Freight service network design with heterogeneous preferences for transport time and reliability

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Value of time and value of reliability are two important user attributes that reflect shippers’ behavioral preferences, and as such influence the design of transport service networks. As shippers preferences will vary widely, it is important to consider these variations between users in the design of service networks. Up to now, network design research has ignored the combined use of time and reliability valuations for heterogeneous user populations. The objective of this paper is to address these attributes in a model for freight service network design targeting service performance improvement. We present a new frequency based service network design model with transshipments, capacity constraints and heterogeneous users. We apply the model to demonstrate that including heterogeneity explicitly in network design pays off in terms of an improved user performance of the network. A case study is conducted for a railway network in China. Values of time and reliability are estimated from a recent Stated Preference survey and used to determine distinct user classes. The proposed optimization problem is solved using an improved Simulated Annealing based heuristic method, for the case of the aggregate user group and the case of two distinct classes. Results show that by taking variations in shippers’ VOT and VOR into account, users’ total generalized cost is reduced while service levels improve. We conclude that incorporating heterogeneous VOT and VOR into the service network design problem is of interest for decisions on network investments.