Product bundling in global ocean transportation

There are over 20 'components' in an international door-to-door transportation, ranging from warehousing and distribution, to forwarding, documentation, transportation, customs clearance, etc..As tariffs in ocean transportation tend to converge due to competition and service homogenization, carriers, in competition with third party logistics service providers, strive to integrate door-to-door services under their control. In doing so, and among others, they invest heavily in logistics rather than ships that can nowadays be easily chartered in from institutional investors.Integration efforts however have been met with varying degrees of success in the face of skeptical and suspicious shippers requiring cost break down and more transparency. With the use of game theory, this paper attempts to develop winning service bundling strategies for ocean carriers, i.e. global supply chain solutions under all-in prices. Preliminary results show that, under certain conditions, bundling can be an equilibrium strategy for one or more carriers, and despite leveraging around captive liner services and potentially enhanced profits, bundling does not necessarily lead to a loss in social welfare.bundling;integrated logistics;liner shipping;vertical integration

Technological Changes in the Transportation Sector--Effects on U.S. Food and Agricultural Trade: A Proceedings

ERS sponsored a workshop, Technological and Structural Change in the Transportation Sector: Effects on U.S. Food and Agricultural Trade, March 17-18, 1999, in Washington, DC. The program's objectives were to raise awareness within ERS about the role and importance of transportation in U.S. food and agricultural trade and to discuss the need of an agency research agenda in this area. More than 60 people attended. Bob Thompson of the World Bank and Jeffrey Frankel of the Brookings Institution led with discussions about the role of transportation in the global food system and the importance of integrating geography and transportation in analysis of international trade. Other panels dealt with transportation technology, past and future, the changing policy environment for ocean shipping, logistical and technological developments aiding exports of specific commodities, including the use of supply chain management. Representatives of the Agricultural Marketing Service discussed the availability of transportation cost data, and the availability of other shipping data was discussed by representatives of the PIERS database, a product of the Journal of Commerce. Two ERS research projects were summarized, one using GTAP and another applying the gravity model to estimate the extent to which distance is less of an inhibiting factor in exporting certain U.S. agricultural exports. The administrator of the Agricultural Marketing Service, the ERS associate administrator, and representatives of the Transportation Research Board, the USDA's World Board, and the Farm Foundation discussed potential ways ERS could include the transportation variable in its research. The program was cosponsored by the Farm Foundation and World Perspectives, Inc.transportation, distance, technology, agricultural trade, United States, Public Economics, Research and Development/Tech Change/Emerging Technologies,

Nonlinear pricing for stochastic container leasing system

With the substantial upsurge of container traffic, the container leasing company thrives on the financial benefits and operational flexibility of leasing containers requested by shippers. In practice, container lease pricing problem is different from the consumer product pricing in consideration of the fair value of container, limited customer types and monopolistic supply market. In view of the durability of container and the diversified lease time and quantity, the pricing is a challenging task for the leasing company. This paper examines the monopolist’s nonlinear pricing problems in static and dynamic envi- ronments. In particular, the leasing company designs and commits a menu of price and hire quantity/time pairs to maximize the expected profit and in turn customers choose hire quantities/time to maximize their surpluses according to their hire preferences. In a static environment, closed-form solutions are obtained for different groups of customers with multiple types subject to capacity constraint. In a dynamic environment, we address two customer types and derive closed-form solutions for the problem of customers with hire time preference. Further, we show that the effect of the capacity constraint increases with time of the planning horizon when customers have the same hire time preference; while in the case with different hire time preferences, the capacity constraint has opposite effects on the low and high type customers. Last, the case of customers with hire quantity preference is discussed. We focus on the lease with alternative given sets of hire time and use dynamic programming to derive the numerical optimal hire time sequence

Study on the Pricing and Path Scheme Comparison of Transit Freight

This paper aims to optimize the transportation network and transportation organization strategy of Transport through China, enabling operators to obtain greater profits, improving the efficiency of transit freight transport, and solving the problem of transportation pricing and route selection of transit goods. In this paper, the growth trend of transit transport demand is firstly determined. On this basis, the ultimate goal is to maximize the transport profit of the operator. In-depth analysis is made from the perspectives of transport income and transport cost. In addition, through combing existing international transportation routes, the overall transit network map of transit China to central Asian and European countries is drawn. In order to achieve the goal of minimizing transportation expenditure, the model of comparing freight routes is established. The customer is also classified by matrix model. Finally, with the transit transportation from Japan, Korea and other countries as examples, the model in this paper is verified, and the optimal transportation path is obtained through software solution. Compared with the current scheme, it has saved operating costs

