Research on Differential Pricing and Train Operation Decisions for Railway Cargo Transportation Under Competitive Conditions

Abstract

Railway freight operations aim not only to market themselves aggressively to capture the market in a competitive environment but also to achieve refined management. The operational decisions chosen by carriers can have a significant impact on the revenue across freight services. Nowadays, various forms of transported products, train make-up, and schedules are developed from the perspective of production convenience, with less consideration of shippers’ needs for the time utility, frequency, and tariffs of transportation services. This paper investigates a joint optimization approach to railroad operation planning that combines meeting the transport demand preferences of different shippers in a competitive environment. Considering the heterogeneity of shippers’ transportation demands and the competitive environment with freight trucking, a new bi-level programming model is proposed that incorporates pricing decisions and operational planning policies, such as car blocking, train routing, and make-up. An exact solution for this model is developed by adding valid inequalities to the mixed-integer formula and the experiment is conducted with data from bulk coal cargo transportation of the S Railway Bureau Group Corp. A simple transportation network is presented, and the calculation results of the pricing decisions that maximize the profit in each operation decision in this network are reported.