Containership routing with time deadlines and simultaneous deliveries and pick-ups

In this paper we seek to determine optimal routes for a containership fleet performing pick-ups and deliveries between a hub and several spoke ports. A capacitated vehicle routing problem with pick-ups, deliveries and time deadlines is formulated and solved using a hybrid genetic algorithm for establishing routes for a dedicated containership fleet. Results on the performance of the algorithm and the feasibility of the approach show that a relatively small fleet of containerships could provide efficient services within deadlines. Moreover, through sensitivity analysis we discuss performance robustness and consistency of the developed algorithm under a variety of problem settings and parameters values.     

Hub-and-spoke network design for container shipping along the Yangtze River

Increasingly large, high-tonnage containerships are becoming a common sight on the Yangtze River, and the shipping network is being transformed accordingly. This paper reports the design of a hub-and-spoke network for a shipping company that is consistent with the characteristics of the Yangtze River. We first explore the economies of scale for container shipping by applying empirical data. Next, we propose a mixed-integer linear programming model, factoring in ship-operating and container-handling costs. We then conduct a numerical experiment and test the effectiveness of the model, and finally discuss the implications of hub-and-spoke shipping network design. The findings reported herein support the trends toward cargo concentration and port regionalization along the Yangtze River.     

Explaining changes and trends in the airline industry: Economies of density,multiproduct scale,and spatial scope

Changes in the shape and size of airline networks have not been explained clearly from a cost perspective based on the finding of increasing returns to density for given route structures and constant returns to scale for variable network size. We reassessed the estimates of these economies by using new scale and scope indices, finding savings due to changes in route structures and various types of economies of spatial scope not previously calculated: network size, trunk-local services and domestic-international services. Results contribute new insights on the role of cost incentives in the observed changes and trends in the airline industry.     

Economies of traffic density and scale in the integrated air cargo industry: The cost structures of FedEx Express and UPS Airlines

This paper examines the cost structures of the leading integrated air cargo carriers, FedEx Express and UPS Airlines. A total cost model is estimated for the two carriers using quarterly data on domestic operations and costs over a nine-year period (2003–2011). The estimated model indicates that the integrated industry exhibits increasing returns to traffic density and constant returns to scale. Accounting for carrier-specific differences in cost structure and network size, FedEx Express is found to be more cost-efficient than UPS Airlines. Looking at the carriers individually, UPS Airlines exhibits substantial economies of traffic density and constant returns to scale while FedEx Express' cost structure is characterized by weak economies of density and constant returns to scale. The combined effect of returns to density and returns to scale on the cost structures of integrated carriers is captured by economies of size. Both FedEx Express and UPS Airlines exhibit economies of size, indicating that carriers in the integrated industry can be more cost efficient by making appropriate adjustments to their network size as their output grows. Moreover, the relative cost-efficiencies of the carriers are reversed when their network-size differences are not controlled.     

Economies of scale in the US airline industry after deregulation: a Fourier series approximation

This paper analyzes the cost structure of the US airline industry after deregulation, finding that there exist economies of scale at moderate levels of output but that they die off at high levels. The cost–share system is estimated using the Fourier functional form. The global approximation property of the Fourier form allows consistent inference throughout the range of the data. The existence of economies of scale suggests that airlines will try to grow to the efficient size. This conclusion is consistent with the evolution of the US airline industry in the last decade.     

Operational workforce planning for check-in counters at airports

This paper addresses operation models for workforce planning for check-in systems at airports. We characterize different tasks of the hierarchical workforce planning problem with time-dependent demand. A binary linear programming formulation is developed for the fortnightly tour scheduling problem with flexible employee contracts. This binary programming model is solved for optimality by CPLEX for real-world demand scenarios with different workforce sizes. The numerical study analyzes the impact of the degree of flexibility and economies of scale. The model formulation is extended to generate convenient tours with regard to employee preferences.     

A successful upriver port? Container shipping in Montreal

This paper revisits the advantages and disadvantages associated with the location of Montreal in the container shipping market. Traditionally, the St. Lawrence River has proved a competitive way to connect the industrial heart of North America with Europe. How does this premise hold in an era of ever-larger containerships? Recent trends in container market share, the number of ships deployed and the services provided are analyzed. It is found that while Montreal continues to maintain its rank among top container ports on the East Coast of North America, the competitive environment has changed significantly over the last 5 years.     

Portuguese tour operators: A fight for survival

This article looks at the efficiency of Portuguese tour operators focusing on firm size, group ownership, and mergers and acquisitions. It has been argued that changed market conditions in Europe make it hard for tour operators to achieve economies of scale and market growth without increasing firm size or being part of a more high profile company.     

