Optimal Contract Design for the Exchange of Tradable Truck Permits at Multiterminal Ports

Li, Dongjun, Dong, Jingxin, Song, Dongping, Hicks, Christian and Singh, Surya P. (2020) Optimal Contract Design for the Exchange of Tradable Truck Permits at Multiterminal Ports. International Journal of Production Economics, 230. p. 107815. ISSN 0925-5273

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Abstract

Truck Appointment System (TAS) is a very common IT system used by marine container ports. At multi-terminal ports, each terminal normally operates its TAS independently, and there is a lack of coordination on how time slots are allocated to trucks across TASs. This is one of the major reasons for truck congestions in port hinterland areas. In this study, a concept of Tradable Truck Permit(TTP), which is adapted from the early idea of Traffic Bottleneck Permit in urban traffic management, is introduced to coordinate the TASs operated by different terminals located in the same port. To further improve the utilisation of TTP, a game theoretical framework is developed to investigate the exchange of TTPs across terminals. The framework includes a centralised decision making mode for perfect collaboration and a decentralised decision making mode for contract-based collaboration. The centralised mode is used for benchmarking the performance of the contract in the decentralised decision making mode. It has been found that a bilateral buy-back contract can coordinate the exchange of TTPs. In other words, even when the decision on permit exchange is made by each terminal independently, the buy-back contact can generate the same amount of profits as perfect collaboration does as long as the parameters in the contract are set properly.

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