Cost allocation in a container shipping alliance considering economies of scale

Abstract

This paper proposes and investigates three schemes for cost allocation in a container shipping alliance considering the economies of scale. In order to deal with the complicated interactions between carriers and the impact of the economies of scale on shipping cost, a duality-based, an inverse optimisation-based and a Shapley value-based scheme are discussed and compared to the conventional demand-based and turnover-based schemes. The theoretical models are applied in a case study involving the Asia-Europe container shipping lines of the CKYH alliance. The application results and the sensitivity analysis illustrate the practicability of our schemes.