Coordinating inland river ports through optimal subsidies from the container shipping carrier

Ming Wang, Zhijia Tan and Yuquan Du

Transportation Research Part E: Logistics and Transportation Review, 2024, vol. 189, issue C

Abstract: The inland waterway system plays a critical role in the domestic transport and logistics systems of many countries and also feeds and receives cargo flows to and from the international freight system. Nevertheless, the inland waterway transportation system involves several transportation modes and many stakeholders including shippers, land transport operators, river ports, and the shipping carriers, resulting in excessive competition and inefficient cooperation. This paper considers an inland waterway system consisting of shippers along a linear freight corridor in the hinterland, two competing river ports, and a waterway shipping company. Different from existing studies focusing on the subsidy scheme design for ports or governments, this study faces the reality of the central and dominant role of a shipping company in an inland waterway system, and designs two subsidy schemes for the shipping company to coordinate the whole transport system: (a) distance-based and (b) fixed-rate subsidies. The optimal subsidies from the shipping carrier to attract the cargoes of shippers to the desired river port are analytically derived, and the benefits of this coordination with subsidies from the shipping company are theoretically revealed through comparison with an uncoordinated decentralized transport system and an ideal centralized transport system. A case study involving 15 container ports along the Yangtze River demonstrates the applicability and validity of our models and theoretical results, and delivers several managerial insights into the implementation of this coordinated inland waterway system through subsidies from the shipping company.

Keywords: Inland waterway; Coordinated transportation system; Subsidy scheme design; Hotelling model (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1016/j.tre.2024.103671

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