Modeling Carrier Interactions in an International Freight Transport System

This paper presents a novel multi-level hierarchical approach which models carrier interactions in international maritime freight transportation networks. Ocean carriers, land carriers and port terminal operators are considered. Port terminal operators, providing transportation services within a port complex, are regarded as a special type of the carrier, based on their behavior. The carriers make pricing and routing decisions at different parts of the multimodal network, having hierarchical relationships. Ocean carriers are regarded as the leaders in a maritime shipping market. Port terminal operators are the followers of ocean carriers as well as the leaders of land carriers. The individual carrier problem is formulated at each level using Nash equilibrium to find the optimal service charge and routing pattern for which each carrier obtains the greatest profit. Interactions among different types of carriers are captured in a three-level model. The concept of multi-leader-follower game is applied to a multi-level game. A numerical example is used to demonstrate the validity of the developed three-level model.