Divergent effects of container port choice incentives on users' behavior

Port choice decisions are often considered to be based on unambiguous choice criteria. The authors examine how port users' evaluation of these criteria can differ and how this may affect actors' incentive structure and decision making, and ultimately port performance. Apart from ports' physical characteristics, the paper considers port policy and freight market conditions as components of actors' incentive structures. As port users interact, each actor's decision making has consequences for the incentives offered to others – with an important role for strategic behavior. The aggregate of port users' decisions affects a port's throughput, cargo composition, and value added, and has implications for handling efficiency. This paper combines these insights within an overarching framework linking port characteristics, policy, and freight market conditions to port user choice behavior and the consequences for ports. The paper explores various facets of this framework using the case of how the Port of Rotterdam competes along the Hamburg–Le Havre range, drawing on port throughput data on various levels of detail and in-depth interviews with a representative selection of port stakeholders. It shows that there is a downside to ports being particularly attractive to carriers, in that the port that offers the most incentives to carriers disproportionately attracts relatively low-value activities: inefficient calls and a large share of empty containers, along with a strong import/export imbalance. Interview findings contextualize the findings from the data and elaborate further on the mechanisms underpinning these observations. Most importantly, the attractiveness of a port for carriers does not always translate into attractiveness for shippers. The challenge for port policy is to balance the port's positioning toward its different categories of users and achieve a congruent value proposition for all port users

Modeling of Optimal Concession Contract between Port Authority and Terminal Operators using Channel Coordination Model

