Pricing and balancing of the sea–cargo service chain with empty equipment repositioning |
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| Affiliation: | 1. School of Management, Tianjin University of Technology, Tianjin 300384, PR China;2. Department of Business and Economics, University of Southern Denmark, DK-5230 Odense M, Denmark;3. Business School, Shantou University, Shantou 515063, PR China;1. Department of Logistics & Maritime Studies, The Hong Kong Polytechnic University, Hung Hom, Hong Kong;2. Department of Civil and Environmental Engineering, National University of Singapore, Singapore 117576, Singapore;1. Transportation Management College, Dalian Maritime University, Dalian 116026, China;2. School of Traffic and Transportation, Beijing Jiaotong University, Beijing 100044, China;1. Department of Logistics Engineering and Management, Lingnan (University) College, Sun Yat-Sen University, PR China;2. Department of Industrial Engineering and Logistics Management, Hong Kong University of Science and Technology, Clear Water Bay, Hong Kong SAR, PR China;1. Department of Industrial Engineering and Engineering Management, National Tsing Hua University, No. 101, Section 2, Kuang-Fu Road, Hsinchu, 30013, Taiwan;2. Department of Transportation and Communication Management Science, National Cheng Kung University, No. 1 University Road, Tainan, 70101, Taiwan;3. Department of Information Technology and Decision Sciences, Old Dominion University, 2165 Constant Hall, Norfolk, VA, 23529, USA |
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| Abstract: | To sustain a business, firms have to reposition empty containers from a surplus port to a port with a shortage and incur repositioning costs if the realized demands are unbalanced in the sea–cargo service chain. In this paper, we study a sea cargo service chain with one carrier and two forwarders providing transportation service between two ports, and there are potential demands for transportation services in both directions. We built a mathematical model to study how the carrier and forwarders determine pricing and empty equipment repositioning (hereafter EER) decisions. We find that whether or not the carrier and forwarders use pricing policies to balance the cargo demands depends on the potential demand imbalance volume between two ports. We also investigate the EER sharing strategy on whether to share the EER cost or undertake it solely. It is found that there exists a threshold, and when the EER cost is beyond the threshold value, the carrier assumes all of the repositioning costs; otherwise, the forwarder assumes all of the repositioning costs. Lastly, we study a subsidy contract between both forwarders and expand to study an EER sharing mode between the carrier and both forwarders. |
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| Keywords: | Sea–cargo service chain Pricing policy Balancing Empty container repositioning |
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