Shipment planning in Pearl River Delta: a stochastic programming approach

A shipment plan usually includes a number of shipment jobs, and each job may require a set of processing activities such as trucking, warehousing, air transport, etc. The forwarder may process an activity using in-house resource or may outsource the activity to another agent. Consolidation is to assign a single agent to handle the same activity for more than one job and it is a common way to save costs in the industry. Integration is to assign a single agent to process a set of consecutive activities of a job and it saves time. Appropriate integrations and consolidations are crucial in achieving time- and cost-efficiency in shipment planning.Global logistics in Pearl River Delta are mostly intermodal and could be described as ground-air/sea-ground logistics. The first part consists of trucking and warehousing activities for shipping the cargo from factories in South China to Hong Kong warehouses. The second part includes air/sea-ground logistics activities from Hong Kong to the receiving end. Usually, local forwarders will hand over the shipments to their overseas partners after the boarding of freight in Hong Kong. Ground transport in Pearl River Delta could be delayed due to various reasons including rainstorms, typhoons and customs clearance. Late arrivals could affect integration and consolidation activities, it is necessary to make changes on the shipment plan when late arrivals are observed. This research examines the stochastic properties of activity processing times. A stochastic programming model is presented to handle the uncertainties in the design of shipment plan. The proposed methodology could be applied to intermodal logistics practices in other areas.