Stochastic fleet deployment models for public bicycle rental systems

This paper presents two stochastic bike deployment (SBD) models that determine the optimal number of bicycles allocated to each station in a leisure-oriented public bicycle rental system with stochastic demands. The SBD models represent the stochastic demands using a set of scenarios with given probabilities. A multilayer bike-flow time-space network is constructed for developing the models, where each layer corresponds to a given demand scenario and effectively describes bicycle flows in the spatial and temporal dimensions. As a result, the models are formulated as the integer multi-commodity network flow problem, which is characterized as NP-hard. We propose a heuristic to efficiently obtain good quality solutions for large-size model instances. Test instances are generated using real data from a bicycle rental system in Taiwan to evaluate the performance of the models and the solution algorithm. The test results show that the models can help the system operator of a public bicycle system make effective fleet deployment decisions.     

Airport location in multiple airport regions (MARs): The role of land and airside accessibility

This paper approaches the airport location problem as a function of accessibility considerations. First, a structural equation model is established to find the relationship between the size of an airport catchment area and its flight network scale. Landside and airside accessibilities are measured by the qualities and costs of surface transportation and flight networks. The two accessibilities are combined to form a regional air transportation accessibility profile, which can be used as a criterion to evaluate airport locations at a macro-planning level. Finally, the scenarios of airport locations in terms of small and large areas are analyzed using two regional case studies in China.     

Economies of scale in the US airline industry

This study investigates economies of scale in the US airline industry using annual data, from 1987 to 2009, on the largest airlines. The paper estimates both a translog and Cobb–Douglas model of both an economic and transportation definition of economies of scale. The study shows that the results from models based on the two definitions are remarkably similar except during rapid growth in output and that the largest US airlines operate under modest scale economies.     

Does ANSP size and scope matter in the European ANS market? A multi-product stochastic frontier approach

This paper assesses the existence of economies of scale and cost complementarities in the European air navigation services (ANS) industry to provide policymakers and air navigation service providers (ANSPs) insight into the economic viability of possible industry-led consolidation and unbundling opportunities. While previous studies using parametric methods made abstraction of the multi-product nature of the ANS industry, this paper tries to fill that gap by estimating a stochastic multi-product translog cost frontier. The existence of economies of density and scale is evaluated from the estimated cost frontier at the sample means as well as for individual ANSPs in the panel. The results suggest that during the period from 2006 to 2016 the European ANS industry faced economies of density and produced at constant economies of scale in the sample means. However, cost complementarities do not seem to be present.     

Identifying airline cost economies: An econometric analysis of the factors affecting aircraft operating costs

This paper provides the results of an econometric analysis of the influences of airline characteristics on the average operating costs per aircraft movement. The analysis combines a comprehensive selection of airline-output variables, airline-fleet variables, and airline-market variables. The results confirm the existence of economies of density, economies of load factor, economies of aircraft utilisation and economies of aircraft size. The paper does not provide evidence of economies of scale, economies of stage length or economies of fleet commonality. Furthermore, airlines that additionally operate full freighters, airlines that are members of a worldwide alliance and airlines that operate a multi-hub system face higher average operating costs per aircraft movement. Surprisingly, the regression results demonstrate that airlines that use newer aircraft have higher average operating costs per aircraft movement, suggesting that ownership costs (depreciation and leasing costs) of new aircraft outweigh the increasing maintenance costs of old aircraft. Finally, the results show that airlines that have a dominant position at their hubs or bases have higher operating costs per aircraft movement, implying that the absence of serious competitive pressure enables airlines to charge higher ticket prices and, with that, leads to a limited focus on cost savings.     

Bootstrapped scale efficiency measures of UK airports

This paper introduces the bootstrapping methodology to analyse and test the scale efficiency of airports. The results from a sample of 27 small and large UK airports indicate that most large airports are scale efficient or operating in a region of decreasing returns to scale, while most small airports are operating in a region of increasing returns to scale. We relate the results to the current industry trends and provide directions for future research.     

Competition and horizontal integration in maritime freight transport

This paper models competition for freight transport between the road and maritime sectors. Operators offer differentiated services and there are economies of scale in the oligopolistic shipping line sector. Two types of integration between shipping lines are considered: in one of them the liners production processes remain separate (like in an alliance); in another economies of scale are further exploited. Typically maritime freight post-merger goes down. However, it may increase if the merger exploits further economies of scale, they are important and transport services are sufficiently differentiated. An empirical application to the routes Valencia–Antwerp and Valencia–Genoa is undertaken to confirm the predictions of the model. It is shown that, for both types of merger, user surplus increases when transport services are weakly differentiated and economies of scale are sufficiently small. These conditions also guarantee that a merger is socially beneficial.     

