Multimodal Capacitated Hub Location Problems with Multi-Commodities: An Application in Freight Transport

Abstract

Hub location problems (HLPs) support decision making on multimodal transport strategic planning. It is related to the location of hubs and the allocation of origin/destination (O/D) flow in a system. Classical formulations assume that these flows are predefined paths and direct delivery is not available. This applied research presents a mixed integer linear programming (MILP) model for a capacitated multimodal, multi-commodity HLP. Furthermore, an application on the export process in a Latin American country is detailed. The new proposed model, unlike the traditional HLP, allows direct shipment, and its O/D flows are part of the decision model. Situations with up to 100 nodes, six products, and two transport modes are used, working with initial and projected flows. All instances can be solved optimally using the commercial solver, Gurobi 7.5.0, in computational times less than a minute. Results indicate that only one hub is profitable for the case study, both for the initial and projected scenarios. The installation of a hub generates transport savings over 1% per year. Two factors affect the location decision: low concentration and distance between the hubs and destinations. Long distances involve an exhaustive use of trains instead of trucks, which leads to lower transport cost per unit.