Forwarder's empty container ordering and coordination considering option trading in the container transportation service chain. (June 2021)

• Record Type: Journal Article
• Authors: Luo, Tian; Chang, Daofang; Xu, Zhenyu
• Is Part Of: Computers & industrial engineering. Volume 156(2021)
• Publication Date: 2021-06
• Subjects: Option contract -- Option trading -- Container transportation service chain -- Empty container ordering -- Contract coordination; Engineering -- Data processing -- Periodicals; Industrial engineering -- Periodicals; 620.00285
• DOI: 10.1016/j.cie.2021.107251
• Languages: English
• ISSNs: 0360-8352

Abstract

Highlights: We introduce option contract into the empty container capacity planning problems. We establish an empty container ordering model with option trading. We analyse the effect of the option trading price on the system profit. We design a contract to coordinate the container transportation service chain. We show the notable performance improvement of coordination with numerical study. Abstract: With the rapid development of the container transportation market, empty container capacity planning problems have become more complex. We consider a container transportation service chain (CTSC) composed of container leasing company, carriers, forwarders, ports, and consignors. We introduce a one-period, two-echelon option contract into the empty container ordering problem from the forwarder's perspective. After the demand is updated, the option contract allows the forwarder to adjust the option exercise quantity based on the options ordered at the start of the selling season to reduce losses caused by the inaccurate container order quantity. First, we establish a basic model without option contract. Second, we consider a case with no cooperation between two forwarders and establish a model in which there is only option contract without option trading. Next, we consider the cooperation between the two forwarders in the decentralized and centralized modes and establish a model with option trading. We analyse the optimal option ordering level under different circumstances and the effect of the option trading price on the system profit. We then apply the contract coordination theory to the empty container ordering problem and coordinate the CTSC by applying appropriate contract parameters. The results of the study show that option trading can share risks among forwarders, while the two-part tariff contract can achieve win–win outcomes for the two forwarders.