세계 해운 시장의 급격한 변화는 항만 산업에 큰 영향을 미친다. PA (항만공사)와 TOC (터미널 운영 회사)는 경쟁 우위를 확보하기 위하여 지금까지 항만 시설과 장비에 많은 투자를 해왔다. TOC는 경쟁사 및 해운 회사로부터의 요구 사항에 따라 수익성을 제고하기 위해 노력한다. 같은 상황에서 PA도 경쟁력을 찾고 있다. 시장의 불확실성과 기술적 변화는 PA와 TOC가 협력하여 더 나은 재정 상태를 요구하고 있다. PA와 TOC간에는계약을 통해 여러 방식으로 운영된다. 세계의 60-70%가 운영중인 임대 기능 모델에 따르면, PA는 항만의 토지 및 인프라를 소유∙관리하며, TOC는 터미널 운영을 담당한다. PA와 TOC는 계약을 통해 고정 요금제 내지 단가 요금제 등의 여부를 결정한다. 세계 항만 임대 시스템을 비교해 볼 때, 절대적인 고정된 계약 방식이 없다고 한다. 아시아의 대부분 지역에서는 고정 요금제를 이용하고, 유럽 지역에서는 고정 요금제와 단가 요금제가 혼합된 계약을 이용한다. 그동안 세계 항만 임대 시스템에 간한 연구는 많지 않았다. 특히 구체적 수치를 제공하지 않거나 비실용적 연구가 많았다. 한편, 이전 연구에서는TOC보다 PA 관점에서의 이익 극대화를 도모하는 데 중점을 두었다. 만약 PA가 처리량을 늘림으로써 이익을 극대화하고자 할 때, 고정 임대 계약이 더 유리한 선택이다. 이 연구는 공공기관과 민간 단체 상호간의 이익 극대화의 방식으로 연결하는 방법에 중점을 두고 있다. PA가 TOC에게 제안하는 4 가지 유형의 계약 방식은 비조정, 조정, Cournot 및 Collusion 모델로 비교하고, 동시에 각 계약 방식에 대해 모듈 수행과 수치 분석을 통해 모델을 비교한다. 연구 결과는 향후 항만 임대 계약을 수립하는 데 중요한 영향을 미칠 것이다. 비교 수치 분석을 관찰하면 다음과 같은 주요 결과를 얻을 수 있다. 결과에 따르면, 고정 계약과 단가 계약을 합친 조건이 각각의 고정 및 단가 계약제 보다 더 높다는 것을 알 수 있다. PA가 TOC의 이익과 위험을 다루는 만큼 TOC가 처리량을 증가시킬 수 있으며, 이것은 PA와 TOC 간의 총이익을 극대화 할 수 있다. 따라서PA가 조정 없는 계약을 제공하는 것보다 조정된 계약을 제공 할 때 더 많은 이익을 낼 수 있다. 그리고 PA와 TOC의 통합 이익은 각각의 이익보다 더 높다. PA와TOC의 통합 이익을 통해서 PA는 TOC에게 적절한 계약 방식을 제공하고 상호간의 이익 극대화를 도모할 수 있다. PA가 이익을 늘리려고 시도 할 때마다 수익과 수요 위험을 공유함으로써 TOC와의 관계를 유지해야한다. PA는TOC와의 협조로 어떤 계약방식을 선택하더라도 이익을 창출할 수 있다.|Rapid changes in the global maritime market have a major impact on the port industry. PA (Port Authority) and TOC (Terminal Operating Company) have invested heavily in port facilities and equipment so far to secure competitive advantage. TOC strives to improve profitability in accordance with requirements from competitors and shipping companies. In the same situation, PA is also looking for its own profitability. Market uncertainty and technological changes require PA and TOC to achieve better financial conditions in cooperation. The ports are operated in different contracts. According to the landlord function model which is operated by 60-70% of the world, the PA owns and manages the land and infrastructure of the port, and the TOC is responsible for terminal operations. The PA and TOC will decide whether to use a fixed fee or a unit fee through the contract. There is no absolute contract method in the port leasing system. Most regions in Asia prefer to use the fixed fee, while European countries prefer to use a mix of fixed fee and unit fee. There have been few studies on the port leasing system. In particular, most of them did not provide specific calculations or were impractical. On the other hand, previous studies have focused on maximizing profits from the perspective of PA rather than TOC. This research focuses on how to connect to the method of maximizing profit between public and private entities. The four types of contracts proposed by the PA to the TOC are compared with the uncoordination, coordination, Cournot and Collusion models, and at the same time, model comparisons and numerical analysis are performed for each contract method. The results of the study will have a significant impact on establishing future port lease contracts. Observing the comparative numerical analysis, the following main results are obtained. According to the results, it can be seen that the two-part tariff is higher than the each of fixed and unit contracts. As the PA shares with the profits and risks in cooperation with the TOC, the TOC can increase throughput, which can maximize the total benefit between PA and TOC. Thus, the PA can make more profits when it comes to providing a contract that is coordination contract provide more than uncoordination contract. And the joint profit of PA and TOC is higher than the respective total profits. Through the joint profit of PA and TOC, the PA can provide the TOC with the appropriate contractual condition and maximize their joint profits. The PA, in cooperation with the TOC, is able to generate profits no matter what contract type it chooses.Table of Contents LIST OF TABLES III LIST OF FIGURES III ABSTRACT IV 초록 VI CHAPTER 1. INTRODUCTION 1 1. BACKGROUND 1 2. AIM AND OBJECTIVES 6 3. SIGNIFICANCE 9 4. STRUCTURE OF THE THESIS 10 CHAPTER 2. LITERATURE REVIEW 11 1. PORT ECONOMICS 11 1. PORT GOVERNANCE 11 2. CONTRACTS: LEASEHOLD AND CONCESSION 16 3. PRICING MECHANISM 18 2. CONCESSION CONTRACT SCHEMES 21 1. FIXED-FEE CONTRACT 21 2. UNIT-FEE CONTRACT 22 3. TWO-PART TARIFF CONTRACT 22 4. FOREIGN AND KOREAN PORT CONTRACT SCHEMES 22 3. RISK SHARING CHARACTERISTICS 26 1. RISKS TYPES IN CONCESSION CONTRACTS 27 2. RISK ALLOCATION BETWEEN PA AND TOC 28 CHAPTER 3. THEORETICAL BACKGROUND AND MODEL DEVELOPMENT 30 1. THEORETICAL BACKGROUND 30 1. BERTRAND MODEL 31 2. COURNOT MODEL 32 3. STACKELBERG MODEL 33 4. COLLUSION MODEL 34 2. MODEL DEVELOPMENT 38 1. TERMINAL OPERATORS’ OPTIMAL BEHAVIORS UNDER THREE SCHEMES 41 2. PORT AUTHORITY’S OPTIMAL BEHAVIORS UNDER FOUR SCHEMES 45 3. COURNOT COORDINATION 55 4. COLLUSION COORDINATION 59 5. COMPARING THE ASSUMPTION MODELS 64 3. COORDINATION THROUGH SHARING THE RISK AND REVENUE 72 1. ASSUMPTION 72 2. SHARING THE JOINT PROFIT 73 3. SHARING THE MARKET UNCERTAINTY 73 4. SHARING THE MARKET RISK 74 CHAPTER 4. NUMERICAL ANALYSIS AND RESULTS 75 CHAPTER 5. CONCLUSION 81 1. SUMMARY 81 2. IMPLICATIONS 83 3. LIMITATION 84 4. FURTHER STUDIES 85 REFERENCE 86Docto