Liner shipping cargo allocation with service levels and speed optimization

• Our model incorporates speed optimization with transhipment durations and variable port stays for the cargo allocation problem.
• We model cargo specific transit time restrictions and respect empty container repositioning.
• Our results show the substantial impact of transit times on the revenue gained from liner networks.
• The model can be used to assess heuristics in liner shipping network design problems.

The cargo allocation problem is a key strategic problem that determines the profitability of a liner shipping network. We present a novel mixed-integer programming model for this problem that introduces service levels for transit time requirements and optimizes the vessel speed on each leg of a service. These extensions to the cargo allocation problem greatly increase its realism and value for carriers. We evaluate our model on realistic data from the LINER-LIB and perform a sensitivity analysis of transit times versus bunker costs. Furthermore, we show how carriers can use our model to make data driven decisions in their operations.