Airfreight forwarder’s shipment planning: Shipment consolidation and containerization
Airfreight operations have two categories, namely, integrator and freight forwarder. This study focuses on an airfreight forwarder’s shipment planning problem, while considering shipment consolidation and containerization in the international supply chain.
The logistics industry is a complex service industry that integrates transportation, warehousing, freight forwarding, and other activities. Third-party logistics (3PL) is an excellent choice for enterprises to reduce potential risks and costs, with a higher utilization rate of links in logistics. The global 3PL revenues increase continually with less than US $50 billion in 2000; then, they rise to US $541.6 billion in 2010, and US $961.8 billion in 2020 (Armstrong & Associate, 2021).
The best of both worlds?
Airfreight operations have two categories, namely, integrator and freight forwarder (Feng et al., 2015). Airfreight forwarder is a company that contracts with multiple individuals or corporations to provide transportation services from suppliers to retailers or terminal stores, including direct dispatches, consolidated air cargo, door delivery, and road-air combined services (Transport Topics, 2022). It extends efficiency, flexibility, and cost benefits to the entire supply chain, by drawing the necessary services together into a complete and optimized package (DHL Global Forwarding, 2023b). The airfreight forwarding market share is expected to increase by 7.1 million tons during 2021–2026 with a CAGR of 4.48 % (Technavio, 2022).
Airfreight forwarder extends efficiency, flexibility, and cost benefits to the entire supply chain, by drawing the necessary services together into a complete and optimized package.
Shipment consolidation is widely adopted in air transportation, which combines multiple small loads into a large economical load and then dispatched to the same destination or destinations in close proximity (Çetinkaya, 2005). Studies on shipment consolidation (Satır et al., 2018, Zhang et al., 2019, Romero-Silva and Mujica Mota, 2022) have shown that well-designed shipment consolidation policies can improve the performance of networks by finding a balance between transportation cost, inventory cost, and customer service levels. By using more flexible load plans, carriers can generate savings on the order of 10 % over traditional load plan designs (Baubaid et al., 2021). Apart from significant cost savings, a combination of consolidated similar shipments can efficiently utilize air capacity and obtain price discount, leading to less environmental damage in transportation and inventory (Merrick and Bookbinder, 2010, Uelkue, 2012, Zhou and Zhang, 2017). Containerization (i.e., container loading) is a system of multimodal freight transport using multimodal containers with standardized dimensions, which provides many advantages for air transportation mode; it also plays a central role in hastening the delivery process and reducing logistics cost (Tiwari et al., 2021). Consolidation and containerization often exist in tandem in a variety of practical logistics scenarios.
Purpose of the study
This study focuses on an airfreight forwarder’s shipment planning problem, while considering shipment consolidation and containerization in international supply chains. Items belonging to different shipments from supplier’s manufacturing warehouses are consolidated and loaded into Unit Loading Devices (ULDs) at outbound logistics hubs and to inbound logistics hubs by air transportation, where items are unloaded from the ULDs and distributed to the corresponding retailers by parcel delivery. A three-dimensional multiple bin size bin packing problem is considered, where items are consolidated and orthogonally loaded into ULDs of heterogeneous irregular shapes, where each item has a required latest allowable delivery time. A mathematical programming model is formulated for the problem, which aims to determine the optimal route planning and feasible packing scheme for the transported items.
Methodology
This study focuses on an airfreight forwarder’s shipment planning problem, while considering shipment consolidation and containerization in international supply chains. With mathematical programming, we propose an MIP model is formulated to determine the optimal route planning and feasible packing structures with minimum transportation, packing, and inventory cost. Items belonging to different shipments from supplier’s manufacturing warehouses are consolidated and loaded into Unit Loading Devices (ULDs) at outbound logistics hubs and to inbound logistics hubs by air transportation, where items are unloaded from the ULDs and distributed to the corresponding retailers by parcel delivery. A three-dimensional multiple bin size bin packing problem is considered, where items are consolidated and orthogonally loaded into ULDs of heterogeneous irregular shapes, where each item has a required latest allowable delivery time.
Applications and beneficiaries
- Airfreight transportation consolidation combines multiple small loads into a large economical load and then dispatched to the same destination or destinations in close proximity (Çetinkaya, 2005). Studies on shipment consolidation (Satır et al., 2018, Zhang et al., 2019, Romero-Silva and Mujica Mota, 2022) have shown that well-designed shipment consolidation policies can improve the performance of networks by finding a balance between transportation cost, inventory cost, and customer service levels. By using more flexible load plans, carriers can generate savings on the order of 10% over traditional load plan designs (Baubaid et al., 2021). Apart from significant cost savings, a combination of consolidated similar shipments can efficiently utilize air capacity and obtain price discount, leading to less environmental damage in transportation and inventory (Merrick and Bookbinder, 2010, Uelkue, 2012, Zhou and Zhang, 2017).
- Airfreight transportation containerization (i.e., container loading) is a system of multimodal freight transport using multimodal containers with standardized dimensions, which provides many advantages for air transportation mode; it also plays a central role in hastening the delivery process and reducing logistics cost (Tiwari et al., 2021).
- Consolidation and containerization often exist in tandem in a variety of practical logistics scenarios.
Reference to the research
Zhou, G., Li, D., Bian, J., & Zhang, Y. (2024). Airfreight forwarder’s shipment planning: Shipment consolidation and containerization. Computers & Operations Research, 161, 106443.
