Planning of Freight Transportation through Scheduled Service Network Design

Planning of Freight Transportation through Scheduled Service Network Design

RATIONALE and TITLE

In recent years, many companies have adopted new manufacturing and inventory management strategies (e.g., make-to-order and just-in-time) that aim to reduce costs while improving responsiveness to market demands. However, these approaches demand for fast, and more importantly reliable, transportation. However, since transportation infrastructure has not kept pace with business growth, excess demand over the transportation network capacity has led to growing congestion and uncertainty in transportation lead-times. According to a 2011 Urban Mobility Report, the US experienced a steady increase in travel time index since 1982 from 1.09 to a national average of 1.2 in 2011 (Schrank and Lomax 2011). They also reportthe cost of congestion to be about $101 billion for delay and fuel waste in 2010 alone. Average line-haul speed on rail freight is about 22 mph (US DoT 2007). Congestion is also an issue in other modes of transportation (US DoT 2007, 2009). A survey conducted by Golob and Regan (2000) shows that 82% of the interviewed companies recognize congestion as a problem (somewhat to critically serious) for their business and over 27% of them often or very often miss their schedules due to congestion. The aforementioned problem can be recognized as a major factor in shift of shippers' demand toward more expensive modes of transportation that provide faster and more reliable services (US DoT 2006). Using more expensive modes of transportation translates to increased shipping service level expectation that demands for more sophisticated decision making that in turn requires better system-wide information. The advent of the Intelligent Transportations Systems (ITS) provides opportunity for improvement in transportation performance and quality. The core of ITS consists of obtaining, processing, and distributing information for better use of the transportation system, infrastructure and services (Crainic, Gendreau, and Potvin 2009). This includes Geographical Positioning System (GPS), Automatic Vehicle Location System (AVL), Fleet Telematics System (FTS), Wireless Communication, Electronic Data Interchange (EDI), along with internet and other real-time data sharing systems that inform the decision maker about the location of the vehicles and freight and provide better understanding of the network status, especially, under congestion. The importance of logistics and its complexities are motivating companies to outsource their logistic operations in different levels to third parties known as “freight forwarders” to reduce cost and increase efficiency (Razzaque and Sheng 1998). Freight forwards generally act as an intermediary between shippers and carriers and are responsible for transporting goods in supply chains. Indeed, freight forwarding industry, as part of the broader supply chain management industry, is undergoing a profound transition with the rise of multinational freight forwarders based in Europe, the United States, and Japan that perform integrated logistics services in addition to simple freight forwarding with a range of value-added services (Bowen and Leinbach 2004). However, despite the major integrators (e.g. FedEx, UPS, DHL, BAX Global and alike), majority of the freight forwarders are small- to mid-size companies. Due to high capital investment, schedules and capacities ...