Game-Theoretic Comparison Approach for Intercontinental Container Transportation: A Case between China and Europe with the B&R Initiative

Abstract

This paper develops a game-theoretic model to analyze the competition between two container freight transportation modes (shipping and railway) using competitive game strategic interactions method, namely, deterrence, by taking account of the most cost-effective scale of the transportation capacity settings. The competition was set against the background of China’s Belt and Road (B&R) Initiative as a new situation for intercontinental Sino-Europe container freight transportation. The behavior of each mode (modeled as a carrier, resp.) is characterized by an optimization model with the objective of minimizing its cost by setting optimal basic freight rate and transportation deployment. A firm can use this method to compare the difference in the time value of the cargos and reduce the expense during the whole transportation process. Finally, the developed model is numerically evaluated by a case study of intercontinental transportation between Hefei (China) and Hamburg (Germany). The results show that deterrence effects largely depend on the deterrence objective, and the differential in the cost of two transportation modes tends to be stable with higher values in the deterrence objective. In the new intercontinental circumstance, the mode of railway transportation provides a new way to transport the cargos between China and Europe.