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

Abstract

AbstractIn 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.