Planning container flows through the Eurasian rail network: Managing ad-hoc demand under limited capacity

Abstract

In the post-COVID era, supply chain viability (SCV) has gained significant attention, requiring supply chains to be both resilient and adaptable to unforeseen disruptions. The Eurasian rail freight presents a viable alternative to complement traditional maritime shipping routes in times of disruption. A surge in ad hoc demand for Eurasian rail freight presents challenges to the network’s limited capacity and complex coordination across railway systems, exceeding the limits of current manual planning. Furthermore, converting the Eurasian rail freight system from a subsidy-driven model to a revenue-funded transport system is urgent. While revenue management plays a crucial role in optimizing transport networks, this area has received significantly less attention in the intercontinental rail freight industry compared to the airline sector. This paper develops the Revenue Management-Intercontinental Scheduled Service Network Design (RM-ISSND) model, a decision support system that aims to optimize revenue in intercontinental rail freight transport for ad hoc demands. The model supports intercontinental rail freight planning by identifying the most profitable ad hoc shipments while rejecting those that do not contribute to maximizing total revenue and are better suited for maritime or air transport. The RM-ISSND model also facilitates a shift from block routing (all containers in an order follow the same path), which is commonly used in Eurasian rail freight, to a new operational principle with free routing (containers in an order are free to be routed along different paths), enhancing both efficiency and profitability. Experiments show that prioritizing transit times between 27 and 35 days in the existing Eurasian rail freight network yields higher profits, underscoring the need to improve border crossing and main transit times to attract more time-sensitive ad hoc orders.