Dispatching of small containers via coastal freight liners: The case of the Aegean Sea

Abstract This work investigates the introduction of small containers, an important new technology, in an effort to reengineer coastal freight shipping in the Aegean Sea in Greece. Infrastructure problems of island ports are documented and the advantages of introducing small containers are discussed. The problem, hereby referred to as Coastal Freight Shipping Problem (CFSP), is dealt with under two dimensions. At first, strategic planning is analyzed by appropriately introducing an LP formulation for the determination of vessel traffic under known supply and demand constraints where total fuel costs and port dues are minimized. Subsequently, the operational dimension of the problem is analyzed by introducing a vehicle routing problem (VRP) formulation corresponding to periodic needs for transportation using small containers. For the planning case, a pilot network of 13 ports (including a depot port) and 25 sea links were taken into consideration. The problem was represented by a constrained formulation of current vessel routes and a more relaxed one utilizing the full network. Results show that current shipping practices of determining freight shipping routes according to passenger traffic demands are not optimal and at least 5.1% cost savings may be realized by redesigning island links while sensitivity analysis shows that total cost decreases with increasing vessel capacity. The utilization of a VRP formulation for the operational needs of a ship fleet allows exploration of problems of higher dimensions with respect to fleet size, demands sites and loads and gives a more comprehensive account with respect to cost and fleet efficiency and utilization.