Intermodal Transportation and Optimum Depot Selection

Intermodal transportation activities have seen fundamental changes in technology, operation, management and organization in the past three decades. A transportation carrier deliver products to its clients using containers in various transportation modes such as railcars and trucks. After delivery and unloading by the customers, the empty containers are shipped back to a depot or warehouse designated by the carrier for subsequent shipment to other customers. After loading the new customer's products, the containers are transported directly to their destinations or through some intermediate depots. Under this type of logistic networks, containers spend a significant amount of time in empty movements. For example in the US rail system it is estimated that a railcar is empty during 40% of its average car cycle. The importance of empty container movement in carriers cost structure has inspired a number of studies directed at managing empty container fleets for railroad, liner shipping operators, and truckers. A fundamental questions these studies address is: Given an inland logistic network, how should the carrier dispatch empty containers to meet shippers' demand, to relocate empty containers among depots and warehouses, and to lease on/off containers in preparation for future demand. While these studies have achieved some degree of success in reducing empty container related operational costs, a more fundamental and strategic question is how to design the underlying logistics network; namely, how to determine the location and capacity of depots and warehouses in order to achieve a broader and more significant cost reduction. This paper addresses the above question by developing a decision support tool to assist transportation carriers in determining their inland logistic network, the location and the capacity of each depot.