Optimizing inland port scale and function decisions: A bilevel programming approach

With the implementation of the Belt and Road Initiative, the inland ports planning is receiving more and more attention. In this work, we aim to determine the scale and function of different potential inland ports in a certain region while considering the cargo flow allocation schemes for the inland ports and seaports in cross-border trade. Unlike previous studies, we consider the dynamic interaction between local government and manufacturing enterprises in the inland port planning process. Based on this, we formulate a bilevel programming model for the considered inland port planning problem, where the upper-level focuses on the local government and the lower-level concentrates on the manufacturing enterprise. To solve the proposed model, we develop a hybrid heuristic algorithm by combining a genetic algorithm and an exact solution method. Furthermore, we conduct a case study of the inland ports planning for the Huaihai Economic Zone in China to verify the applicability of the proposed model and algorithm. The computational results demonstrate that the proposed optimization approach can effectively increase the cross-border transportation market share of inland ports within a limited investment amount and reduce the competition among these inland ports. Our case study also provides valuable management insights on inland port planning in terms of manufacturing enterprises weights, investment limit amount, scale effect, and cargo value weights.