Transshipment network design for express air cargo operations in China

We introduce a novel multimodal (ground and air transportation) network design model with transshipments for the transport of express cargo with heterogeneous service classes (i.e., next morning delivery, and next day delivery). We formulate this problem using a novel path-based mixed-integer program which seeks to maximize the demand (weight) served. We investigate the value of the proposed transshipment network under various operational conditions and by benchmarking against a direct shipment network and a network with a single transshipment point which mimics a classical star-shaped hub-and-spoke network. Our extensive computational study with real-world data from ShunFeng (SF) Express reveals that the integration of ground and air transportation improves the coverage and that transshipment enables serving a large number of origin- destination pairs with a small number of cargo planes. Importantly, we show that by simplifying handling, i.e., employing cross-docking rather than time-consuming sortation, a transshipment network can transport express cargo fast enough to meet demanding delivery deadlines. Finally, we find that increasing the efficiency of intra-city operations and extending the nightly operating time window are the most effective operational adjustments for further improving the performance of the proposed transshipment network.