Liner shipping cargo allocation with service levels and speed optimization

The cargo allocation problem is a key strategic problem that determines the profitability of a liner shipping network. We present a novel mixed‐integer programming model for this problem that introduces service levels for transit time requirements and optimizes the vessel speed on each leg of a service. These extensions to the cargo allocation problem greatly increase its realism and value for carriers. We evaluate our model on realistic data from the LINER‐LIB and perform a sensitivity analysis of transit times versus bunker costs. Furthermore, we show how carriers can use our model to make data driven decisions in their operations.