The encyclopedia · Engineering & Operations · Operational decision · 2005–2010
CSAV stopped shipping empty containers across the world by treating them as a flow
Chile's CSAV ran 700,000 containers on a multicommodity optimization that repositioned empties by forecast, not by habit.
CSAV (Compañía Sud Americana de Vapores)
the move
Shipping lines carry cargo one way and often end up with empty containers gathering in ports that import more than they export — China sucking them in, Saudi Arabia piling them up. Every empty box sitting in the wrong port is capital frozen and a client waiting.
CSAV, one of the world's largest carriers, ran its fleet of about 700,000 TEU containers through thousands of daily decisions. Rather than let each regional office hoard containers, it built ECO with University of Chile researchers: a multicommodity, multi-period optimization that plans repositioning and an inventory model that sets the safety stock each port needs.
The seven regional offices, each acting as an independent business unit, feed in their sales forecasts and inventories over a web collaboration platform, and the system predicts empty-container flows and stock levels across ports.
why it works
- It made repositioning a single optimization problem instead of seven local guesses, so surpluses and deficits netted against each other.
- A hybrid forecasting model fed both the network-flow and inventory models, so safety stock was sized to uncertainty instead of to fear.
- Centralizing through a web platform let independent offices coordinate without surrender of control.
- It attacked the structural imbalance, which was the real cost driver, rather than the symptom of longer voyages.
what transfers
When the constraint is a reusable asset that drifts, model it as a network flow and set safety stock explicitly — local ports each hoarding empties is the naive fix that guarantees waste.
what came after
ECO delivered direct savings of $81 million for CSAV, cut empty-container inventory stock by 50 percent and raised container turnover by 60 percent. It helped CSAV endure the 2008 shipping crisis, was named a finalist for the 2011 INFORMS Franz Edelman Award, and its authors' work won Chile its first such finalist recognition.
references
- A Strategic Empty Container Logistics Optimization in a Major Shipping Company
- CSAV - A Strategic Empty Container Logistics Optimization in a Major Shipping Company
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