Distribution-free vessel deployment for liner shipping

• Liner fleet deployment problem solved without requiring complete probability distributions.
• Proposed distribution-free model generalizes existing model.
• Proposed distribution-free model remains a mixed integer linear program.
• Proposed modeling approach has a very intuitive interpretation.

One important problem faced by the liner shipping industry is the fleet deployment problem. In this problem, the number and type of vessels to be assigned to the various shipping routes need to be determined, in such a way that profit is maximized, while at the same time ensuring that (most of the time) sufficient vessel capacity exists to meet shipping demand. Thus far, the standard assumption has been that complete probability distributions can be readily specified to model the uncertainty in shipping demand. In this paper, it is argued that such distributions are hard, if not impossible, to obtain in practice. To relax this oftentimes restrictive assumption, a new distribution-free optimization model is proposed that only requires the specification of the mean, standard deviation and an upper bound on the shipping demand. The proposed model possesses a number of attractive properties: (1) It can be seen as a generalization of an existing variation of the liner fleet deployment model. (2) It remains a mixed integer linear program and (3) The model has a very intuitive interpretation. A numerical case study is provided to illustrate the model.