Asia‒Europe liner shipping network design model considering Arctic route and black carbon tax

Abstract

The recent improvement in navigational conditions along the Northern Sea Route (NSR) has attracted the attention of academia and industrial circles. For liner companies, the NSR offers a considerably shorter voyage distance than the Suez Canal Route does, making it a viable option to increase their profits. However, the overexploitation and utilization of the NSR may produce large amounts of black carbon, thus damaging the Arctic ecosystem. In light of the aforementioned background, we examine the challenges in designing liner shipping networks while considering the navigability and transit cost of the NSR and the environmental costs (i.e., black carbon pollution taxes) associated with black carbon. To this end, we establish a bi-level optimization model. Specifically, the upper-level model selects a network design scheme that maximizes the liner company's profit, whereas the lower-level model optimizes the slot allocation scheme to evaluate the derived network design scheme from the upper-level model. To solve this bi-level model, we develop a meta-heuristic algorithm embedded with a linear programming model and perform numerical experiments via a practical Asia‒Europe shipping route. Sensitivity analyses are conducted under various navigational conditions and black carbon taxes. The findings demonstrate that the proposed model and algorithm can effectively address the network design problem, offering practical managerial insights for the liner company's daily operations and the policy formulation of green sustainable transportation policies by governments of countries along the NSR. This paper provides a valuable contribution to advancing green shipping practices in the Arctic region.