Cooperation and investment decisions of one shipping liner to multiple ports under differential pricing

Abstract

Cooperation between shipping liners and ports has become an inevitable trend in the development of the maritime supply chain. To better understand the investment decisions of one shipping liner for multiple ports and the efforts that ports should make to achieve a large market share and high profitability, we construct a two-stage game model from the perspective of ports and shipping liner and summarize the conditions under which the shipping liner invests in different ports. The results show that the greater the difference in initial capacity between two ports under no-investment, the more likely it is that the shipping liner chooses the High-capacity port to call. Interestingly, investment in ports by the shipping liner may not necessarily help ports expand their market share but may instead damage the market share they already have, and the loss effect is positively related to port size. Additionally, with the shipping liner investment, a stronger discount decided by the Flexible port does not attract the shipping liner to cooperate with it. In this study, a multi-stage game model is used to characterize the changes in the decision-making of the maritime supply chain under different strategies, which can not only provide decision-making suggestions for the cooperation choices of shipping liners but also provide a theoretical basis for ports to attract investment from shipping liners.