A two-stage maritime supply chain optimisation model

Shipping companies usually determine the optimal sailing speed and number of vessels to deploy in their maritime liner services, using a decentralised system, which sometimes extends the transit time between any two ports and thus affects the in-transit inventory and safety stock levels for shippers. On the contrary, if a centralised system is adopted then the shippers' inventory management costs would be considered in the choice of the optimal configuration. This article proposes a model for this trade-off that compares the supply chain optimal solutions and costs of a decentralised versus a centralised system. Assuming that transport demand can either be inelastic or elastic and that end customers' demand to be satisfied by shippers is stochastic, our model provides an optimisation procedure to determine the optimal configuration for any decentralised or centralised liner service, along with a specific application to a containerised Europe-Far East service.