Blockchain adoption strategy of two-sided shipping platforms connecting forwarder and liner company

Abstract

Blockchain technology has already been explored and used in many industries, while the shutdown of shipping blockchain platform TradeLens poses a substantial challenge to the blockchain adoption in the shipping supply chain. Motivated by this practical issue, we develop a Hotelling model to study two competitive shipping platforms’ pricing strategies and blockchain technology investment preferences in three scenarios including both shipping platforms invest nothing, only one shipping platform invests, as well as both shipping platforms invest. The liner companies and forwarders in the two-sided markets may join only one shipping platform (i.e., singlehoming) or join two shipping platforms simultaneously (i.e., multihoming). Our results suggest that whether the blockchain technology is introduced or not, the shipping platforms in each scenario provide the pricing strategies via subsidizing and charging the entry fees for the liner companies and forwarders when singlehoming occurs, whereas the only pricing strategy is to demand the entry fees when multihoming occurs. Moreover, we find that the shipping platforms’ investment preferences over blockchain technology would not be affected by the liner companies’ and forwarders’ singlehoming or multihoming behavior. The shipping platform without blockchain technology investment can achieve profit improvement by free riding via the other shipping platform’s blockchain investment decision given certain investment cost, while the shipping platform with blockchain technology investment instead suffers a loss of profitability due to its investment decision. In particular, compared to singlehoming, the shipping platforms may obtain higher equilibrium profits when multihoming occurs among three scenarios.