Maritime container shipping: Does coopetition improve cost and environmental efficiencies?. (October 2020)

• Record Type: Journal Article
• Authors: Trapp, Andrew C.; Harris, Irina; Sanchez Rodrigues, Vasco; Sarkis, Joseph
• Is Part Of: Transportation research. Volume 87(2020)
• Publication Date: 2020-10
• Subjects: OR in environment and climate change -- Maritime transportation -- Coopetition -- Container shipping -- Optimization; Transportation -- Research -- Periodicals; Transportation -- Environmental aspects -- Periodicals; 354.76
• DOI: 10.1016/j.trd.2020.102507
• Languages: English
• ISSNs: 1361-9209

Abstract

Highlights: Maritime container shipping in the retail sector under coopetition and competition. Integer optimization model minimizes combined environmental and economic costs. Environmental co-benefits exist when carbon emissions and fuel costs increase. Coopetition and competition affect economic and environmental outcomes differently. Abstract: Global retail supply chains are heavily reliant on efficient container shipping. This study focuses on how a shipping intermediary such as a fourth-party logistics (4PL) provider can enable efficiency gains in retail container distribution. We consider the assignment of cargo to containers and vessels to accommodate downstream retailer demand, aiming to minimize both environmental and economic costs. We develop an integer optimization model that represents the key decisions of which journeys to select to ship various types, and quantities, of products onto containers of various sizes. We generate problem instances using international supply chain data inspired by two large United Kingdom (UK) retailers. Our model is useful for evaluating the feasibility of coopetition in container shipping, which we define as a contractual agreement with a 4PL, of which consolidation is one operational dimension. We conduct a variety of sensitivity analyses around the cost of fuel, cost of carbon emissions, and under coopetition or competition, to better understand their effects on model outcomes. Although some studies have mentioned that coopetition can prove economically beneficial, our study has shown that for the data and model we consider, the advantages of coopetition are quite limited. Our findings suggest there are limited economic or environmental benefits associated with the competition or coopetition scenarios when only fuel costs increase. The greatest benefits from an environmental perspective occur when joint increases of fuel and CO2 costs occur, which result in greater environmental co-benefits in the coopetition case. Alternatively, CO2 cost increases show that competition contexts had greater environmental benefit.