Partitioned vs. Integrated Planning of Hinterland Networks for LCL Transportation

TL;DR

This paper compares partitioned and integrated planning approaches for hinterland networks in LCL ocean freight, highlighting the benefits and computational challenges of integrated modeling for cost-effective routing and consolidation.

Contribution

It introduces an integrated modeling approach for hinterland network planning in LCL freight, demonstrating its advantages over simplified methods.

Findings

Integrated approach reduces transportation costs

Integrated model offers better consolidation efficiency

Higher computational effort required for integrated planning

Abstract

Utilizing existing transportation networks better and designing (parts of) networks involves routing decisions to minimize transportation costs and maximize consolidation effects. We study the concrete example of hinterland networks for the truck-transportation of less-than-container-load (LCL) ocean freight shipments: A set of LCL shipments is given. They have to be routed through the hinterland network to be transported to an origin port and finally to the destination port via ship. On their way, they can be consolidated in hubs to full-container-load (FCL) shipments. The overall transportation cost depends on the selection of the origin port and the routing and consolidation in the hinterland network. A problem of this type appears for the global logistics provider DB Schenker. We translate the business problem into a hub location problem, describe it mathematically, and discuss solution strategies. As a result, an integrated modeling approach has several advantages over solving a simplified version of the problem, although it requires more computational effort.