Fall 2009 - H. Milton Stewart School of Industrial & Systems ...

ON THE MOVE
Transportation Logistics at ISyE
Moving the World with Ocean Cargo
By Alan Erera and Ozlem Ergun
Beginning in the latter stages
of the twentieth century, the
forces of globalization that
reshaped industrial supply
chains were influenced by two primary
factors: the very large differential
in labor costs between developed
and developing countries and the
availability of high volume, inexpensive
international freight transportation.
When it comes to moving finished
goods and intermediate products
between continents to consumers and
businesses, the dominant mode of
transportation is containerized ocean
cargo. In fact, since the early 1990s, the
use of container shipments worldwide
has grown more than three times the
rate of the global GDP. Despite the
recent economic downturn that has
significantly cooled international trade,
it is likely that ocean container cargo
will continue to be important for years
to come.
Researchers within the Stewart
School have been active in ocean cargo
research throughout the past decade.
In this article, we highlight two recent
research efforts supported by both
the National Science Foundation and
the Singapore Economic Development
Board.
Professor Ozlem Ergun and Richa
Agarwal (PhD IE 2007) recently
completed a set of work culminating
in Agarwal’s thesis, “Network Design
and Alliance Formation for Liner
Shipping.” Today’s large ocean carriers,
like Maersk, Hapag Lloyd, and NOL,
face challenging problems in service
network design, the task of determining
which routes or services to operate and
at what frequencies and how to assign
ships to these services. An important
new challenge is that most transoceanic
routes today are operated jointly by a
number of different carriers working
together within an alliance. Thus,
the research also focuses on how to
jointly plan the operations of multiple
collaborative carriers, including how
to allocate the capacity of different
services among carriers.
To solve these problems, Agarwal
and Ergun developed a new integrated
optimization model to solve the ship
scheduling problem and the cargo
routing problem simultaneously—the
first such model to incorporate
transshipment ports (where cargo
is transferred from one service to
another). Since the model is too large
to be solved directly with commercial
optimization solvers, the team
developed various customized heuristic
and exact solution approaches and
demonstrated their applicability on
realistically-sized problems.
In the second part of the study,
Agarwal and Ergun focused specifically
on alliance formation among liner
carriers, using techniques from
optimization and algorithmic game
theory to propose an approach to
design a collaborative service network.
To manage interactions among
participating carriers, their approach
determines appropriate prices for
capacity exchange between carriers to
induce participants to follow an optimal
collaborative strategy.
Professor Alan Erera and Aykagan
Ak (PhD IE 2008) have recently
studied another important aspect of
ocean container operations: scheduling
problems at seaports. Ak’s thesis,
“Berth and Quay Crane Scheduling:
Problems, Models, and Solution
Methods,” is an integrated study that
investigates how to optimally plan ship
loading and unloading operations at
container seaports. Managing berthing
space and the large dockside quay
cranes that are used to service vessels
is a critical operational challenge;
efficiency gains here allow ports to
maximize container throughput while
meeting the service requirements of
carriers.
Berth allocation is the problem of
determining where to moor a sequence
of arriving vessels over time, while
quay crane allocation and scheduling
problems focus on which quay cranes
to assign to berthed vessels. At large
modern seaports, it is possible to
simultaneously berth multiple vessels
of varying lengths along long linear
berthing areas with a shared set of
cranes, which can be moved from one
vessel to another (without passing each
other) at any time, thus leading to very
complex scheduling problems.
Ak’s work was among the first
to consider joint planning of berth
allocation and quay crane scheduling,
and he developed very fast solution
heuristics based on tabu search to
quickly find near-optimal solutions
to these problems. His methods are
currently being used as part of a
large research effort focused on risk
mitigation at U.S. seaports to simulate
how port operators might re-optimize
operations if cranes or berth sections
are damaged.
Alan Erera is associate professor and
co-director of SCL’s Center for Global
Transportation; Ozlem Ergun is associate
professor and co-director of SCL’s Center for
Humanitarian Logistics.
The Alumni Magazine for the Stewart School of ISyE Fall 2009 • 15