A method and apparatus supporting service function chaining in a communication network is provided. Service function chaining requires packets of a service to pass through a defined sequence of service nodes of the network. Traffic engineering support includes defining service segments, determining demands for each service segment, determining flow group conservation constraints using the determined demands, and determining a resource allocation for data links which respects the flow group conservation constraints along with a link capacity constraint. A service-based forwarding operation re-labels packets as they traverse each service segment, and forwards packets toward a destination service node of each service segment.