, we firstly use model for Planning and routing for ships of Company A and Company B. The optimization results in Table 4. Table 4 Numbers of voyage for each company in the planning period (a quarter) and the total cost of shipping system( ten thousand USD)

When k1,j4, kj = qkj =0. For cooperation, other results of decision-making for slot chartering & allocation are in Table 5.

with the help of MATLAB software, one kind of optimization results of Decision-making for Slot Chartering & Allocation are as follows: The result of best number for cooperative voyage and best number for charting slot are: kj =7, qkj =4000TEU (k=1,j=4); or kj =14, qkj =2000TEU (k=1, j=4).

Table 5 Numbers of voyage for each company in the planning period (a quarter) and the total cost of shipping system( ten thousand USD)

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[5] Xie Xin-lian. Methods for Ship Scheduling and Fleet Planning, Peoples Traffic Press, Beijing, 2000. [6] Ding Yu-song. Basic form and main Elements of the Agreement for Cooperation for Container Liner Routes, Containerization, 2003(1): pp.15-17. [7] Teodor Gabriel Crainic. Service network design in freight transportation, European Journal of Operational Research, 2000, vol.122(2): pp.,272-288 [8] S-C.Cho and A. N. Perakis Optimal liner fleet routing strategies, Maritime Policy and Management, 1996, vol.23(3): pp.249-25. [9] Brain Slackc, Claude Comtois, Robert Mccalla. Strategic alliance in the container shipping industry: a global perspective, Maritime Policy &Management, 2002,vol.29: pp.65-76 [10]Phties M.Panayides. Competitive strategies and organizational performance in ship management, Maritime Policy and Management, 2003,vol.30(2): pp.123-140. [11] W. M. Bremer and A. N. Perakis, An operational tanker scheduling optimization system Model implementation, results and possible extensions, Maritime Policy and Management, 1992, vol.19(3): pp.189-199. [12] A.Imai and F. Rivera Strategic fleet size planning for maritime refrigerated containers, Maritime Policy and Management, 2001, vol.28(4): pp.361-374. [13] Chin-Shan Lu, Kee-hung Lai, T.C.E. Cheng. Application of structural equation modeling to evaluate the intention of shippers to use Internet services in liner shipping, European Journal of Operational Research, 2007, vol.180: pp.845867. [14] Dai Xiaohui, LiMingqiang, Kouisong, Genetic Algorithm for Nonlinear Goal Programming, Systems engineering and sustainable development Proceedings for tenth annual meeting of China Systems Engineering Academic Society, in 1998: pp.337-342. [15] Saber M , and Ravindran A. Nonlinear Goal programming Theory and Practice: A Survey, Computers Ops Res, 1993: pp. 275-291 .

Compare Table 5 with Table 4, total cost of shipping system for Company A and Company B all descend by a large scale. For company A, system cost descend to 7480 from 9770, descending by 23.4%; and for company B, system cost descend to 2764 from 3105, descending by 11%.

4. Conclusions
Slot chartering is the most basic and effective form of cooperation for shipping alliance. From this form of cooperation, the shipping alliance have slot chartering agreement. Under the agreement, both sides can not intervene in each others shipping business. But if both sides make adjustments to the shipping route, calling ports, or schedules, they can stop all or part of slots chartering. Otherwise a new agreement will be formed. The nonlinear goal programming model applied for capacity disposition or slot chartering & allocation under shipping alliance is very flexible and effective. When actual situation changes, we may change the objective function as well as its corresponding constraints and parameters of the goal programming to establish a new goal programming model conforming to the special details.

5. References
[1] Cai qing-lin, etal. Analysis of Shipping Transport System, Peoples Traffic Press, Beijing,1991. [2] Wu chang-zhong. Shipping Management, Dalian Maritime University Press, Dalian,China,1992. [3] Zhao Gang, Lin Guo-long. International Shipping Management, Peoples Traffic Press, Beijing, 2000. [4] Zhao Gang. Analysis and Improvement on the Vessel Allocation Model of Liner Service, Journal of Systems Engineering, 1997(1): pp.80-86.

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