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Maximization of container slot booking profits for carriers in the liner shipping industry

Author

Listed:
  • Yu Guo

    (The Hong Kong Polytechnic University)

  • Ran Yan

    (The Hong Kong Polytechnic University)

  • Hans Wang

    (The Hong Kong Polytechnic University)

Abstract

In the liner shipping industry, if a shipper wants to transport its cargo by container ships, it first needs to contact a carrier to book container slots based on the estimated transportation demand. However, one problem in the booking process is that the actual demand is uncertain, resulting in mismatch between the required demand and the booked quantity. To address this issue, this study develops a Newsvendor model to find the optimal order quantity of container slots for the shipper. In addition, uncertainties in the quantity of container slots booking made by the shipper might cause revenue loss to the carrier and low utilization of ship capacity in the daily operations of liner shipping services. Therefore, this study suggests that the shipper should pay reservation fee when booking container slots. This study also aims to find the maximum profit for the carrier under the optimal order quantity of the shipper. In sensitive analysis, how different prices per container slot offered by the carrier would influence the reservation fee, the optimal order quantity of the shipper, and the expected profit of the carrier are explored and discussed. This study can help to manage and promote the online container booking systems in the liner shipping industry.

Suggested Citation

  • Yu Guo & Ran Yan & Hans Wang, 2021. "Maximization of container slot booking profits for carriers in the liner shipping industry," Journal of Shipping and Trade, Springer, vol. 6(1), pages 1-10, December.
    • Handle: RePEc:spr:josatr:v:6:y:2021:i:1:d:10.1186_s41072-021-00100-7
    DOI: 10.1186/s41072-021-00100-7
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    References listed on IDEAS

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    1. Khouja, Moutaz, 1999. "The single-period (news-vendor) problem: literature review and suggestions for future research," Omega, Elsevier, vol. 27(5), pages 537-553, October.
    2. L. H. Lee & E. P. Chew & M. S. Sim, 2007. "A heuristic to solve a sea cargo revenue management problem," Springer Books, in: Kap Hwan Kim & Hans-Otto Günther (ed.), Container Terminals and Cargo Systems, pages 351-364, Springer.
    3. Lam, Jasmine Siu Lee & Zhang, Xiunian, 2019. "Innovative solutions for enhancing customer value in liner shipping," Transport Policy, Elsevier, vol. 82(C), pages 88-95.
    4. Qin, Yan & Wang, Ruoxuan & Vakharia, Asoo J. & Chen, Yuwen & Seref, Michelle M.H., 2011. "The newsvendor problem: Review and directions for future research," European Journal of Operational Research, Elsevier, vol. 213(2), pages 361-374, September.
    5. Feng, Youyi & Xiao, Baichun, 2006. "Integration of pricing and capacity allocation for perishable products," European Journal of Operational Research, Elsevier, vol. 168(1), pages 17-34, January.
    6. Yadong Wang & Qiang Meng, 2019. "Integrated method for forecasting container slot booking in intercontinental liner shipping service," Flexible Services and Manufacturing Journal, Springer, vol. 31(3), pages 653-674, September.
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