IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v272y2024ics0925527324001130.html
   My bibliography  Save this article

Contract design in ocean shipping market: A performance credit leveraged mechanism

Author

Listed:
  • Jin, Jie
  • He, Junliang
  • Wang, Xudong
  • Han, Chuanfeng
  • Meng, Lingpeng

Abstract

In shipping market, the distinct characteristics of violating demand and fluctuating spot market price both in low-demand and high-demand seasons breed the problems of shippers defaulting in the low season and insufficient capacity in high season. Based on the appeal to lock in the market and capacity, the shipper's performance credit in low season as a lever mechanism is proposed in this paper to adjust the capacity obtained in high season and study the contract design problem between the carrier and the shipper in respond to the volatile shipping market. The results show that the mechanism encourages the shipper to re-weigh their actual capacity in low season. It enables the shipper to increase their committed capacity quantity and facilitates the carrier to maintain the benefits of planning capacity in advance. Meanwhile, the shipper may obtain more capacity in the high season without increasing costs. In addition, it is interesting to note that while contracting is consistently a preferrable option than solely relying on the spot market for the shipper, it's only true for the carrier when a certain threshold condition is reached, and on the contrary, it is more profitable to transact with the spot market.

Suggested Citation

  • Jin, Jie & He, Junliang & Wang, Xudong & Han, Chuanfeng & Meng, Lingpeng, 2024. "Contract design in ocean shipping market: A performance credit leveraged mechanism," International Journal of Production Economics, Elsevier, vol. 272(C).
    • Handle: RePEc:eee:proeco:v:272:y:2024:i:c:s0925527324001130
    DOI: 10.1016/j.ijpe.2024.109256
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527324001130
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2024.109256?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:272:y:2024:i:c:s0925527324001130. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.