Hub Port Cooperation vs Competition: A Multi-Criteria Approach for Cost, Reliability, and Sustainability in Liner Shipping

Abstract

Efficient logistical services are usually reliable, i.e., they are available when required. However, reliable logistics service is normally inversely proportional to unreliability, implying a cost-tradeoff. Moreover, containerized liner shipping, in particular, relies heavily on port infrastructures and their managerial decision. This paper examines how cooperative vs. competitive strategies between hub ports can affect the design of a logistical network that is cost-effective and reliable. A multi-objective mixed integer nonlinear optimization model is proposed. Numerical experiments were conducted within the West Africa-Europe-South America transatlantic supply chain, focusing on West Africa due to its strategic location (Atlantic shipping crossroads and extensive coastline). The results show that cooperative hubs, whether close or far apart, exhibit a complex interplay between absolute cost performance and marginal efficiency. While hubs nearby achieved superior marginal cost tradeoffs, neither closer nor geographically distant cooperative hubs dominated each other in absolute cost performance. However, the results showcased that competition completely dominates cooperation when hubs are located far apart.