Designing new European rail freight services

We present an optimization model for design of transportation services, with a particular emphasis on how attention to service quality affects the design. The model is applied to a real–world case study where opportunities for new rail–based freight transportation services are explored. Fleet sizing is introduced to the service network design, because cost of acquiring locomotives is high, and inefficient resource utilization could result if fleet sizing is carried out a posteriori. The problem is a cross–border planning problem, introducing need for change of locomotives at borders, and separate fleets of locomotives thus have to be modelled. Demand in the system is characterized by various commodity groups with different service quality requirements. We propose a mixed integer programming model with a nonlinear objective function. The model finds the most profitable operations for the train operator when important service quality factors are accounted for.