Hub-and-spoke network design to optimize government subsidy costs for maritime transportation in Indonesia

Indonesia's maritime freight transportation system is characterized by inefficiencies stemming from high logistics costs and an unsustainable government subsidy structure. Addressing these challenges necessitates a strategic transformation of the Sea Tollway network. This study introduces a hub-and-spoke model integrated with Milk Run Time Windows (MRTW) to enhance cost efficiency and optimize subsidy expenditures. A deterministic optimization approach was adopted, leveraging Genetic Algorithm (GA) techniques to formulate optimal shipping routes and strategically position hub ports. A case study in East Nusa Tenggara Province was conducted to validate the model's applicability and effectiveness within Indonesia's maritime logistics framework. The findings reveal that the proposed model significantly reduces total operational costs by 16-43% and decreases government subsidy expenditures by 10-25% per round voyage. Cargo consolidation at hub ports enhances vessel utilization, minimizes empty return trips, and improves overall network efficiency. Moreover, transitioning from an annual subsidy framework to a voyage-based allocation system offers increased fiscal flexibility and responsivenes to dynamic operational conditions. This study advances the body of knowledge by presenting an empirical, data-driven framework for optimizing Indonesia's maritime logistics infrastructure. The results inform policy recommendations on subsidy restructuring, port infrastructure development, and the integration of real-time data analytics to enhance the sustainability and efficiency of maritime transport operations.