A Branch-and-Price Algorithm for the Liner Shipping Network Design Problem

Maritime transportation is the backbone of the global economy and one of its most important segments is liner shipping. To design a liner shipping network is notoriously difficult but also very important since an efficient network can be the difference between prosperity and bankruptcy. In this paper, we propose a branch-and-price algorithm for the liner shipping network design problem, which is the problem of designing a set of cyclic services and to deploy a specific class of vessels to each service so that all demand can flow through the network at minimal cost. The proposed model can create services with a complex structure and correctly calculate the transshipment cost. The formulation of the master problem strengthens a known formulation with valid inequalities. Because of multiple dependencies between ports that are not necessarily adjacent and no defining state at any of the ports, the subproblem is formulated and solved as a mixed integer linear program. Strategies to improve the solution time of the subproblem are proposed. The computational study shows that the algorithm provides significantly tighter lower bounds in the root node than existing methods on a set of small instances.