Encroachment and canvassing strategy in a sea-cargo service chain with empty container repositioning

In the shipping market, the transportation of cargo back and forth over two routes is not independent because empty container repositioning (ECR) from a surplus port to a deficit port may occur. To solve canvassing problems with ECR, we study a sea-cargo supply chain in which a liner company and a forwarder provide transportation services between two ports. The forwarder can order capacity from the liner company through one-way or round-trip canvassing. Furthermore, the liner company may sell capacity to both the forwarder and the shipper, which is called liner company encroachment. The results show that round-trip canvassing does not always outperform one-way canvassing for the liner company, although the former can eliminate ECR due to differences in the forwarder’s orders in two directions. Regarding the canvassing strategy, both parties can achieve a win-win situation under certain conditions without encroachment, whereas they can always achieve a win-win situation in the presence of encroachment. Moreover, encroachment always makes the liner company better off but damages the freight forwarder. We also analyze how the forwarder’s order quantity is affected by the canvassing strategy and encroachment.