A Multiperiod Model for the Accumulation of Empty Containers in Urban Areas Authors: Noel Prez and J

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A Multiperiod Model for the Accumulation of Empty
Containers in Urban Areas AuthorsNoel Pérez
and José Holguín-Veras
Presented by Noel Pérez Graduate Research
Assistant Rensselaer Polytechnic Institute
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Introduction

• Trade imbalance has turned the handling of empty
  containers in a serious concern for maritime
  carriers
• Implications imbalances of maritime containers,
  shortage of trailers, rail equipment problems and
  increased costs for repositioning empty
  containers
• Handling options for empty containers
  reposition to a demand point, lease locally or
  store at depots
• The accumulation of empty containers is thought
  to prevent more economically beneficial uses of
  the land, and to have negative impacts on the
  quality of life of communities (safety,
  aesthetic)

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Objectives

• Characterize the handling and storage of cargo
  containers at port facilities
• Develop a basic model to represent the
  distribution and accumulation of empty containers

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The case of New York / New Jersey
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Background

• Literature related to the handling of empty
  containers is abundant
• Most authors focus in particular areas of the
  distribution cycle
• Storage of containers (Hwan and Bae, 1999)
• Transfer scheduling (Kozan and Preston, 1999)
• Land transportation (Crainic, Gendreau Dejax,
  1993)
• Resource allocation (Gambardella, 2001)
• Fleet sizing (Gao, 1994)
• Optimal pricing (Holguín-Veras and Jara-Díaz,
  1999)

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Proposed Model

• Assumptions
• Port is a supplier of empty containers
• Empty units should be stored at depots,
  repositioned to demand points or leased for
  exportation
• Arrival rates and demands are known with
  certainty
• All containers are of the same kind / size
• No importation of empty containers
• Empty containers can be moved directly from
  import to export customers
• Home port and its demand points are a closed
  system, with no interaction with other ports at
  the regional or global level

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Simple Network Representation
REGIONS
DEPOTS
DEMAND POINT
HOME PORT
Inventory carried from t0 to t1
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Proposed Model
Sources of Costs and Revenues
Costs
Revenues
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Proposed Model

• Formulation
• Objective Function Maximize ( Revenues - Costs
  )

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Proposed Model
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Demonstration Problem

• A test problem was created to demonstrate the
  proposed model
• The system included
• a home port
• three delivery regions
• three storage depots
• four foreign ports
• AMPL was used to solve the distribution problem

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Results and Implications

• The optimal solution asked for depots to be
  replenished as soon as possible, even when a
  storage cost is charged per time period
• Local and external demands for empty containers
  were most of the time fulfilled using containers
  received loaded with export cargo (no storage)
• Depots may be seen as buffers to protect against
  low arrival rates at home port and high peaks in
  demands for empty containers.
• The accumulation of empty containers in urban
  areas may represent a revenue opportunity
• Unless storage costs are extremely high, the best
  way to get rid of the problem is by land use
  regulations

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Results and Implications

• The relationship between cheap storage and
  relatively high reposition costs may be the
  economic reason that explains the accumulation of
  empty containers in urban areas.

Present value of empty containers storage at
depots
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Preliminary Conclusions

• Although the model simplifies many features of
  the real system, it illustrates the operational
  and planning complexity of the container
  distribution problem.
• The accumulation of empty containers is linked to
  the relationship between storage and reposition
  costs.
• Under current policies, the amount of empty
  containers stored in urban areas is fairly
  insensitive to taxes and other fees, which
  suggest that land use regulation may be the most
  efficient way to deal with this problem.
• The proposed model can be further developed to
  capture other features of the container
  distribution cycle.

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Questions
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Some Facts

• By conservative estimates, there are about 10
  million containers in the world
• 13 millions of imported TEUs were handled at US
  ports in year 2002
• Almost 2 containers come into American ports for
  every container shipped out
• Reposition of empty containers is a costly
  activity, estimated to amount 4 billion (year
  1999)
• The number of empty containers stored at US
  doubled in two years, reaching 500,000 units in
  2001
• 150,000 containers are stored in Northern New
  Jersey only

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• The solution showed a trend to lease empty
  containers from depots only when containers
  released at importing regions were not enough to
  meet both local and external demands
• Empty containers have turned in a political issue
  due to their undesirable externalities (safety,
  aesthetic)