A hierarchical clustering and routing procedure for large scale disaster relief logistics planning

We describe a hierarchical cluster and route procedure (HOGCR) for coordinating vehicle routing in large-scale post-disaster distribution and evacuation activities. The HOGCR is a multi-level clustering algorithm that groups demand nodes into smaller clusters at each planning level, enabling the optimal solution of cluster routing problems. The routing problems are represented as capacitated network flow models that are solved optimally and independently by CPLEX on a parallel computing platform. The HOGCR preserves the consistency among parent and child cluster solutions obtained at consecutive levels. We assess the performance of the algorithm by using large scale scenarios and find satisfactory results.     

The impact of regional jets on air service at selected US airports and markets

Regional jets, normally defined as jet aircraft introduced since 1993 with less than 100 seats, have been thought to have significant impacts on air services at airports, for example, in improving service frequency, allowing airlines to exploit niche markets and to feed hubs. Previous studies have focused on regional jet deployment strategy and the overall situation and they suggest that deployment was generally to larger cities first and, in addition, to locations east of the Mississippi. It has also been suggested that smaller airports might lose service when regional jets replace turboprops and that carrier competition would increase, to the benefit of the consumer.This paper aims to throw more light on these issues from the individual airports' point of view. Data on changes in schedules from the Official Airline Guide (OAG) at a series of case study airports from 1994 to 2002 is used to examine, the impacts on new route development, market dynamics, carrier competition and concentration and deployment status. In particular, the impact on smaller airports is examined.It is concluded, subject to the usual caveats on sample size, that there is little evidence of a uniform impact on routes or airports. The aggregate picture often described by the industry and government is shown to be a combination of highly dissimilar cases. A spectrum of effects is identified across different types of airports and routes but some of the anticipated trends, such as hub bypassing, are not observed. Some airports reaped significant benefits in terms of improved frequency and services to new destinations, whilst others gained little.     

Spatial competition between parking garages and downtown parking policy

This paper looks at optimal parking policy in dense urban districts (“downtown”), where spatial competition between parking garages is a key feature, from the perspective of economic theory. The paper has four parts. The first looks at the “parking garage operator's problem”. The second derives equilibrium in the parking garage market when there is no on-street parking, compares the equilibrium to the social optimum, and examines optimal parking policy in this context. Since parking garage operators have market power, the spatial competition equilibrium is generally inefficient, and parking policy can be used to mitigate the distortion. The third adds on-street parking and considers how its underpricing affects second-best parking policy. The fourth adds mass transit, and considers how economies of scale in mass transit interact with minimum and maximum off-street parking standards.Preliminary draft: Please do not cite or quote without the permission of the author.     

How efficient and productive are road toll companies?: Evidence from Norway

This article evaluates the technical efficiency of toll companies, i.e., how toll companies perform relative to each other, their productivity, and whether toll companies improve their efficiency from one year to the next relative to the best performers. The rationale for this study is that Norwegian road toll companies have been criticized for not being as efficient as they should; it has been claimed that some have very large operational costs compared to their peers and hence are inefficient. The framework for analysis is Data Envelopment Analysis and its subsequent Malmquist Productivity indices. The data are from the accounting period of 2001–2004 and contain information on 18 companies. The results show that: (1) there is a potential for efficiency increases of about 14%, (2) there are economies of scale in the industry in that larger companies (as measured by number of lanes served) tend to be more efficient compared to smaller companies, and (3) there has been a productivity increase in the sector of about 1%, and this progress is due more to companies employing a newer and more effective method for collecting funds and less to improving efficiency from one year to the next. Finally, these findings suggest that the Norwegian road authorities should consider reorganizing the toll sector such that the inherent economies of scale are utilized.     

Reliable emergency service facility location under facility disruption,en-route congestion and in-facility queuing

The planning of emergency service facility location, especially for those expecting high demand and severe conditions, requires consideration of victims’ en-route travel, in-facility service quality, and reliability of these service facilities themselves. This paper first presents a scenario-based stochastic mixed-integer non-linear program (MINLP) model that integrates facility disruption risks, en-route traffic congestion and in-facility queuing delay into an integrated facility location problem. We derive lower and upper bounds to this highly complex problem by approximating the expected total system costs across the normal and all probabilistic facility disruption scenarios. This allows us to develop a more tractable approximate MINLP formulation and a Lagrangian Relaxation (LR) based solution approach. The relaxed sub-problem for location and service allocation decisions is further reformulated into a second-order conic program. Numerical experiments show that the approximate model and LR solution approach are capable of overcoming the computational difficulties associated with the problem. Interesting findings and managerial insights are obtained from a series of sensitivity analyses, e.g., regarding the importance of considering in-facility queuing in location design, and the significance of resource pooling on the optimal facility deployment.