Optimal refund policy design for ship berthing appointment mechanism

Abstract

Seaports, the nodal and bottleneck points in the global supply chain network, have been making effort to encourage shipping companies to book berths before ships arrive at the ports. The information and communication technology (ICT) system is essential for the success of this effort. We propose an appointment mechanism with a refund policy for the berth booking ICT system to mitigate port congestion. Two refund policies are investigated: cash refund policy and coupon refund policy. We develop a bi-level model that considers the interests of the port and shipping companies, with which the cash refund policy determines its optimal booking fee and the returned cash, and the coupon refund policy determines its optimal booking fee, the value of the coupon, and the shelf life of the coupon. Numerical experiments are conducted to analyze the two refund policies, the reactions of shipping companies with different characteristics, and how the port takes advantage of the characteristics of shipping companies to maximize profit. The proposed appointment mechanism achieves a win-win performance for the port and shipping companies as it increases the income of the port and reduces the delay cost of shipping companies. This study innovatively investigates the refund policy for the berth booking system and helps understand the mechanism of the system, thereby providing theoretical support for applying the berth booking system in the maritime industry. Moreover, this study contributes to alleviating port congestion and to environmental sustainability by reducing ship emissions caused by waiting at port and inappropriate sailing speed.