Service charge and capacity selection of an inland river port with location-dependent shipping cost and service congestion

•Consider the optimal decision of service charge, capacity and location for an inland river port.•Analyze the properties of the optimal solutions for various port investment issues.•Investigate the effects of the port congestion and location-dependent waterway transportation cost.•Study the case of the Yangtze River.

The inland waterway transportation has attracted a lot of attention worldwide in the last fifteen years. This paper studies the location, service charge and capacity decision of an inland river port to maximize its revenue or profit. The cargo shippers are assumed to be uniformly distributed along the inland river and can be shipped to the junction port via pure road transportation service or transshipment service with the inland river port. The natural heterogeneity of the river’ navigational condition is modeled by a location-dependent waterway transportation cost and the service congestion on the port is captured by the M/M/1 queueing model. We analytically investigate the properties of the optimal solutions for various decision problems associated with the inland river port. The effects of the natural heterogeneity and port service congestion of those optimal solutions are investigated. Those theoretical results are carefully examined in the case study of the Yangtze River.