Supply Chain Cost Minimization by Collaboration between Liner Shipping Companies and Port Operators

The container handling rates at ports are input for container shipping operations planning by shipping lines. The handling rates are unilaterally determined by port operators. This article points out that it may be possible for port operators to provide higher handling rates at some additional costs. The higher handling rates will enable ships to have more time sailing at sea, leading to less fuel consumption. The reduction in fuel costs for shipping lines may be more significant than the additional costs incurred by port operators. We therefore propose a practical and easy-to-implement collaborative mechanism between shipping lines and port operators, where the shipping lines compensate the port operators for their additional costs. As a result, the overall efficiency of container transportation is improved.