Hub Operation Pricing in the Intermodal Transportation Network

The growing importance of strategic supply chain management in light of intermodal transportation networks has attracted increased attention from researchers in recent decades. The study of intermodal logistic services has become urgent for multiple branches of science. This work is focused on hub operation pricing under an equilibrium freight flow assignment model. We formulate this model as a non-linear optimization problem and show that its solution corresponds to the equilibrium assignment pattern in an intermodal transportation network. We analyze the sensitivity of the average purchase cost and hub load to different strategies of hub operation pricing. To this end, we obtain the equilibrium freight flow assignment pattern in an explicit form for the network with one consumer-supplier pair, a single layer of hubs, and affine performance functions. The findings of the paper can give fresh managerial insights; in particular, we show risks arising within available pricing strategies.