Simulation of The Order Process in Maritime Hinterland Transportation: The Impact of Order Release Times

The integration of information systems between the various actors organizing and executing the transport of containers to seaports is slowly progressing. Transport orders are frequently characterized by high change rates causing high manual revision effort for dispatchers. Therefore, these order changes, often received shortly before the day of departure, raise the question regarding the immediate transmission of transport orders to the subsequent actors in the transport chain. This paper analyzes the impact of different order release times, which define the timing of order transmission, on order process efficiency (processing times and costs) using a multi-method simulation approach. In a case study, four actors, two focusing on transport planning and two on operative transport execution, are considered. The simulation experiments with varying order release times and change rates reveal: A late release of orders from planning to operative actors and a reduction of order changes can significantly increase order process efficiency.

Maritime transportation is the backbone of the worldwide economic development with a share of over 80 % of global trade volume (Lam 2011). Over the last two decades (except in 2009) the global demand, especially for containerized transport, expanded continuously with yearly growth rates above 2 % (UNCTAD 2016). Therefore, the maritime transport chain (MTC) is a vital part of global supply networks over which actors, e.g., carriers, forwarders, and other logistics service providers, offer services for the movement of freight (Talley and Ng 2013).

The involvement of multiple actors planning and executing container transports in the MTC leads to a highly heterogeneous and fragmented structure making inter-organizational coordination challenging (Roorda et al. 2010). From a technical perspective, these challenges are addressed by the steady improvement of information and communication technology (ICT). By enhancing digital information exchange manual effort (caused by information exchange via e-mail, fax, or phone) can be reduced (Giannopoulos 2004). Additionally, real-time information technologies (e.g., tracking and tracing via GPS) offer opportunities to streamline intra- and inter-organizational processes (Harris, Wang, and Wang 2015). Thus, on the one hand ICT enables actors to differentiate in the competitive transport market (Khalid et al. 2007). On the other hand further standardization and open access to relevant information challenges established routines and services making actors more interchangeable (Inkinen, Tapaninen, and Pulli 2009). Hence, the high number of interfaces along with the risk of being interchangeable might explain the slow penetration of ICT within the transport sector. Especially the maritime sector is lagging behind and thus a great potential to improve process efficiency exists (Tapaninen, Ojala, and Menachof 2010; Almotairi et al. 2011).

Recently, the hinterland has become a focus of maritime research because hinterland transportation costs account for 40 to 80 % of total shipping costs (Notteboom 2008) and the increase of port throughput is highly dependent on efficient hinterland connections (Van Der Horst and De Lange 2008). Due to the increasing demand for container transports not only efficient operative transport processes (material flow) are necessary (Ruiz-Aguilar et al. 2016). An efficient information flow is also required to deal with the increasing demand and complexity of the transport operations (Perego, Perotti, and Mangiaracina 2011).

Orders are the basis of the information flow in logistics systems and are hereby defined as container transport requests from the shipper which can be an industrial or retail company or a logistics service provider itself. Nowadays, orders are usually transmitted via electronic data interchange (EDI) between actors, but when it comes to small actors or order changes, information is often still sent via e-mail, fax, or by phone (Saldanha 2006; Inkinen, Tapaninen, and Pulli 2009; Almotairi et al. 2011). This leads to high manual effort for dispatchers, who plan and coordinate the transport related activities based on order information and corresponding order changes. Order changes hereby comprise all relevant modifications of an order caused and transmitted by the shipper between the day of order placement and the day of departure. High rates of order changes can be explained by the competitive character of the maritime transport chain. Hence, shippers are usually not penalized (e.g., rebooking fees) for frequent order adjustments and thus have no obligation to fulfill the original order. These change rates and the corresponding high revision effort for dispatchers raise the question, if orders should be immediately transmitted to the following actors in the transport chain. In case order transmission is postponed, order changes only have to be incorporated into the original order by the actors at the beginning of the transport chain. Hence, manual effort for succeeding actors in the chain can be reduced. However, if orders are transmitted too late, there might not be sufficient time to coordinate the corresponding transport activities.

Despite the high relevance, the challenges of the order and change processes as well as the potential to improve process efficiency in terms of processing times and costs are not sufficiently analyzed in research. Although the advantages of ICT for managing information across company boundaries are acknowledged (Li et al. 2006), the appropriate timing of information exchange between actors considering the high degree of order changes remains untapped. To address this research gap the concept of order review and release (ORR) dealing with the identification of an order review point and the corresponding order release times between planning and operative systems (e.g., Bergamaschi et al. 1997; Lu, Huang, and Yang 2011) is applied for maritime hinterland transportation. In other words, when is order information reliable enough meaning that most order changes are incorporated into the original order before orders should be transmitted to the operative actors? Therefore, the first research question investigates the proper timing of order transmission between planning and operative actors to improve order process efficiency in terms of reduced processing times and costs per order. Additionally, the suitable timing with regard to process efficiency might be dependent on the magnitude of order changes. Hence, the second research question addresses the impact of a reduced order change rate.

Total processing time per order of the transport chain

Total processing time per order of the transport chain.

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